Isle of Capri Casinos 10-Q 2011 Q3 Quarterly report

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 January 23, 2011

OR

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 o  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  February 25, 2011, the Company had a total of 38,219,211 shares of Common Stock outstanding (which excludes 3,843,358 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)

	January 23,			April 25,
	2011			2010
	(unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	69,966		$	68,069
Marketable securities	21,767			22,926
Accounts receivable, net	7,877			8,879
Income taxes receivable	4,490			8,109
Deferred income taxes	16,826			16,826
Prepaid expenses and other assets	27,305			25,095
Total current assets	148,231			149,904
Property and equipment, net	1,121,156			1,098,942
Other assets:
Goodwill	345,303			313,136
Other intangible assets, net	83,419			79,675
Deferred financing costs, net	7,891			10,354
Restricted cash	12,763			2,774
Prepaid deposits and other	16,468			20,055
Total assets	$	1,735,231		$	1,674,840
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Current maturities of long-term debt	$	8,769		$	8,754
Accounts payable	27,746			24,072
Accrued liabilities:
Interest	15,086			14,779
Payroll and related	41,089			45,863
Property and other taxes	18,825			20,253
Other	51,650			43,434
Total current liabilities	163,165			157,155
Long-term debt, less current maturities	1,243,513			1,192,135
Deferred income taxes	28,841			29,193
Other accrued liabilities	37,515			38,972
Other long-term liabilities	17,078			17,166
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: 36,762,569 shares at January 23, 2011 and 36,771,730 shares at April 25, 2010	368			367
Class B common stock, $.01 par value; 3,000,000 shares authorized; none issued	—			—
Additional paid-in capital	201,675			201,464
Retained earnings	92,224			98,555
Accumulated other comprehensive (loss) income	(2,857		)	(8,060		)
	291,410			292,326
Treasury stock, 3,843,358 shares at January 23, 2011 and 4,326,242 shares at April 25, 2010	(46,291		)	(52,107		)
Total stockholders’ equity	245,119			240,219
Total liabilities and stockholders’ equity	$	1,735,231		$	1,674,840

See notes to the condensed consolidated financial statements.

2

ISLE OF CAPRI CASINOS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except share and per share amounts)

(Unaudited)

	Three Months Ended						Nine Months Ended
	January 23,			January 24,			January 23,			January 24,
	2011			2010			2011			2010
Revenues:
Casino	$	240,205		$	229,521		$	754,007		$	742,957
Rooms	8,400			8,424			29,924			32,488
Pari-mutuel, food, beverage and other	31,082			31,240			99,170			98,821
Gross revenues	279,687			269,185			883,101			874,266
Less promotional allowances	(47,680		)	(42,113		)	(152,522		)	(143,225		)
Net revenues	232,007			227,072			730,579			731,041
Operating expenses:
Casino	38,529			36,435			118,117			115,351
Gaming taxes	58,331			60,529			182,951			191,056
Rooms	2,002			2,237			7,496			8,118
Pari-mutuel, food, beverage and other	10,557			10,553			32,848			32,638
Marine and facilities	14,602			14,392			44,558			46,148
Marketing and administrative	61,152			62,326			188,580			190,581
Corporate and development	8,719			11,127			32,180			33,412
Expense recoveries and other charges, net	—			—			—			(6,762		)
Depreciation and amortization	21,822			26,797			66,934			84,062
Total operating expenses	215,714			224,396			673,664			694,604
Operating income	16,293			2,676			56,915			36,437
Interest expense	(21,506		)	(17,452		)	(68,711		)	(53,682		)
Interest income	431			455			1,372			1,218
Derivative income (expense)	974			—			(1,256		)	—
Income (loss) from continuing operations before income taxes	(3,808		)	(14,321		)	(11,680		)	(16,027		)
Income tax benefit	1,151			2,922			4,555			8,056
Income (loss) from continuing operations	(2,657		)	(11,399		)	(7,125		)	(7,971		)
Income (loss) from discontinued operations, net of income taxes	—			774			794			(187		)
Net income (loss)	$	(2,657	)	$	(10,625	)	$	(6,331	)	$	(8,158	)
Income (loss) per common share-basic and dilutive:
Income (loss) from continuing operations	$	(0.08	)	$	(0.35	)	$	(0.22	)	$	(0.25	)
Income (loss) from discontinued operations, net of income taxes	—			0.02			0.03			—
Net income (loss)	$	(0.08	)	$	(0.33	)	$	(0.19	)	$	(0.25	)
Weighted average basic shares	32,929,965			32,438,809			32,720,532			32,179,233
Weighted average diluted shares	32,929,965			32,438,809			32,720,532			32,179,233

See notes to the condensed consolidated financial statements.

3

ISLE OF CAPRI CASINOS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(In thousands, except share amounts)

(Unaudited)

											Accum.
											Other
	Shares of				Additional						Comprehensive						Total
	Common		Common		Paid-in			Retained			Income			Treasury			Stockholders’
	Stock		Stock		Capital			Earnings			(Loss)			Stock			Equity
Balance, April 25, 2010	36,771,730		$	367	$	201,464		$	98,555		$	(8,060	)	$	(52,107	)	$	240,219
Net loss	—		—		—			(6,331		)	—			—			(6,331		)
Deferred hedge adjustment, net of income tax provision of $3,164	—		—		—			—			5,299			—			5,299
Unrealized loss on interest rate cap contracts net of income tax benefit of $3	—		—		—			—			(5		)	—			(5		)
Foreign currency translation adjustments	—		—		—			—			(91		)	—			(91		)
Comprehensive income (loss)																	(1,128		)
Issuance of restricted stock from treasury stock	—		—		(5,816		)	—			—			5,816			—
Forfeiture of restricted stock	(21,302	)
Exercise of stock options	500		—		3			—			—			—			3
Issuance of deferred bonus shares	11,641		1		—			—			—			—			1
Stock compensation expense	—		—		6,024			—			—			—			6,024
Balance, January 23, 2011	36,762,569		$	368	$	201,675		$	92,224		$	(2,857	)	$	(46,291	)	$	245,119

See notes to the condensed consolidated financial statements.

