Quarterly Report (10-q)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

x	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended October 26, 2014

o	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number 0-20538

ISLE OF CAPRI CASINOS, INC.

Delaware		41-1659606
(State or other jurisdiction of		(I.R.S. Employer
incorporation or organization)		Identification Number)

600 Emerson Road, Suite 300, Saint Louis, Missouri		63141
(Address of principal executive offices)		(Zip Code)

Registrant’s telephone number, including area code: (314) 813-9200

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes x No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer, or a smaller reporting company. See definition of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated o

Accelerated filer x

Non-accelerated filer o

Smaller reporting company o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No x

As of December 1, 2014, the Company had a total of 40,027,800 shares of Common Stock outstanding (which excludes 2,038,348 shares held by us in treasury).

PART I—FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

ISLE OF CAPRI CASINOS, INC.

CONSOLIDATED BALANCE SHEETS

(In thousands, except share and per share amounts)

	October 26,			April 27,
	2014			2014
	(unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	68,794		$	69,830
Marketable securities	27,052			27,289
Accounts receivable, net	11,280			12,615
Income taxes receivable	203			73
Deferred income taxes	3,898			4,106
Prepaid expenses and other assets	21,779			18,526
Total current assets	133,006			132,439
Property and equipment, net	935,930			955,604
Other assets:
Goodwill	108,970			108,970
Other intangible assets, net	54,492			54,911
Deferred financing costs, net	21,200			23,439
Restricted cash and investments	9,149			9,807
Prepaid deposits and other	4,825			4,904
Total assets	$	1,267,572		$	1,290,074
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Current maturities of long-term debt	$	233		$	230
Accounts payable	19,813			20,869
Accrued liabilities:
Payroll and related	37,935			34,700
Property and other taxes	24,750			20,360
Interest	16,658			16,920
Progressive jackpots and slot club awards	16,700			16,306
Other	20,773			18,478
Total current liabilities	136,862			127,863
Long-term debt, less current maturities	1,034,182			1,066,071
Deferred income taxes	37,628			35,870
Other accrued liabilities	18,420			18,495
Other long-term liabilities	22,357			22,391
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 October 26, 2014 and April 27, 2014	421			421
Class B common stock, $.01 par value; 3,000,000 shares authorized; none issued				—
Additional paid-in capital	247,450			247,819
Retained earnings (deficit)	(205,251		)	(201,913		)
	42,620			46,327
Treasury stock, 2,033,907 shares at October 26, 2014 and 2,236,971 at April 27, 2014	(24,497		)	(26,943		)
Total stockholders’ equity	18,123			19,384
Total liabilities and stockholders’ equity	$	1,267,572		$	1,290,074

See notes to the consolidated financial statements.

ISLE OF CAPRI CASINOS, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except share and per share amounts)

(Unaudited)

	Three Months Ended						Six Months Ended
	October 26,			October 27,			October 26,			October 27,
	2014			2013			2014			2013
Revenues:
Casino	$	255,445		$	246,508		$	510,517		$	497,342
Rooms	8,474			8,713			16,786			17,628
Food, beverage, pari-mutuel and other	34,435			32,597			68,558			66,719
Gross revenues	298,354			287,818			595,861			581,689
Less promotional allowances	(59,437		)	(56,197		)	(115,295		)	(112,055		)
Net revenues	238,917			231,621			480,566			469,634
Operating expenses:
Casino	40,275			39,793			80,403			80,061
Gaming taxes	64,403			62,451			128,870			125,129
Rooms	1,849			1,872			3,752			3,773
Food, beverage, pari-mutuel and other	10,674			10,315			22,046			21,117
Marine and facilities	14,488			14,382			29,207			29,001
Marketing and administrative	59,858			59,640			120,219			118,890
Corporate and development	6,735			7,386			15,883			14,084
Litigation accrual reversal	—			(7,351		)	—			(7,351		)
Preopening expense	—			—			—			3,898
Depreciation and amortization	19,610			20,522			39,253			40,324
Total operating expenses	217,892			209,010			439,633			428,926
Operating income	21,025			22,611			40,933			40,708
Interest expense	(21,114		)	(15,193		)	(42,443		)	(37,847		)
Interest income	92			84			179			174
Derivative income	—			168			—			398

Income (loss) from continuing operations before income taxes	3			7,670			(1,331		)	3,433
Income tax provision	(1,024		)	(1,359		)	(2,007		)	(2,770		)
Income (loss) from continuing operations	(1,021		)	6,311			(3,338		)	663
Income from discontinued operations, net of income taxes	—			1,726			—			2,512
Net income (loss)	$	(1,021	)	$	8,037		$	(3,338	)	$	3,175

Income (loss) per common share-basic:
Income (loss) from continuing operations	$	(0.03	)	$	0.16		$	(0.08	)	$	0.02
Income from discontinued operations, net of income taxes	—			0.04			—			0.06
Net income (loss)	$	(0.03	)	$	0.20		$	(0.08	)	$	0.08

Income (loss) per common share-diluted:
Income (loss) from continuing operations	$	(0.03	)	$	0.16		$	(0.08	)	$	0.02
Income from discontinued operations, net of income taxes	—			0.04			—			0.06
Net income (loss)	$	(0.03	)	$	0.20		$	(0.08	)	$	0.08

Weighted average basic shares	39,932,856			39,686,217			39,880,379			39,634,573
Weighted average diluted shares	39,932,856			39,731,192			39,880,379			39,682,644

See notes to the consolidated financial statements.

ISLE OF CAPRI CASINOS, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(In thousands, except share amounts)

(Unaudited)

	Three Months Ended					Six Months Ended
	October 26,			October 27,		October 26,			October 27,
	2014			2013		2014			2013
Net income (loss)	$	(1,021	)	$	8,037	$	(3,338	)	$	3,175
Other comprehensive income, net of tax:
Deferred hedge adjustment, net of income tax provision of $59 and $149 for the three and six months ended October 27, 2013, respectively	—			99		—			247
Comprehensive income (loss)	$	(1,021	)	$	8,136	$	(3,338	)	$	3,422

See notes to the consolidated financial statements.

ISLE OF CAPRI CASINOS, INC.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(In thousands, except share amounts)

(Unaudited)

	Shares of			Additional			Retained						Total
	Common	Common		Paid-in			Earnings			Treasury			Stockholders’
	Stock	Stock		Capital			(Deficit)			Stock			Equity
Balance, April 27, 2014	42,066,148	$	421	$	247,819		$	(201,913	)	$	(26,943	)	$	19,384
Net loss	—	—		—			(3,338		)	—			(3,338		)
Issuance of restricted stock from treasury stock, net of forfeitures	—	—		(2,446		)	—			2,446			—
Stock compensation expense	—	—		2,077			—			—			2,077
Balance, October 26, 2014	42,066,148	$	421	$	247,450		$	(205,251	)	$	(24,497	)	$	18,123

See notes to the consolidated financial statements.

ISLE OF CAPRI CASINOS, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)

	Six Months Ended
	October 26,			October 27,
	2014			2013
Operating activities:
Net income (loss)	$	(3,338	)	$	3,175
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization	39,253			41,497
Amortization and write-off of deferred financing costs	2,239			2,224
Amortization of debt discount	128			120
Deferred income taxes	1,965			2,190
Stock compensation expense	2,077			2,637
Litigation accrual reversal	—			(14,730		)
Gain on derivative instruments	—			(398		)
Loss (gain) on disposal of assets	35			(1,002		)
Changes in operating assets and liabilities:
Marketable securities	237			400
Accounts receivable	1,335			1,209
Income tax receivable	(130		)	446
Prepaid expenses and other assets	(3,205		)	(2,429		)
Accounts payable and accrued liabilities	8,317			(3,000		)
Net cash provided by operating activities	48,913			32,339

Investing activities:
Purchase of property and equipment	(18,658		)	(30,724		)
Proceeds from sale of property and equipment	35			1,154
Payments towards gaming license	—			(7,500		)
Restricted cash and investments	688			1,198
Net cash used in investing activities	(17,935		)	(35,872		)

Financing activities:
Principal payments on debt	(114		)	(305		)
Net (repayments) borrowings on line of credit	(31,900		)	6,000
Payment of deferred financing costs	—			(673		)
Net cash (used in) provided by financing activities	(32,014		)	5,022

Net decrease in cash and cash equivalents	(1,036		)	1,489
Cash and cash equivalents, beginning of period	69,830			68,469
Cash and cash equivalents, end of the period	$	68,794		$	69,958

See notes to the consolidated financial statements.

ISLE OF CAPRI CASINOS, INC.

Notes to Consolidated Financial Statements

(amounts in thousands, except share and per share amounts)

(Unaudited)

1. Nature of Operations

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 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 or operate fifteen casino gaming facilities in the United States located in Black Hawk, Colorado; Pompano Beach, Florida; Bettendorf, Marquette and Waterloo, Iowa; Lake Charles, Louisiana; Lula, Natchez and Vicksburg, Mississippi; Boonville, Cape Girardeau, Caruthersville and Kansas City, Missouri; and Nemacolin, Pennsylvania.

2. Basis of Presentation

The accompanying condensed consolidated financial statements have been prepared in accordance with the rules and regulations of the Securities and Exchange Commission (“SEC”) and in accordance with accounting principles generally accepted in the United States of America for interim financial reporting. Accordingly, certain information and note disclosures normally included in financial statements prepared in conformity with accounting principles generally accepted in the United States have been condensed or omitted. In managements’ opinion, the accompanying interim condensed consolidated financial statements include all adjustments, consisting of normal recurring adjustments, necessary for a fair statement of the results presented. The accompanying interim condensed consolidated financial statements have been prepared without audit. The results for interim periods are not necessarily indicative of results that may be expected for any other interim period or for the full year. These condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended April 27, 2014 as filed with the SEC and all of our other filings, including Current Reports on Form 8-K, filed with the SEC after such date and through the date of this report, which are available on the SEC’s website at www.sec.gov or our website at www.islecorp.com.

Our fiscal year ends on the last Sunday in April. Periodically, this system necessitates a 53-week year. Fiscal 2015 and 2014 are both 52-week years, which commenced on April 28, 2014 and April 29, 2013, respectively.

The condensed consolidated financial statements include our accounts and those of our subsidiaries. All significant intercompany balances and transactions have been eliminated in consolidation. Certain reclassifications have been made to prior period financial statements to conform to the current period presentation. We view each property as an operating segment and all such operating segments have been aggregated into one reporting segment.

Discontinued operations include our former Davenport, Iowa casino operations sold in February 2014. The results of our discontinued operations are summarized as follows:

	Three Months Ended		Six Months Ended
	October 27,		October 27,
	2013		2013
Net revenues	$	9,959	$	19,675
Pretax income from discontinued operations	1,726		2,512
Income tax provision from discontinued operations	—		—
Income from discontinued operations	1,726		2,512

3. Long-Term Debt

Long-term debt consists of the following:

	October 26,		April 27,
	2014		2014
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	$	32,800	$	64,700
5.875% Senior Notes, interest payable semi-annually March 15 and September 15	350,000		350,000
7.75% Senior Notes, interest payable semi-annually March 15 and September 15, net of discount	298,616		298,488
8.875% Senior Subordinated Notes, interest payable Semi-annually June 15 and December 15	350,000		350,000
Other	2,999		3,113
	1,034,415		1,066,301
Less current maturities	233		230
Long-term debt	$	1,034,182	$	1,066,071

Senior Secured Credit Facility—Our Senior Secured 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.

Our net revolving line of credit availability at October 26, 2014, as limited by our maximum consolidated total leverage ratio, was approximately $178,000, after consideration of approximately $32,000 in outstanding letters of credit. We have an annual commitment fee related to the unused portion of the Credit Facility of up to 0.55% which is included in interest expense in the accompanying consolidated statements of operations. The weighted average effective interest rates of the Credit Facility for the six months ended October 26, 2014 was 3.54%.

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 October 26, 2014.

Subsequent to quarter end, on October 29, 2014, we amended our Credit Facility to revise the definition of consolidated EBITDA to exclude the costs associated with the Colorado Referendum and certain severance expenses related to the corporate restructuring. The amendment will be effective beginning in the third quarter fiscal 2015.

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 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 March 15, 2016, with call premiums as defined in the indenture governing the 5.875% Senior Notes.

7.75% Senior Notes—In March 2011, we issued $300,000 of 7.75% Senior Notes due 2019 at a price of 99.264% (“7.75% Senior Notes”). 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.

8.875% Senior Subordinated Notes — In August 2012, we issued $350,000 of 8.875% Senior Subordinated Notes due 2020 (“8.875% Senior Subordinated Notes”). 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 5.875% Senior Notes, 7.75% Senior Notes and 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 9. All of the guarantor subsidiaries are wholly owned by us.

The indentures governing the 5.875% Senior Notes, 7.75% Senior Notes and 8.875% Senior Subordinated 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.

4. Earnings Per Share

The following table sets forth the computation of basic and diluted income (loss) per share:

	Three Months Ended					Six Months Ended
	October 26,			October 27,		October 26,			October 27,
	2014			2013		2014			2013
Numerator:
Income (loss) applicable to common shares:
Income (loss) from continuing operations	$	(1,021	)	$	6,311	$	(3,338	)	$	663
Income from discontinued operations	—			1,726		—			2,512

Net income (loss)	$	(1,021	)	$	8,037	$	(3,338	)	$	3,175

Denominator:
Denominator for basic earnings (loss) per share - weighted average shares	39,932,856			39,686,217		39,880,379			39,634,573
Effect of dilutive securities
Employee stock options	—			44,975		—			48,071
Denominator for diluted earnings (loss) per share - adjusted weighted average shares and assumed conversions	39,932,856			39,731,192		39,880,379			39,682,644

Basic earnings (loss) per share:
Income (loss) from continuing operations	$	(0.03	)	$	0.16	$	(0.08	)	$	0.02
Income from discontinued operations	—			0.04		—			0.06
Net income (loss)	$	(0.03	)	$	0.20	$	(0.08	)	$	0.08

Diluted earnings (loss) per share:
Income (loss) from continuing operations	$	(0.03	)	$	0.16	$	(0.08	)	$	0.02
Income from discontinued operations	—			0.04		—			0.06
Net income (loss)	$	(0.03	)	$	0.20	$	(0.08	)	$	0.08

Our basic earnings (loss) per share are computed by dividing net income (loss) by the weighted average number of shares outstanding for the period. Due to the loss from continuing operations for the three and six months ended October 26, 2014, stock options representing 43,945 and 44,180 shares, which are potentially dilutive, and 205,060 shares, which are anti-dilutive, were excluded from the calculation of common shares for diluted loss per share for the respective periods. Stock options representing 753,860 shares, which were anti-dilutive, were excluded from the calculation of common shares for diluted earnings per share for the three and six months ended

October 27, 2013. As the minimum market performance conditions related to our restricted stock units have not been achieved as of October 26, 2014 or October 27, 2013, 1,656,943 and 1,714,286 units have been excluded from the calculation of diluted earnings per share for the respective periods.

5. Stock Based Compensation

Under our 2009 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 1,656,943 shares. Any RSUs earned will vest 50% on April 26, 2015 and 50% on April 26, 2016. The fair value of these RSUs was determined utilizing a lattice pricing model which considered a range of assumptions including volatility and risk-free interest rates. The aggregate compensation cost related to these RSUs is $4,695 to be recognized over the vesting periods. As of October 26, 2014, our unrecognized compensation cost for these RSUs was $1,265.

Restricted Stock — During the six months ended October 26, 2014, we issued 107,214 shares of restricted stock with a weighted average grant date fair value of $7.92 to employees and 122,325 shares of restricted stock with a weighted-average grant date fair value of $7.24 to directors. Restricted stock awards are made to employees and directors under annual long-term incentive grants which primarily vest one-third on each anniversary of the grant date for employees and vests one-half on the grant date and one-half on the first anniversary of the grant date for directors. Our aggregate estimate of forfeitures for restricted stock for employees and directors is 12% and 0%, respectively. As of October 26, 2014, our unrecognized compensation cost for unvested restricted stock was $1,430 with a remaining weighted average vesting period of 1.15 years.

6. Fair Value

Items Measured at Fair Value on a Recurring Basis—The following table sets forth the assets measured at fair value on a recurring basis, by input level, in the consolidated balance sheets at October 26, 2014 and April 27, 2014:

	October 26, 2014
	Level 1		Level 2		Total
Assets:
Marketable securities	$	7,910	$	19,142	$	27,052
Restricted cash and investments	4,665		4,484		9,149

	April 27, 2014
	Level 1		Level 2		Total
Assets:
Marketable securities	$	10,074	$	17,215	$	27,289
Restricted cash and investments	4,459		5,348		9,807

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 (Level 1), quoted prices of identical assets in inactive markets, or quoted prices for similar assets in active and inactive markets (Level 2), 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 (Level 1), or quoted prices for similar assets in active and inactive markets (Level 2), and represent the amounts we would expect to receive if we sold our restricted cash and investments.

Other Financial Instruments - The estimated carrying amounts and fair values of our other financial instruments are as follows:

	October 27, 2014				April 27, 2014
	Carrying				Carrying
	Amount		Fair Value		Amount		Fair Value
Financial liabilities:
Revolving line of credit	$	32,800	$	31,816	$	64,700	$	63,083
5.875% Senior notes	350,000		357,000		350,000		351,750
7.75% Senior notes	298,616		313,547		298,488		318,576
8.875% Senior subordinated notes	350,000		373,625		350,000		373,520
Other long-term debt	2,999		2,999		3,113		3,113
Other long-term liabilities	22,357		22,357		22,391		22,391

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) 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). Debt obligations with a short remaining maturity have a carrying amount that approximates fair value.

7. Income Taxes

A summary of our effective income tax provision from continuing operations is as follows:

	Three Months Ended						Six Months Ended
	October 26,			October 27,			October 26,			October 27,
	2014			2013			2014			2013
Federal taxes at the statutory rate	$	1		$	3,289		$	(466	)	$	2,081
State taxes	(179		)	233			(519		)	516
Permanent differences	1,464			277			2,004			536
Tax credits	(559		)	(263		)	(672		)	(525		)
Other	40			49			40			101
Valuation allowance	257			(2,226		)	1,620			61
Income tax provision from continuing operations	$	1,024		$	1,359		$	2,007		$	2,770

Our income tax provision consists of changes in the deferred tax liability attributable to indefinite lived intangibles and expense in state jurisdictions without net operating loss carryforwards available.