4

ISLE OF CAPRI CASINOS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)

	Nine Months Ended
	January 23			January 24
	2011			2010
Operating activities:
Net loss	$	(6,331	)	$	(8,158	)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation and amortization	66,934			84,062
Amortization of deferred financing costs	2,463			1,735
Expense recoveries and other charges, net	—			(6,762		)
Deferred income taxes	(3,513		)	(4,409		)
Stock compensation expense	6,024			6,055
Deferred compensation expense	—			72
Loss on derivative instruments	1,256			—
(Gain) loss on disposal of assets	(267		)	696
Changes in operating assets and liabilities, net of acquisition:
Sales (purchases) of trading securities	1,159			(2,502		)
Accounts receivable	1,024			6,608
Income tax receivable	3,620			2,603
Prepaid expenses and other assets	2,000			(3,123		)
Accounts payable and accrued liabilities	8,415			(7,103		)
Net cash provided by operating activities	82,784			69,774
Investing activities:
Purchase of property and equipment	(46,124		)	(21,577		)
Net cash paid for acquisition, net of cash acquired	(76,167		)	—
Payments towards gaming license	—			(4,000		)
Proceeds from sale of assets held for sale	—			653
Increase in restricted cash	(9,942		)	(12		)
Net cash used in investing activities	(132,233		)	(24,936		)
Financing activities:
Principal payments on debt	(6,606		)	(6,591		)
Net borrowings (repayments) on line of credit	58,000			(62,558		)
Proceeds from exercise of stock options	3			204
Net cash provided by (used in) financing activities	51,397			(68,945		)
Effect of foreign currency exchange rates on cash	(51		)	(11		)
Net increase (decrease) in cash and cash equivalents	1,897			(24,118		)
Cash and cash equivalents, beginning of period	68,069			96,654
Cash and cash equivalents, end of the period	$	69,966		$	72,536

See notes to the condensed consolidated financial statements.

5

ISLE OF CAPRI CASINOS, INC.

Notes to Condensed 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 leading developer, owner and operator of branded gaming facilities and related lodging and entertainment facilities in markets throughout the United States. Our wholly owned subsidiaries own and operate fourteen casino gaming facilities in the United States located in Black Hawk, Colorado; Lake Charles, Louisiana; Lula, Biloxi, Natchez and Vicksburg, Mississippi; Kansas City, Caruthersville and Boonville, Missouri; Bettendorf, Davenport, Waterloo and Marquette, Iowa; and Pompano Beach, Florida.

2.  Basis of Presentation

The accompanying 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. The accompanying interim 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 A nnual Report on Form 10-K/A for the year ended April 25, 2010 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 2011 and 2010 are both 52-week years, which commenced on April 26, 2010 and April 27, 2009, 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 operating segments have been aggregated into one reporting segment.

Discontinued operations include our former Blue Chip casinos in Dudley and Wolverhampton, England, sold in fiscal 2010, our former casino in Freeport, Grand Bahamas, exited in November 2009 and our former casino in Coventry, England sold in fiscal year 2009. The results of our discontinued operations for the three and nine months ended January 23, 2011 and January 24, 2010, are summarized as follows:

	Three Months Ended					Nine Months Ended
	January 23, 2011		January 24, 2010			January 23, 2011		January 24, 2010
Net revenues	$	—	$	1,105		$	—	$	7,403
Pretax loss from discontinued operations	—		(716		)	—		(2,299		)
Income tax benefit from discontinued operations	—		1,490			794		2,112
Income (loss) from discontinued operations	—		774			794		(187		)

During the nine months ended January 23, 2011, we recorded a tax benefit in discontinued operations related to the resolution of  previously unrecognized tax positions related to our former UK operations (See Note 11).

6

We evaluated all subsequent events through the date of the issuance of the consolidated financial statements and have disclosed such subsequent events in the notes to the condensed consolidated financial statements. No material subsequent events have occurred that required recognition in the condensed consolidated financial statements, except as disclosed in Note 13.

3.   Acquisition

We completed the acquisition of Rainbow Casino-Vicksburg Partnership, L.P. (“Rainbow”) located in Vicksburg, Mississippi on June 8, 2010 acquiring 100% of the partnership interests and have included the results of Rainbow in our consolidated financial statements subsequent to June 8, 2010. The purchase price was $76,167, net of cash acquired and purchase price adjustments. The preliminary allocation of the purchase price for these partnership interests was determined based upon estimates of future cash flows and evaluations of the net assets acquired. The transaction was accounted for using the acquisition method in accordance with the accounting guidance under Accounting Standards Codification Topic 805, Business Combinations.  As a result, the net assets of Rainbow were recorded at their estimated fair value with the excess of the purchase price over the fair value of the net assets acquired allocated to goodwill. The acquisition was funded by borrowings from Isle’s senior secured credit facility. The purchase price allocation remains preliminary as management is in process of obtaining third party valuations to assist in its determination of fair value for property and equipment, and intangible assets acquired.

Goodwill — A rollforward of goodwill is as follows:

Balance April 25, 2010	$	313,136
Addition from Rainbow acquisition	32,167
Balance January 23, 2011	$	345,303

The pro forma results of operations, as if the acquisition of Rainbow had occurred on the first day of each fiscal year, are as follows:

	Three Months Ended						Nine Months Ended
	January 23,			January 24,			January 23,			January 24,
	2011			2010			2011			2010
Pro forma
Net Revenues	$	232,007		$	235,472		$	734,395		$	756,797
Income (loss) from continuing operations before income taxes	(3,808		)	(13,514		)	(11,564		)	(12,836		)
Net income (loss) from continuing operations	(2,657		)	(10,893		)	(7,053		)	(5,973		)
Basic earnings (loss) per share from continuing operations	(0.08		)	(0.34		)	(0.22		)	(0.19		)
Diluted earnings (loss) per share from continuing operations	(0.08		)	(0.34		)	(0.22		)	(0.19		)

7

4.  Long-Term Debt

Long-term debt consists of the following:

	January 23,		April 25,
	2011		2010
Senior Secured Credit Facility:
Revolving line of credit, expires July 26, 2012, interest payable at least quarterly at either LIBOR and/or prime plus a margin	$	79,500	$	21,500
Variable rate term loans, mature November 25, 2013, principal and interest payments due quarterly at either LIBOR and/or prime plus a margin	810,960		817,256
7% Senior Subordinated Notes, interest payable semi-annually March 1 and September 1	357,275		357,275
Other	4,547		4,858
	1,252,282		1,200,889
Less current maturities	8,769		8,754
Long-term debt	$	1,243,513	$	1,192,135

Credit Facility - The Credit Facility as amended (“Credit Facility”) consists of a $375,000 revolving line of credit and an $875,000 term loan facility.  The Credit Facility is secured on a first priority basis by substantially all of our assets and guaranteed by all of our significant subsidiaries.

Our net line of credit availability at January 23, 2011, as limited by our maximum leverage covenant was approximately $140,000. We have an annual commitment fee related to the unused portion of the Credit Facility of up to 0.75% which is included in interest expense in the accompanying consolidated statements of operations.  The weighted average effective interest rate of the Credit Facility for the nine months ended January 23, 2011 was 6.47%.

The Credit Facility includes a number of affirmative and negative covenants. Additionally, we must comply with certain financial covenants including maintenance of a 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 January 23, 2011.

7% Senior Subordinated Notes - Our 7% Senior Subordinated Notes are due 2014 (“7% Senior Subordinated Notes”) and are guaranteed, on a joint and several basis, by all of our significant subsidiaries and certain other subsidiaries as described in Note 15. All of the guarantor subsidiaries are wholly owned by us. The 7% Senior Subordinated Notes are general unsecured obligations and rank junior to all of our senior indebtedness. The 7% Senior Subordinated Notes are redeemable, in whole or in part, at our option at any time, with call premiums as defined in the indenture governing the 7% Senior Subordinated Notes.