As of October 26, 2014, we have a full valuation allowance on our federal and state deferred tax assets and have concluded that the valuation allowance was still needed due to our history of cumulative losses. During fiscal 2014, our Florida operations experienced their second consecutive year of substantive pretax income. We continue to evaluate our cumulative income position and income trend, as well as our future projections of sustained profitability for our Florida operations. We will continue to evaluate whether this profitability trend constitutes sufficient positive evidence to support a full, or partial, reversal of our Florida state valuation allowance of approximately $3,000.

8. Supplemental Disclosures

Cash Flow — For the six months ended October 26, 2014 and October 27, 2013, we made net cash interest payments of $40,466 and $43,652, respectively. Additionally, we made net income tax payments of $171 and received net income tax refunds of $97 during the six months ended October 26, 2014 and October 27, 2013, respectively.

For the six months ended October 26, 2014 and October 27, 2013, the accrued purchases of property and equipment in accounts payable increased by $573 and decreased by $6,188, respectively.

9. 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 5.875% Senior Notes, 7.75% 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 5.875% Senior Notes, 7.75% 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-Black Hawk County, 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, L.L.C. Each of the subsidiaries’ guarantees is joint and several with the guarantees of the other subsidiaries.

During the three months ended October 26, 2014, our wholly owned subsidiary, IOC-Davenport, Inc, changed designations from a Guarantor Subsidiary to a Non-Guarantor Subsidiary. All periods presented below reflect the operations of IOC-Davenport, Inc. as a Non-Guarantor Subsidiary.

Consolidating condensed balance sheets as of October 26, 2014 and April 27, 2014 are as follows:

	As of October 26, 2014
	Isle of Capri						Consolidating
	Casinos, Inc.				Non-		and			Isle of Capri
	(Parent		Guarantor		Guarantor		Eliminating			Casinos, Inc.
	Obligor)		Subsidiaries		Subsidiaries		Entries			Consolidated
Balance Sheet
Current assets	$	25,549	$	76,811	$	35,459	$	(4,813	)	$	133,006
Intercompany receivables	476,708		—		316		(477,024		)	—
Investments in subsidiaries	551,876		3,358		—		(555,234		)	—
Property and equipment, net	7,421		889,188		39,321		—			935,930
Other assets	31,831		150,571		20,210		(3,976		)	198,636
Total assets	$	1,093,385	$	1,119,928	$	95,306	$	(1,041,047	)	$	1,267,572

Current liabilities	$	34,197	$	75,958	$	31,520	$	(4,813	)	$	136,862
Intercompany payables	—		452,024		25,000		(477,024		)	—
Long-term debt, less current maturities	1,034,105		—		77		—			1,034,182
Other accrued liabilities	6,960		68,133		7,288		(3,976		)	78,405
Stockholders’ equity	18,123		523,813		31,421		(555,234		)	18,123
Total liabilities and stockholders’ equity	$	1,093,385	$	1,119,928	$	95,306	$	(1,041,047	)	$	1,267,572

	As of April 27, 2014
	Isle of Capri						Consolidating
	Casinos, Inc.				Non-		and			Isle of Capri
	(Parent		Guarantor		Guarantor		Eliminating			Casinos, Inc.
	Obligor)		Subsidiaries		Subsidiaries		Entries			Consolidated
Balance Sheet
Current assets	$	16,131	$	80,918	$	35,589	$	(199	)	$	132,439
Intercompany receivables	530,886		—		—		(530,886		)	—
Investments in subsidiaries	535,662		3,358		—		(539,020		)	—
Property and equipment, net	6,693		907,175		41,736		—			955,604
Other assets	35,837		151,044		20,236		(5,086		)	202,031
Total assets	$	1,125,209	$	1,142,495	$	97,561	$	(1,075,191	)	$	1,290,074

Current liabilities	$	33,447	$	67,899	$	26,716	$	(199	)	$	127,863
Intercompany payables	—		495,416		35,470		(530,886		)	—
Long-term debt, less current maturities	1,065,913		—		158		—			1,066,071
Other accrued liabilities	6,465		68,002		7,375		(5,086		)	76,756
Stockholders’ equity	19,384		511,178		27,842		(539,020		)	19,384
Total liabilities and stockholders’ equity	$	1,125,209	$	1,142,495	$	97,561	$	(1,075,191	)	$	1,290,074

Consolidating condensed statements of operations for the three and six months ended October 26, 2014 and October 27, 2013 are as follows:

	For the Three Months Ended October 26, 2014
	Isle of Capri									Consolidating
	Casinos, Inc.						Non-			and			Isle of Capri
	(Parent			Guarantor			Guarantor			Eliminating			Casinos, Inc.
Statement of Operations	Obligor)			Subsidiaries			Subsidiaries			Entries			Consolidated
Revenues:
Casino	$	—		$	244,105		$	11,340		$	—		$	255,445
Rooms, food, beverage, pari-mutuel and other	1			41,755			3,380			(2,227		)	42,909
Management fee revenue	8,334			—			—			(8,334		)	—
Gross revenues	8,335			285,860			14,720			(10,561		)	298,354
Less promotional allowances	—			(55,983		)	(3,454		)	—			(59,437		)
Net revenues	8,335			229,877			11,266			(10,561		)	238,917

Operating expenses:
Casino	—			38,598			1,677			—			40,275
Gaming taxes	—			60,249			4,154			—			64,403
Rooms, food, beverage, pari-mutuel and other	8,017			83,283			4,531			(2,227		)	93,604
Management fee expense	—			8,034			300			(8,334		)	—
Depreciation and amortization	508			17,740			1,362			—			19,610
Total operating expenses	8,525			207,904			12,024			(10,561		)	217,892

Operating income (loss)	(190		)	21,973			(758		)	—			21,025
Interest expense, net	(10,971		)	(9,519		)	(532		)	—			(21,022		)
Equity in income (loss) of subsidiaries	5,769			—			—			(5,769		)	—
Income (loss) from continuing operations before income taxes	(5,392		)	12,454			(1,290		)	(5,769		)	3
Income tax benefit (provision)	4,371			(7,068		)	1,673			—			(1,024		)
Income (loss) from continuining operations	(1,021		)	5,386			383			(5,769		)	(1,021		)
Income (loss) of discontinued operations	—			—			—			—			—
Net income (loss)	$	(1,021	)	$	5,386		$	383		$	(5,769	)	$	(1,021	)

	For the Three Months Ended October 27, 2013
	Isle of Capri									Consolidating
	Casinos, Inc.						Non-			and			Isle of Capri
	(Parent			Guarantor			Guarantor			Eliminating			Casinos, Inc.
Statement of Operations	Obligor)			Subsidiaries			Subsidiaries			Entries			Consolidated
Revenues:
Casino	$	—		$	238,051		$	8,457		$	—		$	246,508
Rooms, food, beverage, pari-mutuel and other	176			40,236			3,217			(2,319		)	41,310
Management fee revenue	7,816			—			—			(7,816		)	—
Gross revenues	7,992			278,287			11,674			(10,135		)	287,818
Less promotional allowances	—			(54,276		)	(1,921		)	—			(56,197		)
Net revenues	7,992			224,011			9,753			(10,135		)	231,621

Operating expenses:
Casino	—			37,938			1,855			—			39,793
Gaming taxes	—			59,183			3,268			—			62,451
Rooms, food, beverage, pari-mutuel and other	8,628			82,560			4,726			(2,319		)	93,595
Litigation accrual reversal	—			—			(7,351		)	—			(7,351		)
Management fee expense	—			7,608			208			(7,816		)	—
Depreciation and amortization	380			18,472			1,670			—			20,522
Total operating expenses	9,008			205,761			4,376			(10,135		)	209,010

Operating income (loss)	(1,016		)	18,250			5,377			—			22,611
Interest (expense) income, net	(11,546		)	(9,697		)	6,134			—			(15,109		)
Derivative income	168			—			—			—			168
Equity in income (loss) of subsidiaries	15,422			—			—			(15,422		)	—
Income (loss) from continuing operations before income taxes	3,028			8,553			11,511			(15,422		)	7,670
Income tax (provision) benefit	3,283			(5,107		)	465			—			(1,359		)
Income (loss) from continuining operations	6,311			3,446			11,976			(15,422		)	6,311
Income (loss) of discontinued operations	1,726			—			1,310			(1,310		)	1,726
Net income (loss)	$	8,037		$	3,446		$	13,286		$	(16,732	)	$	8,037

	For the Six Months Ended October 26, 2014
	Isle of Capri									Consolidating
	Casinos, Inc.						Non-			and			Isle of Capri
	(Parent			Guarantor			Guarantor			Eliminating			Casinos, Inc.
Statement of Operations	Obligor)			Subsidiaries			Subsidiaries			Entries			Consolidated
Revenues:
Casino	$	—		$	488,978		$	21,539		$	—		$	510,517
Rooms, food, beverage, pari-mutuel and other	42			83,195			6,636			(4,529		)	85,344
Management fee revenue	16,800			—			—			(16,800		)	—
Gross revenues	16,842			572,173			28,175			(21,329		)	595,861
Less promotional allowances	—			(109,351		)	(5,944		)	—			(115,295		)
Net revenues	16,842			462,822			22,231			(21,329		)	480,566