The indenture governing the 7% Senior Subordinated Notes limits, among other things, our ability and our restricted subsidiaries’ ability to borrow money, make restricted payments, use assets as security in other transactions, enter into transactions with affiliates or pay dividends on or repurchase stock. The indenture also limits our ability to issue and sell capital stock of subsidiaries, sell assets in excess of specified amounts or merge with or into other companies.

8

5.  Earnings Per Share

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

	Three Months Ended						Nine Months Ended
	January 23,			January 24,			January 23,			January 24,
	2011			2010			2011			2010
Numerator:
Income (loss) applicable to common shares:
Income (loss) from continuing operations	$	(2,657	)	$	(11,399	)	$	(7,125	)	$	(7,971	)
Income (loss) from discontinued operations	—			774			794			(187		)
Net income (loss)	$	(2,657	)	$	(10,625	)	$	(6,331	)	$	(8,158	)
Denominator:
Denominator for basic earnings (loss) per share - weighted average shares	32,929,965			32,438,809			32,720,532			32,179,233
Effect of dilutive securities Employee stock options	—			—			—			—
Denominator for diluted loss per share - adjusted weighted average shares and assumed conversions	32,929,965			32,438,809			32,720,532			32,179,233
Basic earnings (loss) per share:
Income (loss) from continuing operations	$	(0.08	)	$	(0.35	)	$	(0.22	)	$	(0.25	)
Loss from discontinued operations	—			0.02			0.03			—
Net income (loss)	$	(0.08	)	$	(0.33	)	$	(0.19	)	$	(0.25	)
Diluted earnings (loss) per share:
Income (loss) from continuing operations	$	(0.08	)	$	(0.35	)	$	(0.22	)	$	(0.25	)
Loss from discontinued operations	—			0.02			0.03			—
Net income (loss)	$	(0.08	)	$	(0.33	)	$	(0.19	)	$	(0.25	)

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, stock options representing 144,909 and 95,615 shares, which are potentially dilutive, and 475,210 shares which are anti-dilutive, were excluded from the calculation of common shares for diluted (loss) per share for the three and nine months ended January 23, 2011, respectively. Due to the loss from continuing operations, stock options representing 57,756 and 144,386, which are potentially dilutive, and 1,189,028 and 589,028 shares which were anti-dilutive were excluded from the calculation of common shares for diluted income (loss) per share for the three and nine month periods ended January 24, 2010, respectively.

6.Stock Based Compensation

Under our amended and restated 2009 Long Term Incentive Plan we have issued stock options and restricted stock.

Restricted Stock —During the nine months ended January 23, 2011, we issued 306,247 shares of restricted stock with a weighted average grant-date fair value of $8.72 to employees and 191,126 shares of restricted stock with a weighted average grant-date fair value of $7.54 to directors under the Long Term Incentive Plan. Restricted stock awarded to employees under annual long-term incentive grants vests one-third on each anniversary of the grant date and for directors vests one-half on the grant date and one-half on the first anniversary of the grant date. Restricted stock previously awarded

9

under our tender offer vests three years from the date of award. Our estimate of forfeitures for restricted stock for employees is 10%. No forfeiture rate is estimated for directors. As of January 23, 2011, our unrecognized compensation cost for unvested restricted stock is $4,802 with a remaining weighted average vesting period of 1.0 years.

Stock Options - We have issued incentive stock options and nonqualified stock options which have a maximum term of 10 years and are, generally, vested and exercisable in yearly installments of 20% commencing one year after the date of grant. We currently estimate our aggregate forfeiture rates at 12%. As of January 23, 2011, our unrecognized compensation cost for unvested stock options was $809 with a weighted average vesting period of 2.4 years.

7.   Expense Recoveries and Other Charges, net

During the nine months ended January 24, 2010, we recorded an expense recovery of $6,762 representing the discounted value of a receivable for reimbursement of development costs expended in prior periods relating to a terminated plan to develop a casino in Pittsburgh, Pennsylvania. This receivable was recorded following a revised assessment of collectability.

8.   Interest Rate Derivatives

We have entered into various interest rate derivative agreements in order to manage market risk on variable rate term loans outstanding, as well as comply with requirements under the Credit Facility. We have interest rate swap agreements with an aggregate notional value of $100,000 with maturity dates in fiscal 2012 and 2014. We have also entered into interest rate cap contracts with an aggregate notional value of $220,000 having maturity dates in fiscal 2012 and 2013 and paid premiums of $203 at inception.

As a result of the amendment to our Credit Facility in the fourth quarter of fiscal 2010, our interest rate swaps no longer meet the criteria for hedge effectiveness, and therefore changes in the fair value of the swaps subsequent to the date of ineffectiveness in February 2010, are recorded in derivative income (expense) in the consolidated statement of operations. Prior to their ineffectiveness, changes in the fair value of these interest rate swaps were adjusted through other comprehensive income (loss) as these derivative instruments qualified for hedge accounting. The cumulative loss recorded in other comprehensive income (loss) through the date of ineffectiveness is being amortized into derivative expense over the remaining term of the individual interest rate swap agreements or when the underlying transaction is no longer expected to occur. As of January 23, 2011, the weighted average fixed LIB OR interest rate of our interest rate swap agreements was 4.25%.

The interest rate cap agreements meet the criteria for hedge accounting for cash flow hedges and have been evaluated, as of January 23, 2011 as being fully effective. As a result, there is no impact on our consolidated statement of operations from changes in fair value of the interest rate cap agreements.

The loss recorded in other comprehensive income (loss) of our interest rate swap contracts is recorded net of deferred income tax benefits of $1,540 and $4,704, as of January 23, 2011 and April 25, 2010, respectively.  The loss recorded in other comprehensive income (loss) for our  interest rate cap contracts is recorded net of deferred income tax benefits of $33 and $30 as of January 23, 2011 and April 25, 2010, respectively.

The fair values of derivatives included in our consolidated balance sheet are as follows:

Type of Derivative Instrument	Balance Sheet Location	January 23, 2011		April 25, 2010
Interest rate cap contracts	Prepaid deposits and other	$	92	$	24
Interest rate swap contracts	Accrued interest	1,917		6,704
Interest rate swap contracts	Other long-term liabilities	3,827		6,247

We  recorded  income of $2,344 and $7,207 in derivative income (expense) related to the change in fair value of interest rate swap contracts during the three and nine months ended January 23, 2011, respectively.

Additionally, during the three and nine months ended January 23, 2011, we recorded expense of $1,370 and $8,463, respectively, in derivative income (expense) associated with the amortization of $858, net of taxes of $512 and $5,299, net

10

of taxes of $3,164, of cumulative loss recorded in other comprehensive income (loss) for the interest rate swaps through the date of their ineffectiveness.