Operating expenses:
Casino	—			77,210			3,193			—			80,403
Gaming taxes	—			120,783			8,087			—			128,870
Rooms, food, beverage, pari-mutuel and other	17,426			168,014			10,196			(4,529		)	191,107
Management fee expense	—			16,200			600			(16,800		)	—
Depreciation and amortization	976			35,556			2,721			—			39,253
Total operating expenses	18,402			417,763			24,797			(21,329		)	439,633

Operating income (loss)	(1,560		)	45,059			(2,566		)	—			40,933
Interest expense, net	(22,154		)	(19,040		)	(1,070		)	—			(42,264		)
Equity in income (loss) of subsidiaries	11,578			—			—			(11,578		)	—
Income (loss) from continuing operations before income taxes	(12,136		)	26,019			(3,636		)	(11,578		)	(1,331		)
Income tax benefit (provision)	8,798			(13,501		)	2,696			—			(2,007		)
Income (loss) from continuining operations	(3,338		)	12,518			(940		)	(11,578		)	(3,338		)
Income (loss) of discontinued operations	—			—			—			—			—
Net income (loss)	$	(3,338	)	$	12,518		$	(940	)	$	(11,578	)	$	(3,338	)

	For the Six Months Ended October 27, 2013
	Isle of Capri									Consolidating
	Casinos, Inc.						Non-			and			Isle of Capri
	(Parent			Guarantor			Guarantor			Eliminating			Casinos, Inc.
Statement of Operations	Obligor)			Subsidiaries			Subsidiaries			Entries			Consolidated
Revenues:
Casino	$	—		$	486,418		$	10,924		$	—		$	497,342
Rooms, food, beverage, pari-mutuel and other	354			82,775			5,885			(4,667		)	84,347
Management fee revenue	16,055			—			—			(16,055		)	—
Gross revenues	16,409			569,193			16,809			(20,722		)	581,689
Less promotional allowances	—			(109,947		)	(2,108		)	—			(112,055		)
Net revenues	16,409			459,246			14,701			(20,722		)	469,634

Operating expenses:
Casino	—			77,540			2,521			—			80,061
Gaming taxes	—			120,644			4,485			—			125,129
Rooms, food, beverage, pari-mutuel and other	16,762			167,865			10,803			(4,667		)	190,763
Litigation accrual reversal	—			—			(7,351		)	—			(7,351		)
Management fee expense	—			15,847			208			(16,055		)	—
Depreciation and amortization	782			37,314			2,228			—			40,324
Total operating expenses	17,544			419,210			12,894			(20,722		)	428,926

Operating income (loss)	(1,135		)	40,036			1,807			—			40,708
Interest (expense) income, net	(23,308		)	(19,428		)	5,063			—			(37,673		)
Derivative income	398			—			—			—			398
Equity in income (loss) of subsidiaries	18,210			—			—			(18,210		)	—
Income (loss) from continuing operations before income taxes	(5,835		)	20,608			6,870			(18,210		)	3,433
Income tax (provision) benefit	6,498			(11,341		)	2,073			—			(2,770		)
Income (loss) from continuining operations	663			9,267			8,943			(18,210		)	663
Income (loss) of discontinued operations	2,512			—			1,777			(1,777		)	2,512
Net income (loss)	$	3,175		$	9,267		$	10,720		$	(19,987	)	$	3,175

Consolidating condensed statements of cash flows for the six months ended October 26, 2014 and October 27, 2013 are as follows:

	Six Months Ended October 26, 2014
	Isle of Capri									Consolidating
	Casinos, Inc.						Non-			and			Isle of Capri
	(Parent			Guarantor			Guarantor			Eliminating			Casinos, Inc.
Statement of Cash Flows	Obligor)			Subsidiaries			Subsidiaries			Entries			Consolidated

Net cash (used in) provided by operating activities	$	(17,140	)	$	60,199		$	5,854		$	—		$	48,913

Investing Activities:
Purchases of property and equipment, net of proceeds	(1,639		)	(16,664		)	(320		)	—			(18,623		)
Restricted cash and investments	—			—			688			—			688
Parent company investment in subsidiaries	49,663			—			—			(49,663		)	—
Net cash provided by (used in) investing activities	48,024			(16,664		)	368			(49,663		)	(17,935		)

Financing Activities:
Principal payments on debt	(33		)	—			(81		)	—			(114		)
Net repayments on line of credit	(31,900		)	—			—			—			(31,900		)
Net proceeds from (payments to) related parties	—			(43,393		)	(6,270		)	49,663			—
Net cash (used in) provided by financing activities	(31,933		)	(43,393		)	(6,351		)	49,663			(32,014		)

Net (decrease) increase in cash and cash equivalents	(1,049		)	142			(129		)	—			(1,036		)
Cash and cash equivalents at beginning of period	6,051			53,787			9,992			—			69,830
Cash and cash equivalents at end of the period	$	5,002		$	53,929		$	9,863		—			$	68,794

	Six Months Ended October 27, 2013
	Isle of Capri									Consolidating
	Casinos, Inc.						Non-			and			Isle of Capri
	(Parent			Guarantor			Guarantor			Eliminating			Casinos, Inc.
Statement of Cash Flows	Obligor)			Subsidiaries			Subsidiaries			Entries			Consolidated

Net cash (used in) provided by operating activities	$	(20,158	)	$	50,539		$	1,958		$	—		$	32,339

Investing Activities:
Purchases of property and equipment, net of proceeds	(169		)	(12,600		)	(16,801		)	—			(29,570		)
Payments towards gaming license	—			—			(7,500		)	—			(7,500		)
Restricted cash and investments	—			—			1,198			—			1,198
Parent company investment in subsidiaries	13,491			—			—			(13,491		)	—
Net cash provided by (used in) investing activities	13,322			(12,600		)	(23,103		)	(13,491		)	(35,872		)

Financing Activities:
Principal payments on debt	(30		)	—			(275		)	—			(305		)
Net borrowings on line of credit	6,000			—			—			—			6,000
Payments of deferred financing costs	(673		)	—			—			—			(673		)
Net proceeds from (payments to) related parties	—			(41,056		)	27,565			13,491			—
Net cash provided by (used in) financing activities	5,297			(41,056		)	27,290			13,491			5,022

Net (decrease) increase in cash and cash equivalents	(1,539		)	(3,117		)	6,145			—			1,489
Cash and cash equivalents at beginning of period	6,914			54,612			6,943			—			68,469
Cash and cash equivalents at end of the period	$	5,375		$	51,495		$	13,088		—			$	69,958

10. Commitments and Contingencies

Legal and Regulatory Proceedings— In October 2012, we opened our new casino in Cape Girardeau, Missouri. A subcontractor 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 refused to do so and asserted that a portion of the subcontractor’s claim resulted from additional work directly requested by us. In October 2013, the subcontractor filed suit against our wholly-owned subsidiary IOC-Cape Girardeau, LLC, the general contractor and two other defendants alleging various contract and equitable claims and is seeking damages of approximately $4,600. In August 2014, we filed a cross claim against the general contractor alleging breach of contract and various indemnity claims. The outcome of this matter is still in doubt and cannot be predicted with any degree of certainty. 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, the settlement of construction costs would be capitalized.

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 alleged that the defendants failed to make specified payments in connection with the gaming license bid process for Patras, Greece. In the Civil Court lawsuit, the Civil Court of First Instance ruled in our favor and dismissed the lawsuit in 2001. The lawsuits continued through the appeals process and in October 2013, the Supreme Administrative Court rejected both lawsuits in a final and irrevocable decision which disposed of this matter completely. As a result, during the three months ended October 27, 2013, we reversed a litigation accrual of $14,730, of which $7,351 was recorded as a reduction to operating expenses and $7,379 was recorded as a reduction to interest expense.

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.

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 was selected by the Pennsylvania Gaming Control Board. The agreement included a commitment for a loan that was secured by a stand by letter of credit of $25,000, which could only be drawn upon if the Tower JV was awarded the license. On November 18, 2014, the license was awarded to another applicant and we subsequently cancelled the letter of credit.

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

DISCLOSURE REGARDING FORWARD-LOOKING STATEMENTS

This report contains statements that we believe are, or may be considered to be, “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. All statements other than statements of historical fact included in this report regarding the prospects of our industry or our prospects, plans, financial position or business strategy, may constitute forward-looking statements. In addition, forward-looking statements generally can be identified by the use of forward-looking words such as “may,” “will,” “expect,” “intend,” “estimate,” “foresee,” “project,” “anticipate,” “believe,” “plans,” “forecasts,” “continue” or “could” or the negatives of these terms or variations of them or similar terms. Furthermore, such forward-looking statements may be included in various filings that we make with the SEC or press releases or oral statements made by or with the approval of one of our authorized executive officers. Although we believe that the expectations reflected in these forward-looking statements are reasonable, we cannot assure you that these expectations will prove to be correct and are not guarantees of future performance. These forward-looking statements are subject to certain known and unknown risks and uncertainties, as well as assumptions that could cause actual results to differ materially from those reflected in these forward-looking statements. Readers are cautioned not to place undue reliance on any forward-looking statements contained herein, which reflect management’s opinions only as of the date hereof. Except as required by law, we undertake no obligation to revise or publicly release the results of any revision to any forward-looking statements. You are advised, however, to consult any additional disclosures we make in our reports to the SEC. All subsequent written and oral forward-looking statements attributable to us or persons acting on our behalf are expressly qualified in their entirety by the cautionary statements contained in this report.