The change in unrealized gain (loss) on our derivatives qualifying for hedge accounting was $63 and $67 for the three and nine months ended January 23, 2011, respectively. The change in unrealized gain (loss) on our derivatives qualifiying for hedge accounting was $2,545 and $7,304 for the three and nine months ended January 24, 2010, respectively.

The amount of accumulated other comprehensive income (loss) related to interest rate swap contracts and interest rate cap contracts maturing within the next twelve months was $1,676, net of tax of $1,001, as of January 23, 2011.

9.  Fair Value

The fair value of our interest swap and cap contracts are recorded using Level 3 inputs at the present value of all expected future cash flows based on the LIBOR-based swap yield curve as of the date of the valuation.

The following table presents the changes in Level 3 liabilities measured at fair value on a recurring basis for the three and nine months ended January 23, 2011:

	January 23, 2011
Interest Rate Derivatives	Three Months Ended			Nine Months Ended
Beginning Balance	$	(8,060	)	$	(12,927	)
Realized gains/(losses)	2,345			7,208
Unrealized gains/(losses)	63			67
Balance at January 23, 2011	$	(5,652	)	$	(5,652	)

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

	January 23, 2011				April 25, 2010
	Carrying				Carrying
	Amount		Fair Value		Amount		Fair Value
Financial assets:
Cash and cash equivalents	$	69,966	$	69,966	$	68,069	$	68,069
Marketable securities	21,767		21,767		22,926		22,296
Restricted cash	12,763		12,763		2,774		2,774
Notes receivable	7,172		7,172		8,510		8,510
Financial liabilities:
Revolving line of credit	$	79,500	$	73,935	$	21,500	$	20,855
Variable rate term loans	810,960		768,386		817,256		800,911
7% Senior subordinated notes	357,275		357,275		357,275		326,013
Other long-term debt	4,547		4,547		4,858		4,858
Other long-term obligations	17,078		17,078		17,166		17,166

The following methods and assumptions were used to estimate the fair value of each class of financial instruments for which it is practicable to estimate that value:

Cash and cash equivalents, restricted cash and notes receivable are carried at cost, which approximates fair value due to their short-term maturities.

11

Marketable securities are based upon Level 1 inputs obtained from quoted prices available in active markets and represent the amounts we would expect to receive if we sold these marketable securities.

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

10.  Accumulated Other Comprehensive Income (Loss)

A detail of Accumulated other comprehensive income (loss) is as follows:

	January 23, 2011			April 25, 2010
Interest rate cap contracts	$	(55	)	$	(50	)
Interest rate swap contracts	(2,578		)	(7,877		)
Foreign currency translation loss	(224		)	(133		)
	$	(2,857	)	$	(8,060	)

The amount of change in the gain (loss) recognized in accumulated other comprehensive income (loss) related to derivative instruments is as follows:

	Three Months Ended					Nine Months Ended
	January 23,		January 24,			January 23,			January 24,
Type of Derivative Instrument	2011		2010			2011			2010
Interest rate cap contracts	$	21	$	(35	)	$	(5	)	$	(35	)
Interest rate swap contracts	858		1,627			5,299			4,604
	$	879	$	1,592		$	5,294		$	4,569

11.  Income Taxes

During fiscal 2010, the IRS completed its examination of our federal income tax returns which relate to our fiscal years 2007 and 2008.  The income tax examination changes were subject to review by the U.S. Congress Joint Committee on Taxation and on August 20, 2010 we received notification that the review had been completed with no exception to the examination.  As a result, during the nine months ended January 23, 2011, we recognized a tax benefit in discontinued operations of $794 related to the resolution of previously unrecognized tax positions related to our former UK operations.

Related to our uncertain tax positions, we accrued interest expense of $132 and $373 respectively, for the three and nine months ended January 23, 2011 as a component of our income tax benefit.  As of January 23, 2011, we have recognized a liability of $3,199 for interest and no amount for penalties.

During the nine months ended January 24, 2010, we settled Louisiana income tax examinations covering fiscal years ended April 2001 through April 2008.  As a result of the actual taxes and interest due for these years being less than our previously accrued amounts, we recognized a benefit of $4,727 in our income tax provision during the nine months ended January 24, 2010.

Our effective income tax rates from continuing operations for the three and nine months ended January 23, 2011 were 30.2% and 39.0%, respectively.  Our effective income tax rates from continuing operations for the three and nine months ended January 24, 2010 were 20.4% and 50.3%, respectively.  Without the impact of the settlement of certain Louisiana income tax matters during the nine months ended January 24, 2010, our effective income tax rate for the nine months ended January 24, 2010, would have been 28.2%.  Our actual effective rate will fluctuate based upon the amount of our pretax book income, permanent differences and other items used in the calculation of our income tax benefit.

12

12.  Supplemental Cash Flow Disclosures

For the nine months ended January 23, 2011 and January 24, 2010, we made net cash interest payments of $61,210 and $46,514, respectively. Additionally, we received income tax refunds of $5,733 and $1,515 during the nine months ended January 23, 2011 and January 24, 2010, respectively.

In fiscal year 2006, we obtained a gaming license for our Waterloo, Iowa property and recorded an intangible asset of $18,547.  Annual payments for the license are recorded on a yearly basis and for the nine months ended January 24, 2010, we made payments of $4,000 towards the gaming license.

For the nine months ended January 23, 2011 and January 24, 2010, the change in accrued purchases of property and equipment in accounts payable increased by $859 and decreased by $695, respectively.

13.  Subsequent Event

On January 25, 2011 we issued 5.3 million shares of common stock bringing total shares outstanding to 42,062,569. Net proceeds of approximately $51,700 were used to repay amounts under our Credit Facility and for general corporate purposes.

14.  Contingencies and Commitments

Legal and Regulatory Proceedings—Lady Luck Gaming Corporation (now our wholly owned subsidiary) and several joint venture partners have been defendants in the Greek Civil Courts and the Greek Administrative Courts in similar lawsuits brought by the country of Greece. The actions allege that the defendants failed to make specified payments in connection with the gaming license bid process for Patras, Greece. Although it is difficult to determine the damages being sought from the lawsuits, the action may seek damages up to that aggregate amount plus interest from the date of the action.

In the Civil Court lawsuit, the Civil Court of First Instance ruled in our favor and dismissed the lawsuit in 2001. Greece appealed to the Civil Appeal Court and, in 2003, the Court rejected the appeal. Greece then appealed to the Civil Supreme Court and, in 2007, the Supreme Court ruled that the matter was not properly before the Civil Courts and should be before the Administrative Court.

In the Administrative Court lawsuit, the Administrative Court of First Instance rejected the lawsuit stating that it was not competent to hear the matter. Greece then appealed to the Administrative Appeal Court, which court rejected the appeal in 2003. Greece then appealed to the Supreme Administrative Court, which remanded the matter back to the Administrative Appeal Court for a hearing on the merits. The re-hearing took place in 2006, and in 2008 the Administrative Appeal Court rejected Greece’s appeal on procedural grounds. On December 22, 2008 and January 23, 2009, Greece appealed the ruling to the Supreme Administrative Court. A hearing has tentatively been scheduled for April 2011.