For a more complete description of the risks that may affect our business, see our Annual Report on Form 10-K for the year ended April 27, 2014.

Executive Overview

We are a developer, owner and operator of branded gaming facilities and related dining, lodging and entertainment facilities in regional markets in the United States. We have sought and established geographic diversity to limit the risks caused by weather, regional economic difficulties, gaming tax rates and regulations of local gaming authorities. We currently operate casinos in Colorado, Florida, Iowa, Louisiana, Mississippi, Missouri and Pennsylvania.

Our operating results for the periods presented have been affected, both positively and negatively, by current economic conditions and several other factors discussed in detail below. Our historical operating results may not be indicative of our future results of operations because of these factors and the changing competitive landscape in each of our markets, as well as by factors discussed elsewhere herein. This Management’s Discussion and Analysis of Financial Condition and Results of Operations should be read in conjunction with our Annual Report on Form 10-K for the year ended April 27, 2014 and by giving consideration to the following:

Items Impacting Income (Loss) from Continuing Operations— Significant items impacting our income (loss) from continuing operations during the periods ended October 26, 2014, and October 27, 2013 are as follows:

Colorado Referendum Costs —During the three and six months ended October 26, 2014, the Company incurred costs of $3.0 million and $4.1 million, respectively, in support of efforts to defeat the proposed November referendum that would have expanded gaming to racetracks in certain Colorado counties.

Property Tax Settlement — During the three months ended October 26, 2014, we reduced property tax expense by $1.2 million as a result of the settlement of our property tax appeal at our Waterloo, Iowa property for calendar years 2011 through 2014.

Corporate Restructuring - During the six months ended October 26, 2014, we eliminated executive positions in the corporate office to maximize efficiency and streamline reporting lines, resulting in severance expense of $2.3 million.

Casino Openings — We opened our Lady Luck Casino on the Nemacolin Woodlands Resort in Farmington, Pennsylvania on July 1, 2013.

Legal Recoveries — During October 2013, we received a favorable appellant ruling in our Greece gaming license legal proceedings. As a result of this favorable ruling, during the three months ended October 27, 2013, we reversed a litigation accrual of $14.7 million, of which $7.3 million was recorded as a reduction to operating expenses and $7.4 million was recorded as a reduction to interest expense.

Disruption — Our Black Hawk property’s attendance was negatively impacted by the severe weather and flooding in Colorado during September 2013. Our Boonville property was affected by power outages and was forced to close three times for a total of approximately 40 hours, of which two periods were over the key holidays of Father’s Day weekend and on the 4th of July. These disruptive events had a negative impact on our operating results for the prior year periods.

Income Tax Provision — Our income tax provision from continuing operations was impacted by changes in the deferred tax liability attributable to indefinite lived intangibles and expense for state jurisdictions where taxable income is generated. Our tax provision was $1.0 million and $1.4 million for the three months ended October 26, 2014 and October 27, 2013, respectively, and was $2.0 million and $2.8 million for the six months ended October 26, 2014 and October 27, 2013, respectively.

Results of Operations

Revenues and operating expenses for the three and six months ended October 26, 2014 and October 27, 2013 are as follows:

	Three Months Ended
	October 28,			October 27,						Percentage
(in thousands)	2014			2013			Variance			Variance
Revenues:
Casino	$	255,445		$	246,508		$	8,937		3.6	%
Rooms	8,474			8,713			(239		)	-2.7	%
Food, beverage, pari-mutuel and other	34,435			32,597			1,838			5.6	%
Gross revenues	298,354			287,818			10,536			3.7	%
Less promotional allowances	(59,437		)	(56,197		)	(3,240		)	5.8	%
Net revenues	238,917			231,621			7,296			3.1	%

Operating expenses:
Casino	40,275			39,793			482			1.2	%
Gaming taxes	64,403			62,451			1,952			3.1	%
Rooms	1,849			1,872			(23		)	-1.2	%
Food, beverage, pari-mutuel and other	10,674			10,315			359			3.5	%
Marine and facilities	14,488			14,382			106			0.7	%
Marketing and administrative	59,858			59,640			218			0.4	%
Corporate and development	6,735			7,386			(651		)	-8.8	%
Litigation accrual reversal	—			(7,351		)	7,351			N/M
Depreciation and amortization	19,610			20,522			(912		)	-4.4	%
Total operating expenses	$	217,892		$	209,010		8,882			4.2	%

	Six Months Ended
	October 26,			October 27,						Percentage
(in thousands)	2014			2013			Variance			Variance
Revenues:
Casino	$	510,517		$	497,342		$	13,175		2.6	%
Rooms	16,786			17,628			(842		)	-4.8	%
Food, beverage, pari-mutuel and other	68,558			66,719			1,839			2.8	%
Gross revenues	595,861			581,689			14,172			2.4	%
Less promotional allowances	(115,295		)	(112,055		)	(3,240		)	2.9	%
Net revenues	480,566			469,634			10,932			2.3	%

Operating expenses:
Casino	80,403			80,061			342			0.4	%
Gaming taxes	128,870			125,129			3,741			3.0	%
Rooms	3,752			3,773			(21		)	-0.6	%
Food, beverage, pari-mutuel and other	22,046			21,117			929			4.4	%
Marine and facilities	29,207			29,001			206			0.7	%
Marketing and administrative	120,219			118,890			1,329			1.1	%
Corporate and development	15,883			14,084			1,799			12.8	%
Litigation accrual reversal	—			(7,351		)	7,351			N/M
Preopening expense	—			3,898			(3,898		)	N/M
Depreciation and amortization	39,253			40,324			(1,071		)	-2.7	%
Total operating expenses	$	439,633		$	428,926		10,707			2.5	%

Casino — Casino revenues increased $8.9 million, or 3.6%, for the three months ended October 26, 2014, as compared to the same period in fiscal 2014. Casino revenues increased $3.4 million at our Black Hawk properties as they were impacted in the prior year by the weather and flooding in Colorado. Nemacolin and Cape Girardeau’s casino revenues increased by $2.9 million and $1.5 million, respectively, as both properties continue

to mature. Lula’s casino revenues also increased $1.5 million due to the implementation of more targeted marketing programs.

Casino operating expenses increased $0.5 million, or 1.2%, for the three months ended October 26, 2014, as compared to the same period in the prior fiscal year reflecting the increased casino revenues offset by savings from cost reduction initiatives.

Casino revenues increased $13.2 million, or 2.6%, for the six months ended October 26, 2014, as compared to the same period in fiscal 2014. Casino revenues at our Nemacolin property, which opened July 1, 2013, were $21.5 million and $10.9 million for the six months ended October 26, 2014 and October 27, 2013, respectively. Excluding casino revenues at our Nemacolin property, casino revenues increased $2.6 million, or 0.5%.

Casino operating expenses increased $0.3 million, or 0.4%, for the six months ended October 26, 2014, as compared to the same period in the prior fiscal year. Excluding casino operating expenses of $3.2 million and $2.5 million at our Nemacolin property for the six months ended October 26, 2014 and October 27, 2013, respectively, casino expenses decreased $0.3 million or 0.4% reflecting savings from cost reduction initiatives.

Gaming Taxes — State and local gaming taxes increased $2.0 million, or 3.1% for the three months ended October 26, 2014, as compared to the same period in the prior fiscal year, which is commensurate with casino revenues.

State and local gaming taxes increased $3.7 million, or 3.0%, for the six months ended October 26, 2014, as compared to the same period in the prior fiscal year. Excluding gaming taxes at our Nemacolin property of $8.1 million and $4.5 million for the six months ended October 26, 2014 and October 27, 2013, respectively, gaming taxes were flat for the six month period, which is commensurate with casino revenues when excluding Nemacolin revenues.

Rooms — Rooms revenue decreased $0.2 million, or 2.7%, and $0.8 million, or 4.8%, for the three and six months ended October 26, 2014, respectively, as compared to the same period in the prior fiscal year due to lower occupancy rates.

Promotional Allowances — Promotional allowances increased $3.2 million, or 5.8%, for the three months ended October 26, 2014. The Nemacolin, Lula and Black Hawk properties’ promotional allowances increased $3.6 million contributing to their increases in casino revenues.

Promotional allowances increased $3.2 million, or 2.9%, for the six months ended October 26, 2014. Excluding the promotional allowances at our Nemacolin property, promotional allowances decreased $0.6 million, or 0.5%. The $2.9 million increase at our Lula and Black Hawk properties were offset by decreases in our overall promotional allowances reflecting changes in our marketing programs.

Marketing and Administrative — Marketing and administrative expenses increased $0.2 million, or 0.4%, for the three months ended October 26, 2014 as compared to the same period in the prior fiscal year. Excluding $3.0 million of costs incurred to defeat the Colorado referendum and the $1.2 million credit related to the property tax settlement in Waterloo, marketing and administrative expenses decreased $1.6 million, or 2.7%, reflecting changes in our marketing programs as well as savings from cost reduction initiatives.

Marketing and administrative expenses increased $1.3 million, or 1.1%, for the six months ended October 26, 2014 as compared to the same period in the prior fiscal year. Excluding marketing and administrative expenses at our Nemacolin property for both periods, the $4.1 million of costs incurred to defeat the Colorado referendum and the $1.2 million credit related to the property tax settlement at Waterloo, marketing and administrative expenses decreased $3.5 million, or 3.1%, reflecting changes in our marketing programs as well as savings from cost reduction initiatives.

Corporate and Development — During the three months ended October 26, 2014, our corporate and development expenses were $6.7 million compared to $7.4 million for the three months ended October 27, 2013. The decrease reflects lower stock compensation expense of $0.3 million and savings achieved through cost reduction initiatives.

During the six months ended October 26, 2014, our corporate and development expenses were $15.8 million compared to $14.1 million for the six months ended October 27, 2013. The six months ended October 26, 2014 includes severance of $2.3 million resulting from the corporate restructuring. The six months ended October 27, 2013 includes a gain of $1.0 million from the sale of our corporate aircraft. The decrease reflects lower stock compensation expense of $0.5 million and savings achieved through cost reduction initiatives.

Depreciation and Amortization — Depreciation and amortization expense for the three and six months ended October 26, 2014 decreased $0.9 million and $1.1 million, respectively, primarily due to certain assets becoming fully depreciated.

Other Income (Expense) and Income Taxes

Interest expense, interest income, derivative income and income tax (provision) benefit for the three and six months ended October 26, 2014 and October 27, 2013 are as follows:

	Three Months Ended
	October 26,			October 27,						Percentage
(in thousands)	2014			2013			Variance			Variance

Interest expense	$	(21,114	)	$	(15,193	)	$	(5,921	)	39.0	%
Interest income	92			84			8			9.5	%
Derivative income	—			168			(168		)	-100.0	%
Income tax provision	(1,024		)	(1,359		)	335			-24.7	%

	Six Months Ended
	October 26,			October 27,						Percentage
(in thousands)	2014			2013			Variance			Variance

Interest expense	$	(42,443	)	$	(37,847	)	$	(4,596	)	12.1	%
Interest income	179			174			5			2.9	%
Derivative income	—			398			(398		)	-100.0	%
Income tax provision	(2,007		)	(2,770		)	763			-27.5	%

Interest Expense — Interest expense increased by $5.9 million and $4.6 million for the three and six months ended October 26, 2014, respectively, as compared to the same periods in the prior fiscal year. The three and six months of the prior year includes the reversal of $7.4 million in interest expense resulting from the favorable Greek litigation ruling. Excluding this reversal, interest expense decreased $1.5 million and $2.8 million in the three and six months of the current year on lower credit facility borrowings.

Liquidity and Capital Resources

Cash Flows from Operating Activities - During the six months ended October 26, 2014, we generated $48.9 million in cash flows from operating activities compared to generating $32.3 million during the six months ended October 27, 2013. The year over year increase in cash flows from operating activities is primarily the result of working capital changes associated with accounts payable and construction activities in the prior year.

Cash Flows used in Investing Activities - During the six months ended October 26, 2014, we used $17.9 million for investing activities compared to using $35.9 million during the six months ended October 27, 2013. Significant investing activities for the six months ended October 26, 2014 included capital expenditures of $18.7 million. Significant investing activities for the six months ended October 27, 2013 included capital expenditures of $30.7 million, of which $17.7 million related to Nemacolin, as well as an additional $7.5 million toward a Nemacolin table gaming license. These outflows were offset by $1.2 million of cash inflows from the change in restricted cash and investments and $1.2 million in proceeds from the sale of property and equipment.

Cash Flows used in Financing Activities — During the six months ended October 26, 2014, our net cash flows used in financing activities were primarily to repay $31.9 million of borrowings under our Credit Facility. During the six months ended October 27, 2013, our net cash flows provided from financing activities were primarily from $6.0 million in borrowings under our Credit Facility.

Availability of Cash and Additional Capital - At October 26, 2014, we had cash and cash equivalents of $68.8 million and marketable securities of $27.1 million. As of October 26, 2014, we had $32.8 million in outstanding revolving credit borrowings under our Credit Facility and our net line of credit availability was approximately $178.0 million, as limited by our maximum consolidated total leverage ratio. On October 29, 2014, we amended our Credit Facility to revise the definition of consolidated EBITDA to exclude the costs associated with the Colorado Referendum and certain severance expenses related to the corporate restructuring. The amendment will be effective beginning in the third quarter fiscal 2015.

Capital Expenditures and Development Activities— Historically, as part of our business development activities, we have entered into agreements which have resulted in the acquisition or development of businesses or assets. These business development efforts and related agreements typically require the expenditure of cash, which may be significant. The amount and timing of our cash expenditures relating to development activities may vary based upon our evaluation of current and future development opportunities, our financial condition and the condition of the financing markets. Our development activities are subject to a variety of factors including but not limited to: obtaining permits, licenses and approvals from appropriate regulatory and other agencies, legislative changes and, in certain circumstances, negotiating acceptable leases.

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 was selected by the Pennsylvania Gaming Control Board. The agreement included a commitment for a loan that was secured by a stand by letter of credit of $25 million, which could only be drawn upon if the Tower JV was awarded the license. On November 18, 2014, the license was awarded to another applicant and we subsequently cancelled the letter of credit.

Historically, we have made significant investments in property and equipment and expect that our operations will continue to demand ongoing investments to keep our properties competitive. The timing, completion and amount of additional capital projects will be subject to improvement of economic and local market conditions, cash flows from our continuing operations and borrowing availability under our Credit Facility.

Typically, we have funded our daily operations through net cash provided by operating activities and our significant capital expenditures through operating cash flow and debt financing. While we believe that cash on hand, cash flow from operations, and available borrowings under our Credit Facility will be sufficient to support our working capital needs, planned capital expenditures and debt service requirements for the foreseeable future, there is no assurance that these sources will in fact provide adequate funding for our planned and necessary expenditures or that the level of our capital investments will be sufficient to allow us to remain competitive in our existing markets.

We are highly leveraged and may be unable to obtain additional debt or equity financing on acceptable terms if our current sources of liquidity are not sufficient or if we fail to stay in compliance with the covenants of our Credit Facility. We will continue to evaluate our planned capital expenditures at each of our existing locations in light of the operating performance of the facilities at such locations.

Critical Accounting Estimates

Our consolidated financial statements are prepared in accordance with U.S. generally accepted accounting principles that require our management to make estimates and assumptions that affect reported amounts and related disclosures. Management identifies critical accounting estimates as:

· those that require the use of assumptions about matters that are inherently and highly uncertain at the time the estimates are made;

· those estimates where, had we chosen different estimates or assumptions, the resulting differences would have had a material impact on our financial condition, changes in financial condition or results of operations; and

· those estimates that, if they were to change from period to period, likely would result in a material impact on our financial condition, changes in financial condition or results of operations.

For a discussion of our significant accounting policies and estimates, please refer to Management’s Discussion and Analysis of Financial Condition and Results of Operations and Notes to Consolidated Financial Statements presented in our 2014 Annual Report on Form 10-K. There were no newly identified significant accounting estimates in the second quarter of fiscal year 2015, nor were there any material changes to the critical accounting policies and estimates set forth in our 2014 Annual Report.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Market risk is the risk of loss arising from adverse changes in market rates and prices, including interest rates, commodity prices and equity prices. Our primary exposure to market risk is interest rate risk associated with our Credit Facility.

ITEM 4. CONTROLS AND PROCEDURES

EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES

Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of our disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934) as of October 26, 2014. Based on this evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that, as of October 26, 2014, our disclosure controls and procedures were effective in recording, processing, summarizing and reporting, on a timely basis, information required to be disclosed by us in the reports we file or submit under the Exchange Act of 1934 and such information is accumulated and communicated to management as appropriate to allow timely decisions regarding required disclosure.

CHANGES IN INTERNAL CONTROL OVER FINANCIAL REPORTING

There have been no changes in our internal controls over financial reporting during the fiscal quarter ended October 26, 2014, that have materially affected, or are reasonably likely to materially affect, our internal controls over financial reporting.

PART II—OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

A reference is made to the information contained in Footnote 10 of our unaudited condensed consolidated financial statements included herein, which is incorporated herein by reference.

ITEM 1A. RISK FACTORS

There have been no material changes in our risk factors from those disclosed in our Annual Report on Form 10-K for the year ended April 27, 2014, except for the following:

We face significant competition from other gaming operations, including Native American gaming facilities, and from legalization or expansion of gaming by states in or near where we own properties, that could have a material adverse effect on our future operations.