The outcome of this matter is still in doubt and cannot be predicted with any degree of certainty. We intend to continue a vigorous and appropriate defense to the claims asserted in this matter. Through January 23, 2011, we have accrued an estimated liability including interest of $11,446. Our accrual is based upon management’s estimate of the original claim by the plaintiffs for lost payments.  We continue to accrue interest on the asserted claim.  We are unable to estimate a total possible loss as information as to possible additional claims, if any, have not been asserted or quantified by the plaintiffs at this time.

During January 2010, we entered into an agreement to provide management services for a potential casino to be located at the Nemacolin Woodlands Resort in Farmington, Pennsylvania, (“The Resort”). The development of this casino is subject to numerous regulatory approvals including obtaining a state gaming license, which is a competitive award process among several applicants. If The Resort is successful in obtaining a gaming license, we have agreed to complete the build-out of the casino space. We currently estimate the project cost at approximately $50,000.

On December 1, 2010, our proposed casino in Cape Girardeau, Missouri was selected by the Missouri Gaming Commission for prioritization for the 13th and final gaming license in the State of Missouri. We had previously entered into a development agreement with the City of Cape Girardeau. The project is expected to include approximately 1,000 slot

13

machines, 28 table games, 3 restauants, a lounge and terrace overlooking the Mississippi River and a 750-seat event center.  We currently estimate the cost of the project at approximately $125,000 with an anticipated opening date by the end of calendar 2012.

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.

15.  Consolidating Condensed Financial Information

Certain of our wholly owned subsidiaries have fully and unconditionally guaranteed on a joint and several basis, the payment of all obligations under our 7% Senior Subordinated Notes.

The following wholly owned subsidiaries of the Company are guarantors, on a joint and several basis, under the 7% Senior Subordinated Notes: Black Hawk Holdings, L.L.C.; Casino America of Colorado, Inc.; CCSC/Blackhawk, Inc.; Grand Palais Riverboat, 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-Davenport, Inc.; IOC Holdings, L.L.C.; IOC Services, L.L.C.; IOC-Vicksburg, Inc.; IOC-Vicksburg, LLC; Rainbow Casino Vicksburg Partnership, L.P.; Isle of Capri Bahamas Holdings, Inc.; Isle of Capri Bettendorf Marina Corporation.; Isle of Capri Bettendorf, L.C; Isle of Capri Black Hawk Capital Corp.; Isle of Capri Black Hawk, L.L.C.; Isle of Capri Marquette, Inc.; P.P.I, Inc.; Riverb oat Corporation of Mississippi; Riverboat Services, Inc.; and St. Charles Gaming Company, Inc. Each of the subsidiaries’ guarantees is joint and several with the guarantees of the other subsidiaries.Consolidating condensed balance sheets as of January 23, 2011 and April 25, 2010 are as follows (in thousands):

14

	As of January 23, 2011
	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	$	38,994	$	79,065		$	33,477		$	(3,305	)	$	148,231
Intercompany receivables	1,033,849		(226,426		)	(56,655		)	(750,768		)	—
Investments in subsidiaries	398,959		(64,846		)	—			(334,113		)	—
Property and equipment, net	10,965		1,069,711			40,480			—			1,121,156
Other assets	62,073		443,084			19,358			(58,671		)	465,844
Total assets	$	1,544,840	$	1,300,588		$	36,660		$	(1,146,857	)	$	1,735,231
Current liabilities	$	51,137	$	80,233		$	35,100		$	(3,305	)	$	163,165
Intercompany payables	—		750,768			—			(750,768		)	—
Long-term debt, less current maturities	1,239,335		3,531			647			—			1,243,513
Other accrued liabilities	9,249		119,337			13,519			(58,671		)	83,434
Stockholders’ equity	245,119		346,719			(12,606		)	(334,113		)	245,119
Total liabilities and stockholders’ equity	$	1,544,840	$	1,300,588		$	36,660		$	(1,146,857	)	$	1,735,231

	As of April 25, 2010
	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	$	35,835	$	71,976		$	43,193		$	(1,100	)	$	149,904
Intercompany receivables	990,557		(185,612		)	(54,177		)	(750,768		)	—
Investments in subsidiaries	390,369		(63,110		)	—			(327,259		)	—
Property and equipment, net	7,579		1,059,147			32,216			—			1,098,942
Other assets	57,092		409,106			11,150			(51,354		)	425,994
Total assets	$	1,481,432	$	1,291,507		$	32,382		$	(1,130,481	)	$	1,674,840
Current liabilities	$	46,581	$	80,884		$	30,790		$	(1,100	)	$	157,155
Intercompany payables	—		750,768			—			(750,768		)	—
Long-term debt, less current maturities	1,187,631		3,760			744			—			1,192,135
Other accrued liabilities	7,001		116,815			12,869			(51,354		)	85,331
Stockholders’ equity	240,219		339,280			(12,021		)	(327,259		)	240,219
Total liabilities and stockholders’ equity	$	1,481,432	$	1,291,507		$	32,382		$	(1,130,481	)	$	1,674,840

15

Consolidating condensed statements of operations for the three and nine month periods ended January 23, 2011 and January 24, 2010 are as follows (in thousands):

	For the Three Months Ended January 23, 2011
	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	$	—		$	240,205		$	—		$	—		$	240,205
Pari-mutuel, rooms, food, beverage and other	162			39,295			2,413			(2,388		)	39,482
Gross revenues	162			279,500			2,413			(2,388		)	279,687
Less promotional allowances	—			(47,680		)	—			—			(47,680		)
Net revenues	162			231,820			2,413			(2,388		)	232,007
Operating expenses:
Casino	—			38,529			—			—			38,529
Gaming taxes	—			58,331			—			—			58,331
Other operating expenses	9,150			88,311			1,959			(2,388		)	97,032
Management fee expense (revenue)	(7,947		)	7,947			—			—			—
Depreciation and amortization	461			21,223			138			—			21,822
Total operating expenses	1,664			214,341			2,097			(2,388		)	215,714
Operating income (loss)	(1,502		)	17,479			316			—			16,293
Interest expense, net	(5,665		)	(15,318		)	(92		)	—			(21,075		)
Derivative income (expense)	974			—			—			—			974
Equity in income (loss) of subsidiaries	(748		)	(463		)	—			1,211			—
Income (loss) from continiuing operations before income taxes	(6,941		)	1,698			224			1,211			(3,808		)
Income tax (provision) benefit	4,284			(3,364		)	231			—			1,151
Income (loss) from continuing operations	(2,657		)	(1,666		)	455			1,211			(2,657		)
Income (loss) from discontinued operations, net of tax	—			—			—			—			—
Net income (loss)	$	(2,657	)	$	(1,666	)	$	455		$	1,211		$	(2,657	)