The gaming industry is intensely competitive, and we face a high degree of competition in the markets in which we operate. We have numerous competitors, including land-based casinos, dockside casinos, riverboat casinos, casinos located on racing, pari-mutuel operations or Native American-owned lands and video lottery and poker machines not located in casinos. We also compete with other forms of legalized gaming and entertainment such as online computer gambling, bingo, pull tab games, card parlors, sports books, “cruise-to-nowhere” operations, pari-mutuel or telephonic betting on horse racing and dog racing, state-sponsored lotteries, jai-alai, and, in the future, may compete with gaming at other venues. In addition, we compete more generally with other forms of entertainment for the discretionary spending of our customers. We also face the risk that existing competitors will expand their operations and the risk that Native American gaming will continue to grow. For example, an existing competitor in Davenport, Iowa, has announced plans to move its riverboat casino to a new land-based gaming facility that will compete with our Bettendorf, Iowa property, and a new casino is under construction in Lake Charles, Louisiana that will compete with our property there. Some of our competitors may have better name recognition, marketing and financial resources than we do; competitors with more financial resources may therefore be able to improve the quality of, or expand, their gaming facilities in a way that we may be unable to match.

In addition, we also face the risk of further legalization and/or expansion of gaming. Certain states have recently legalized, and other states are currently considering legalizing gaming. Our existing casinos attract a significant number of their customers from Houston, Texas; South Florida; Little Rock, Arkansas; and Denver, Colorado. Our continued success depends upon drawing customers from each of these geographic markets. In the past, legislation to legalize or expand gaming has been introduced that would impact some of these markets. In July 2014, the Secretary of State of Colorado declared that proponents of an initiative to expand gaming to horse tracks in Colorado had obtained sufficient signatures to place the initiative on the ballot in November 2014. If passed, the initiative would expand gaming at Arapahoe Park horse racetrack and no more than one horse racetrack in each of Pueblo and Mesa counties where racing and wagering have taken place for at least five consecutive years. On November 4, 2014, the initiative failed. Had the initiative passed, our business would have been adversely affected, particularly our Black Hawk, Colorado property.

We expect similar proposals to legalize or expand gaming will be made in the future in various states, and it is uncertain whether such proposals will be successful. Further, because the economic recession has reduced the revenues of state governments from traditional tax sources, voters and state legislatures may be more sympathetic to proposals authorizing or expanding gaming in those jurisdictions.

In addition, there is no limit on the number of gaming licenses that may be granted in several of the jurisdictions in which we operate. As a result, new gaming licenses could be awarded in these jurisdictions, which could allow new gaming operators to enter our markets that could have an adverse effect on our operating results.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

We have purchased our common stock under stock repurchase programs. These programs allow for the repurchase of up to 6,000,000 shares. To date, we have purchased 4,895,792 shares of our common stock under these programs. These programs have no approved dollar amount, nor expiration dates. No purchases have been made under the program since September 2007.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4. MINE SAFETY DISCLOSURE

Not Applicable.

ITEM 5. OTHER INFORMATION

None.

ITEM 6. EXHIBITS

See the Index to Exhibits following the signature page hereto for a list of the exhibits filed pursuant to Item 601 of Regulation S-K.

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	ISLE OF CAPRI CASINOS, INC.

Dated: December 4, 2014	/s/ Eric L. Hausler
	Eric L. Hausler
	Chief Financial Officer
	(Principal Financial Officer and Authorized Officer)

EXHIBIT NUMBER		DESCRIPTION

10.1		Sixth Amendment to Credit Agreement, dated as of October 29, 2014, among Isle of Capri Casinos, Inc., as borrower, certain subsidiaries of Isle of Capri Casinos, Inc., the financial institutions listed therein, as Lenders, and Wells Fargo Bank, National Association, as one of the Requisite Lenders, Issuing Bank, Swing Line Lender and as the administrative agent.

31.1		Certification of Chief Executive Officer pursuant to Rule 13a—14(a) under the Securities Exchange Act of 1934.

31.2		Certification of Chief Financial Officer pursuant to Rule 13a—14(a) under the Securities Exchange Act of 1934.

32.1		Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350.

32.2		Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350.

101		The following financial statements and notes from the Isle of Capri Casinos, Inc. Quarterly Report on Form 10-Q for the quarter ended October 26, 2014, filed on December 4, 2014 formatted in XBRL: (i) Consolidated Balance Sheets; (ii) Consolidated Statements of Operations; (iii) Consolidated Statement of Comprehensive Income (Loss); (iv) Consolidated Statements of Stockholders’ Equity; (v) Consolidated Statements of Cash Flows; and (vi) Notes to Consolidated Financial Statements.

Exhibit 10.1

SIXTH AMENDMENT TO CREDIT AGREEMENT

THIS SIXTH AMENDMENT TO CREDIT AGREEMENT (this “Amendment”), dated as of October 29, 2014 and effective as of the Sixth Amendment Effective Date (as hereinafter defined), is made and entered into by and among ISLE OF CAPRI CASINOS, INC., a Delaware corporation (“Borrower”), the Subsidiary Guarantors (together with Borrower, the “Loan Parties”), the Requisite Lenders party hereto (or that have separately consented to this Amendment), and WELLS FARGO BANK, NATIONAL ASSOCIATION (“Administrative Agent”), as one of the Requisite Lenders, Issuing Bank, Swing Line Lender and as the Administrative Agent.

RECITALS

A. Borrower is a party to that certain Credit Agreement dated as of July 26, 2007, as amended by the First Amendment to Credit Agreement, dated as of February 17, 2010, by the Second Amendment to Credit Agreement and Amendments to Loan Documents, dated as of March 25, 2011, by the Third Amendment to Credit Agreement, dated as of November 21, 2012, by the Fourth Amendment to Credit Agreement and Amendments to Loan Documents, dated as of April 19, 2013, and by the Fifth Amendment to Credit Agreement, dated as of July 2, 2013 (as amended and in effect immediately before giving affect to this Amendment, the “Existing Credit Agreement,” and as amended by this Amendment and as further amended, amended and restated, supplemented or otherwise modified from time to time, the “Credit Agreement”) by and among Borrower, Administrative Agent, and the lenders party thereto from time to time.

B. Borrower has requested that the Requisite Lenders agree to amend the Existing Credit Agreement in the manner set forth in Section 2 herein, subject to, and in accordance with, the terms and conditions set forth herein.

C. The Requisite Lenders are willing to agree to enter into this Amendment, subject to the conditions and on the terms set forth below.

AGREEMENT

NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Borrower, Requisite Lenders, Administrative Agent and the Loan Parties agree as follows:

1. DEFINITIONS. Except as otherwise expressly provided herein, capitalized terms used in this Amendment shall have the meanings given in the Existing Credit Agreement, and the rules of construction set forth in the Credit Agreement shall apply to this Amendment.

2. AMENDMENT TO CREDIT AGREEMENT. With effect as of the Sixth Amendment Effective Date, the following definition in Section 1.1 of the Existing Credit Agreement shall be amended and restated in its entirety as follows:

“Consolidated EBITDA” means, for any period, (a) the sum, without duplication, of the amounts for such period of Consolidated Net Income, plus the following items (i) through (xii) to the extent deducted in determining such Consolidated Net Income for such period, (i)

Consolidated Interest Expense, (ii) provisions for Taxes based on income, (iii) total depreciation expense, (iv) total amortization expense, (v) pre-opening expense, (vi) any extraordinary expenses or losses, (vii) other non-recurring non-cash items (including, to the extent deducted in determining Consolidated Net Income, non-cash charges related to ineffective portions of Hedging Agreements), (viii) the non-cash expense associated with the granting of stock based compensation, (ix) the Transaction Costs, (x) any prepayment premiums associated with (I) the repayment of the 8.875% Subordinated Notes, the 7.75% Unsecured Notes or the 5.875% Unsecured Notes (to the extent of any prepayments permitted hereunder but except to the extent such premiums are attributable to an increase in the amount thereof resulting from any amendments of the 8.875% Subordinated Note Indenture, the 7.75% Unsecured Note Indenture or the 5.875% Unsecured Note Indenture after the Fourth Amendment Effective Date) or (II) the repayment of the Term Loans issued in accordance with Section 2.1A(i) of the Existing Credit Agreement, (xi) employee severance expenses for the 2015 Fiscal Year not to exceed $2,300,000 and (xii) expenses associated with the proposed Colorado Amendment 68 not to exceed $4,100,000, minus (b) to the extent added in determining such Consolidated Net Income for such period, the sum of the following for such period (without duplication): (x) the aggregate amount of extraordinary or nonrecurring income or gains and (y) non-cash income or gains, all of the foregoing as determined on a consolidated basis for Borrower and its Restricted Subsidiaries in conformity with GAAP; provided, that for purposes of calculating Consolidated EBITDA for Borrower and its Restricted Subsidiaries for any period in determining the Consolidated Total Leverage Ratio and Consolidated Senior Secured Leverage Ratio (x) the Consolidated EBITDA of any Person or line of business acquired by Borrower or any of its Restricted Subsidiaries pursuant to a Permitted Acquisition during such period shall be included on a pro forma basis for such period (assuming the consummation of such acquisition and the incurrence or assumption of any Indebtedness in connection therewith occurred as of the first day of such period), (y) the Consolidated EBITDA of any Person or line of business sold or otherwise disposed of by Borrower or any of its Restricted Subsidiaries during such period shall be excluded for such period (assuming the consummation of such sale or other disposition and the repayment of any Indebtedness in connection therewith occurred as of the first day of such period) and (z) for any Restricted Subsidiary which is a new Restricted Subsidiary without any historical operations (such as a “greenfield” project), until the date which is four full consecutive Fiscal Quarters after the first date such Restricted Subsidiary began its operations (which for any Gaming Facility shall mean the date it was first open to the public) (the “Initial Operation Date”), the Consolidated EBITDA of such Restricted Subsidiary for each relevant period shall be calculated as follows: (A) if the relevant date of calculation is less than two full fiscal accounting periods (each period consisting of either 4 or 5 weeks) after such Restricted Subsidiary’s Initial Operation Date, the Consolidated EBITDA of such Restricted Subsidiary shall be deemed to be such Restricted Subsidiary’s actual Consolidated EBITDA for the period beginning on such Initial Operation Date and ending on such date of calculation; and (B) if the relevant date of calculation is no less than two full fiscal accounting periods (each period consisting of either 4 or 5 weeks) after such Restricted Subsidiary’s Initial Operation Date, the Consolidated EBITDA of such Restricted Subsidiary shall be deemed to be equal to the product of (1) such Restricted Subsidiary’s Consolidated EBITDA for the period beginning on such Initial Operation Date and ending on such date of calculation multiplied by (2) a fraction, the numerator of which is the number of days in the Fiscal Year that includes such date of calculation and the denominator of which is the number of days in such period; provided that (I) for the avoidance of doubt, the

provisions of this clause (z) shall not apply from and after the date which is four full consecutive Fiscal Quarters after such Restricted Subsidiary’s Initial Operation Date and (II) the provisions of this clause (z) shall not apply to any calculation for a period shorter than four full consecutive Fiscal Quarters.

3. REPRESENTATIONS AND WARRANTIES. To induce the Requisite Lenders to agree to this Amendment, Borrower and each of the other Loan Parties represents to the Lenders and the Administrative Agent that as of the date hereof and as of the Sixth Amendment Effective Date:

3.1 Borrower and each of the other Loan Parties has all power and authority to enter into, execute and deliver this Amendment and to carry out the transactions contemplated by, and to perform its obligations under or in respect of, this Amendment;

3.2 the execution and delivery of this Amendment and the performance of the obligations of Borrower and each of the other Loan Parties under or in respect of this Amendment have been duly authorized by all necessary action on the part of Borrower and each of the other Loan Parties;

3.3 the execution and delivery of this Amendment and the performance of the obligations of Borrower and each of the other Loan Parties under or in respect of this Amendment do not and will not conflict with or violate (i) any provision of the articles or certificate of incorporation or bylaws (or similar constituent documents) of Borrower or any other Loan Party, (ii) any provision of any law or any governmental rule or regulation (other than any violation of any such law, governmental rule or regulation, or Gaming Law, in each case which could not reasonably be expected to result in a Material Adverse Effect or cause any liability to any Lender), (iii) any order, judgment or decree of any Governmental Authority or arbitrator binding on Borrower or any other Loan Party (other than any violation of any such order, judgment or decree, in each case which could not reasonably be expected to result in a Material Adverse Effect or cause any liability to any Lender), or (iv) any material indenture, material agreement or material instrument to which Borrower or any other Loan Party is a party or by which Borrower or any other Loan Party, or any property of any of them, is bound (other than any such conflict, breach or default which could not reasonably be expected to result in a Material Adverse Effect), and do not and will not require any consent or approval of any Person that has not been obtained;

3.4 Borrower and each of the other Loan Parties has duly executed and delivered this Amendment, and this Amendment constitutes a legal, valid and binding obligation of Borrower and each of the other Loan Parties, enforceable against Borrower and each of the other Loan Parties in accordance with its terms, except as enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the enforcement of creditors’ rights generally and by general equitable principles (whether enforcement is sought by proceedings in equity or at law);

3.5 after giving effect to this Amendment, no event has occurred and is continuing or will result from the execution and delivery of this Amendment or the performance by Borrower

and the other Loan Parties of their obligations hereunder that would constitute a Potential Event of Default or an Event of Default; and

3.6 each of the representations and warranties made by Borrower and the other Loan Parties in or pursuant to the Loan Documents, as amended hereby, shall be true and correct in all material respects on and as of the Sixth Amendment Effective Date as if made on and as of such date, except for representations and warranties expressly stated to relate to a specific earlier date, or which by their context relate to an earlier date, in which case such representations and warranties shall be true and correct in all material respects as of such earlier date.

4. EFFECTIVENESS OF THIS AMENDMENT. This Amendment shall be effective only if and when:

4.1 the Administrative Agent shall have received on behalf of the Lenders, this Amendment, duly executed and delivered by the Borrower, the Administrative Agent, the Requisite Lenders (or the duly executed and delivered written consent thereof), and the Subsidiary Guarantors;

4.2 Borrower and each of the other Loan Parties shall have received all material governmental and third-party approvals and consents (including from Gaming Authorities) required in connection with this Amendment and the transactions contemplated hereby (if any), each of which shall be in form and substance satisfactory to the Administrative Agent and in full force and effect, and with respect to which all applicable waiting periods related thereto shall have expired without any action being taken by any applicable authority;

4.3 each of the representations and warranties contained in Section 3 of this Amendment shall be true and correct in all material respects; and

4.4 Borrower shall have paid to the Administrative Agent all reasonable expenses incurred by the Administrative Agent in connection with this Amendment, including, to the extent invoiced on or before the Sixth Amendment Effective Date, reimbursement or other payment of all reasonable out-of-pocket expenses required to be reimbursed or paid by Borrower.

This Amendment shall be deemed to be effective on the date (the “Sixth Amendment Effective Date”) on which each of the foregoing conditions are satisfied.

5. ACKNOWLEDGMENTS. By executing this Amendment, each of the Loan Parties (a) consents to this Amendment and the performance by Borrower and each of the other Loan Parties of their obligations hereunder, (b) acknowledges that notwithstanding the execution and delivery of this Amendment, and except as expressly modified hereby, the obligations of each of the Loan Parties under the Subsidiary Guaranty, the Security Agreement, the Mortgages, the Ship Mortgages and each of the other Loan Documents to which such Loan Party is a party, are not impaired or affected and each of the Subsidiary Guaranty, the Security Agreement, the Mortgages, the Ship Mortgages and each such other Loan Document continues in full force and effect, (c) affirms and ratifies, to the extent it is a party thereto, the Subsidiary Guaranty, the Security Agreement, the Mortgages, the Ship Mortgages and each other Loan Document with respect to all of the Obligations as expanded or amended hereby and (d) reaffirms the security

interests, Liens, mortgages and conveyances it has granted to or made in favor of or for the benefit of Administrative Agent under the Collateral Documents and confirms that such security interests, Liens, mortgages and conveyances continue to secure the obligations recited to be secured by the applicable Collateral Documents, after giving effect to this Amendment.

6. MISCELLANEOUS. THIS AMENDMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF NEW YORK (INCLUDING SECTION 5- 1401 OF THE GENERAL OBLIGATIONS LAW OF THE STATE OF NEW YORK), WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES. This Amendment may be executed in one or more duplicate counterparts and, subject to the other terms and conditions of this Amendment, when signed by all of the parties listed below shall constitute a single binding agreement. Delivery of an executed signature page to this Amendment by facsimile transmission or electronic mail shall be as effective as delivery of a manually signed counterpart of this Amendment. Except as amended hereby, all of the provisions of the Credit Agreement and the other Loan Documents shall remain in full force and effect except that each reference to the “Credit Agreement”, or words of like import in any Loan Document, shall mean and be a reference to the Credit Agreement as amended hereby. This Amendment shall be deemed a “Loan Document” as defined in the Credit Agreement. Sections 10.17 and 10.18 of the Credit Agreement shall apply to this Amendment and all past and future amendments to the Credit Agreement and other Loan Documents as if expressly set forth herein or therein.

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IN WITNESS WHEREOF, the parties have caused this Amendment to be duly executed by their officers or partners thereunto duly authorized as of the day and year first above written.

ISLE OF CAPRI CASINOS, INC,
a Delaware corporation			IOC- CARUTHERSVILLE, LLC

By:	/s/ Eric L. Hausler		IOC - BOONVILLE, INC.
Name:	Eric L. Hausler
Title:	CFO		IOC - KANSAS CITY, INC.
			IOC - LULA, INC.
			IOC - NATCHEZ, INC.
			IOC BLACK HAWK COUNTY, INC.
			IOC HOLDINGS, L.L.C.
			ISLE OF CAPRI BETTENDORF, L.C.
			ISLE OF CAPRI MARQUETTE, INC.
			PPI, INC.
			ST. CHARLES GAMING COMPANY, L.L.C.
			BLACK HAWK HOLDINGS, L.L.C.
			CCSC/BLACKHAWK, INC.
			IC HOLDINGS COLORADO, INC.
			IOC-BLACK HAWK DISTRIBUTION COMPANY, LLC
			ISLE OF CAPRI BLACK HAWK, L.L.C.
			IOC-VICKSBURG, INC.
			IOC-VICKSBURG, L.L.C.
			IOC-CAPE GIRARDEAU LLC


			By:		/s/ Eric L. Hausler
			Name:		Eric L. Hausler
			Title:		CFO


		RAINBOW CASINO-VICKSBURG PARTNERSHIP, L.P.
		RAINBOW CASINO-VICKSBURG PARTNERSHIP, L.P.


		By: IOC-VICKSBURG, INC., its General Partner

		By:		/s/ Eric L. Hausler
		Name: Eric L. Hausler
		Title: CFO