16

	For the Three Months Ended January 24, 2010
	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	$	—		$	229,521		$	—		$	—		$	229,521
Pari-mutuel, rooms, food, beverage and other	600			39,043			2,421			(2,400		)	39,664
Gross revenues	600			268,564			2,421			(2,400		)	269,185
Less promotional allowances	—			(42,113		)	—			—			(42,113		)
Net revenues	600			226,451			2,421			(2,400		)	227,072
Operating expenses:
Casino	—			36,435			—			—			36,435
Gaming taxes	—			60,529			—			—			60,529
Other operating expenses	10,332			89,508			3,195			(2,400		)	100,635
Management fee expense (revenue)	(5,589		)	5,589			—			—			—
Depreciation and amortization	1,038			25,607			152			—			26,797
Total operating expenses	5,781			217,668			3,347			(2,400		)	224,396
Operating income (loss)	(5,181		)	8,783			(926		)	—			2,676
Interest expense, net	(1,572		)	(15,403		)	(22		)	—			(16,997		)
Derivative income (expense)	—			—			—			—			—
Equity in income (loss) of subsidiaries	(11,601		)	(758		)	—			12,359			—
Income (loss) from continiuing operations before income taxes	(18,354		)	(7,378		)	(948		)	12,359			(14,321		)
Income tax (provision) benefit	6,955			(3,949		)	(84		)	—			2,922
Income (loss) from continuing operations	(11,399		)	(11,327		)	(1,032		)	12,359			(11,399		)
Income (loss) from discontinued operations, net of tax	774			(98		)	(716		)	814			774
Net income (loss)	$	(10,625	)	$	(11,425	)	$	(1,748	)	$	13,173		$	(10,625	)

17

	For the Nine Months Ended January 23, 2011
	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	$	—		$	754,007		$	—		$	—		$	754,007
Pari-mutuel, rooms, food, beverage and other	1,469			127,551			7,370			(7,296		)	129,094
Gross revenues	1,469			881,558			7,370			(7,296		)	883,101
Less promotional allowances	—			(152,522		)	—			—			(152,522		)
Net revenues	1,469			729,036			7,370			(7,296		)	730,579
Operating expenses:
Casino	—			118,117			—			—			118,117
Gaming taxes	—			182,951			—			—			182,951
Other operating expenses	31,649			273,488			7,821			(7,296		)	305,662
Management fee expense (revenue)	(25,560		)	25,560			—			—			—
Depreciation and amortization	1,492			65,008			434			—			66,934
Total operating expenses	7,581			665,124			8,255			(7,296		)	673,664
Operating income (loss)	(6,112		)	63,912			(885		)	—			56,915
Interest expense, net	(21,167		)	(45,985		)	(187		)	—			(67,339		)
Derivative income (expense)	(1,256		)	—			—			—			(1,256		)
Equity in income (loss) of subsidiaries	8,969			(1,747		)	—			(7,222		)	—
Income (loss) from continiuing operations before income taxes	(19,566		)	16,180			(1,072		)	(7,222		)	(11,680		)
Income tax (provision) benefit	12,441			(8,465		)	579			—			4,555
Income (loss) from continuing operations	(7,125		)	7,715			(493		)	(7,222		)	(7,125		)
Income (loss) from discontinued operations, net of tax	794			—			—			—			794
Net income (loss)	$	(6,331	)	$	7,715		$	(493	)	$	(7,222	)	$	(6,331	)

18

	For the Nine Months Ended January 24, 2010
	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	$	—		$	742,957		$	—		$	—		$	742,957
Pari-mutuel, rooms, food, beverage and other	963			130,287			7,363			(7,304		)	131,309
Gross revenues	963			873,244			7,363			(7,304		)	874,266
Less promotional allowances	—			(143,225		)	—			—			(143,225		)
Net revenues	963			730,019			7,363			(7,304		)	731,041
Operating expenses:
Casino	—			115,351			—			—			115,351
Gaming taxes	—			191,056			—			—			191,056
Other operating expenses	32,760			277,489			1,190			(7,304		)	304,135
Management fee expense (revenue)	(18,585		)	18,585			—			—			—
Depreciation and amortization	3,324			80,280			458			—			84,062
Total operating expenses	17,499			682,761			1,648			(7,304		)	694,604
Operating income (loss)	(16,536		)	47,258			5,715			—			36,437
Interest expense, net	(4,945		)	(47,264		)	(255		)	—			(52,464		)
Equity in income (loss) of subsidiaries	2,081			(2,618		)	—			537			—
Income (loss) from continiuing operations before income taxes	(19,400		)	(2,624		)	5,460			537			(16,027		)
Income tax (provision) benefit	11,429			(1,062		)	(2,311		)	—			8,056
Income (loss) from continuing operations	(7,971		)	(3,686		)	3,149			537			(7,971		)
Income (loss) from discontinued operations, net of tax	(187		)	(955		)	(2,302		)	3,257			(187		)
Net income (loss)	$	(8,158	)	$	(4,641	)	$	847		$	3,794		$	(8,158	)

19

Consolidating condensed statements of cash flows for the nine months ended January 23, 2011 and January 24, 2010 are as follows (in thousands):

	Nine Months Ended January 23, 2011
	Isle of Capri									Consolidating
	Casinos, Inc.						Non-			and			Isle of Capri
	(Parent			Guarantor			Guarantor			Eliminating			Casinos, Inc.
	Obligor)			Subsidiaries			Subsidiaries			Entries			Consolidated
Statement of Cash Flows
Net cash provided by (used in) operating activities	$	(3,753	)	$	77,073		$	9,464		$	—		$	82,784
Net cash provided by (used in) investing activities	(47,466		)	(109,374		)	(17,838		)	42,445			(132,233		)
Net cash provided by (used in) financing activities	51,707			39,746			2,389			(42,445		)	51,397
Effect of foreign currency exchange rates on cash and cash equivalents	—			—			(51		)	—			(51		)
Net increase (decrease) in cash and cash equivalents	488			7,445			(6,036		)	—			1,897
Cash and cash equivalents at beginning of the period	6,506			46,994			14,569			—			68,069
Cash and cash equivalents at end of the period	$	6,994		$	54,439		$	8,533		$	—		$	69,966

	Nine Months Ended January 24, 2010
	Isle of Capri									Consolidating
	Casinos, Inc.						Non-			and			Isle of Capri
	(Parent			Guarantor			Guarantor			Eliminating			Casinos, Inc.
	Obligor)			Subsidiaries			Subsidiaries			Entries			Consolidated
Statement of Cash Flows
Net cash provided by (used in) operating activities	$	(9,057	)	$	78,794		$	37		$	—		$	69,774
Net cash provided by (used in) investing activities	75,440			(24,629		)	778			(76,525		)	(24,936		)
Net cash provided by (used in) financing activities	(67,592		)	(74,138		)	(3,740		)	76,525			(68,945		)
Effect of foreign currency exchange rates on cash and cash equivalents	—			—			(11		)	—			(11		)
Net increase (decrease) in cash and cash equivalents	(1,209		)	(19,973		)	(2,936		)	—			(24,118		)
Cash and cash equivalents at beginning of the period	8,776			68,681			19,197			—			96,654
Cash and cash equivalents at end of the period	$	7,567		$	48,708		$	16,261		$	—		$	72,536

20

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. 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. 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 sub sequent 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/A for the year ended April 25, 2010, as updated in Item 1A Risk Factors in Part II of this document.

Executive Overview

We are a leading developer, owner and operator of branded gaming facilities and related lodging and entertainment facilities in regional markets in the United States. We have intentionally sought geographic diversity to limit the risks caused by weather, regional economic difficulties and local gaming authorities and regulations. We currently operate casinos in Mississippi, Louisiana, Missouri, Iowa, Colorado and Florida. We also operate a harness racing track at our casino in Florida.

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/A for the year ended April 25, 2010 and by giving consideration to the following:

Acquisition of Rainbow Casino - We completed the acquisition of Rainbow Casino-Vicksburg Partnership, L.P. (“Rainbow”) located in Vicksburg, Mississippi on June 8, 2010 acquiring 100% of the partnership interests and have included the results of Rainbow in our consolidated financial statements subsequent to June 8, 2010. The acquisition was funded by borrowings from Isle’s senior secured credit facility.

Florida Gaming Law Changes — Effective July 1, 2010, the state portion of gaming taxes applicable to our Pompano property was reduced from 50% to 35% of gaming revenues. Additionally, this legislation removed poker betting limits and allowed us to expand our poker hours from 12 hours per day to 18 hours per day Monday through Thursday and 24 hours per day on Friday through Sunday. Our casino revenues and gaming taxes reflect the favorable impact of these changes in state gaming laws.

Expense Recoveries and Other Charges — During the nine months ended January 24, 2010, we recorded an other expense recovery of $6.8 million representing the discounted value of a receivable for reimbursement of development costs expensed in prior periods relating to a terminated plan to develop a casino in Pittsburgh, Pennsylvania.

21

Provision for Income Taxes — During the nine months ended January 23, 2011, we recognized a tax benefit of $0.8 million in discontinued operations representing the resolution of previously unrecognized tax positions following the completion of certain federal tax reviews. During the nine months ended January 24, 2010, we recognized a benefit of $4.7 million in our income tax provision, as we elected to settle certain state income tax matters with our actual settlement being less than our estimated accrued liability.

Increased Competition — The opening of a new hotel in October 2009 by a competitor in Black Hawk, Colorado has had a negative impact on our Black Hawk, Colorado property.

Discontinued Operations — Discontinued operations include the results of our international operations including our former Blue Chip, Grand Bahamas and Coventry casino operations. The sale of our Blue Chip and exit of our Grand Bahamas casino operations were substantially completed during November 2009. Our Coventry casino operations were sold and discontinued during the fourth quarter of fiscal year 2009. During the nine months ended January 23, 2011, we recorded a tax benefit in discontinued operations related to the resolution of  previously unrecognized tax positions related to our former UK operations.

Revenues

Revenues for the three and nine months ended January 23, 2011 and January 24, 2010 are as follows:

	Three Months Ended
	January 23,			January 24,						Percentage
(in thousands)	2011			2010			Variance			Variance
Revenues:
Casino	$	240,205		$	229,521		$	10,684		4.7	%
Rooms	8,400			8,424			(24		)	-0.3	%
Pari-mutuel, food, beverage and other	31,082			31,240			(158		)	-0.5	%
Gross revenues	279,687			269,185			10,502			3.9	%
Less promotional allowances	(47,680		)	(42,113		)	(5,567		)	13.2	%
Net revenues	$	232,007		$	227,072		4,935			2.2	%

	Nine Months Ended
	January 23,			January 24,						Percentage
(in thousands)	2011			2010			Variance			Variance
Revenues:
Casino	$	754,007		$	742,957		$	11,050		1.5	%
Rooms	29,924			32,488			(2,564		)	-7.9	%
Pari-mutuel, food, beverage and other	99,170			98,821			349			0.4	%
Gross revenues	883,101			874,266			8,835			1.0	%
Less promotional allowances	(152,522		)	(143,225		)	(9,297		)	6.5	%
Net revenues	$	730,579		$	731,041		(462		)	-0.1	%

Casino Revenues - Casino revenues increased $10.7 million, or 4.7%, and $11.1 million, or 1.5%, for the three and nine months ended January 23, 2011, respectively, as compared to the same period in fiscal 2010.

For the three months ended January 23, 2011, casino revenues increased $1.4 million at our Pompano property, and included $9.8 million from our newly acquired Vicksburg casino. These increases were offset by decreased casino revenues at our Black Hawk property of $0.9 million reflecting the impact of competition and a decrease at our Lake Charles, Lula and Natchez properties of $1.3 million primarily due to current economic conditions. Our other properties combined for a net increase of $1.7 million in casino revenues.

For the nine months ended January 23, 2011, casino revenues increased $7.4 million at our Pompano property, and included $24.6 million from our Vicksburg casino. These increases were offset by decreased casino revenues at our Black Hawk and Quad Cities properties of $13.4 million reflecting the impact of competition and a decrease at our Lake Charles, Lula and

22

Natchez properties of approximately $10.0 million primarily due to current economic conditions. Our other properties combine for a net increase of $2.4  million in casino revenues.

Rooms Revenue - Rooms revenue was relatively flat for the three months ended and decreased $2.6 million, or 7.9%, for the nine months ended January 23, 2011, respectively, as compared to the same period in the prior fiscal year. The majority of this decrease has occurred at our Black Hawk property where we have experienced decline in both room rates and occupancy following the opening of a competitor’s new hotel during October 2009 and at our Biloxi property where a competitive market has reduced the overall hotel room rates.

Pari-mutuel, Food, Beverage and Other Revenues — Pari-mutuel, food, beverage and other revenues decreased $0.2 million, or 0.5%, and increased $0.3 million, or 0.4%, for the three and nine months ended January 23, 2011, respectively, as compared to the same period in the prior fiscal year. Food, beverage and other revenues for the three and nine months ended January 23, 2011 included $0.6 million and $1.5 million, respectively, from our recently acquired Vicksburg casino.

Promotional Allowances - Promotional allowances increased $5.6 million, or 13.2%, and $9.3 million, or 6.5%, for the three and nine months ended January 23, 2011, respectively, as compared to the same period in the prior fiscal year. Promotional allowances for the three and nine months ended January 23, 2011 included $3.0 million and $7.5 million, respectively, from our Vicksburg casino. At our existing properties, changes in our promotional allowances reflect revisions to our marketing plans as a result of competitive factors, economic conditions and regulations.

Operating Expenses

Operating expenses for the three months ended January 23, 2011 and January 24, 2010 are as follows:

	Three Months Ended
	January 23,		January 24,					Percentage
(in thousands)	2011		2010		Variance			Variance
Operating expenses:
Casino	$	38,529	$	36,435	$	2,094		5.7	%
Gaming taxes	58,331		60,529		(2,198		)	-3.6	%
Rooms	2,002		2,237		(235		)	-10.5	%
Pari-mutuel, food, beverage and other	10,557		10,553		4			0.0	%
Marine and facilities	14,602		14,392		210			1.5	%
Marketing and administrative	61,152		62,326		(1,174		)	-1.9	%
Corporate and development	8,719		11,127		(2,408		)	-21.6	%
Depreciation and amortization	21,822		26,797		(4,975		)	-18.6	%
Total operating expenses	$	215,714	$	224,396	(8,682		)	-3.9	%

	Nine Months Ended
	January 23,		January 24,						Percentage
(in thousands)	2011		2010			Variance			Variance
Operating expenses:
Casino	$	118,117	$	115,351		$	2,766		2.4	%
Gaming taxes	182,951		191,056			(8,105		)	-4.2	%
Rooms	7,496		8,118			(622		)	-7.7	%
Pari-mutuel, food, beverage and other	32,848		32,638			210			0.6	%
Marine and facilities	44,558		46,148			(1,590		)	-3.4	%
Marketing and administrative	188,580		190,581			(2,001		)	-1.0	%
Corporate and development	32,180		33,412			(1,232		)	-3.7	%
Expense recoveries and other charges	—		(6,762		)	6,762			-100.0	%
Depreciation and amortization	66,934		84,062			(17,128		)	-20.4	%
Total operating expenses	$	673,664	$	694,604		(20,940		)	-3.0	%

23

Casino - Casino operating expenses increased $2.1 million, or 5.7%, and $2.8 million, or 2.4%, for the three and nine months ended January 23, 2011, respectively, as compared to the same period in the prior fiscal year. Excluding casino costs of $1.4 million and $3.4 million for the three and nine months ended January 23, 2011, in Vicksburg, our casino costs would have increased $0.7 million and decreased $0.6 million, respectively. This net change in casino operating expenses reflects net cost reductions in casino expense at most of our properties offset by a slight increase in casino expenses at our Pompano property following the expansion of gaming hours effective July 1, 2010.

Gaming Taxes - State and local gaming taxes decreased $2.2 million, or 3.6%, and $8.1 million, or 4.2%, for the three and nine months ended January 23, 2011, respectively, as compared to the same period in the prior fiscal year. Reductions in gaming taxes for the three and nine months ended January 23, 2011 reflect the decrease in state gaming taxes at our Pompano facility from 50% to 35% effective July 1, 2010, decreases in our overall gaming revenues and changes in the mix of our gaming revenues derived from states with different gaming tax rates. Gaming taxes for the three and nine months ended January 23, 2011 included $0.9 million and $2.2 million, respectively, from our Vicksburg casino.

Rooms - Rooms expense decreased $0.2 million, or 10.5%, and $0.6 million, or 7.7%, for the three and nine months ended January 23, 2011, respectively, as compared to the same period in the prior fiscal year. These expenses directly relate to the cost of providing hotel rooms. This decrease in rooms expense is reflective of a 7.9% reduction in our hotel revenues for the nine months ended January 23, 2011, respectively, as compared to the same period in the prior fiscal year.

Pari-mutuel, Food, Beverage and Other — Pari-mutuel, food, beverage and other expenses were relatively flat for the three months ended and increased $0.2 million for the nine months ended January 23, 2011, respectively, as compared to the same period in the prior fiscal year. Excluding food beverage and other costs of $0.2 million and $0.8 million for the three and nine months ended January 23, 2011, incurred by our Vicksburg casino, our food, beverage and other expenses would have decreased $0.3 million and an immaterial amount, respectively.

Marine and Facilities -  Marine and facilities expenses increased $0.2 million, or 1.5%, and decreased $1.6 million, or 3.4% for the three and nine months ended January 23, 2011, respectively, as compared to the same period in the prior fiscal year. Excluding marine and facility costs of $0.4 million and $1.0 million for the three and nine months ended January 23, 2011, incurred by our recently acquired Vicksburg casino, our marine and facility costs would have decreased $0.2 million and $2.6 million, respectively. This decrease includes reductions in facility costs across most properties as we continue to focus on cost reductions efforts.

Marketing and Administrative -  Marketing and administrative expenses decreased $1.2 million, or 1.9%, and $2.0 million, or 1.0%, for the three and nine months ended January 23, 2011 as compared to the same period in the prior fiscal year. Excluding marketing and administrative costs of $2.3 million and $5.6 million for the three and nine months ended January 23, 2011, incurred by our Vicksburg casino, our marketing and administrative costs would have decreased $3.5 million and $7.6 million, respectively. These decreases reflect reductions in our operating cost to align such expenditures with changes in our net revenues.

Corporate and Development - During the three months ended January 23, 2011, our corporate and development expenses were $8.7 million compared to $11.1 million for the three months ended January 24, 2010. The net decrease in corporate and development cost for the three months ended January 23, 2011, primarily reflects decreased incentive compensation and insurance. During the nine months ended January 23, 2011, our corporate and development expenses were $32.2 million compared to $33.4 million for the nine months ended January 24, 2010. The net decrease in corporate and development expenses for the nine months ended January 23, 2011, reflects decreases in incentive compensation and insurance costs offset by expenses related to our attempted equity offering during the first quarter, acquisition related costs reg arding the Rainbow acquisition and development expenses.

Depreciation and Amortization - Depreciation and amortization expense for the three and nine months ended January 23, 2011 decreased $4.9 million and $17.1 million, respectively, as compared to the same periods in the prior fiscal year, primarily due to certain assets becoming fully depreciated. Depreciation and amortization for the three and nine months ended January 23, 2011 included $1.3 million and $3.2 million, respectively, from Vicksburg.

24

Other Income (Expense), Income Taxes, and Discontinued Operations

Interest expense, interest income, income tax (provision) benefit, and income (loss) from discontinued operations, net of income taxes for the three and nine months ended January 23, 2011 and January 24, 2010 are as follows:

	Three Months Ended
	January 23,			January 24,						Percentage
(in thousands)	2011			2010			Variance			Variance
Interest expense	$	(21,506	)	$	(17,452	)	$	(4,054	)	23.2	%
Interest income	431			455			(24		)	-5.3	%
Derivative income (expense)	974			—			974			N/M
Income tax benefit	1,151			2,922			(1,771		)	-60.6	%
Income (loss) from discontinued operations, net of income taxes	—			774			(774		)	-100.0	%

	Nine Months Ended
	January 23,			January 24,						Percentage
(in thousands)	2011			2010			Variance			Variance
Interest expense	$	(68,711	)	$	(53,682	)	$	(15,029	)	28.0	%
Interest income	1,372			1,218			154			12.6	%
Derivative income (expense)	(1,256		)	—			(1,256		)	N/M
Income tax benefit	4,555			8,056			(3,501		)	-43.5	%
Income (loss) from discontinued operations, net of income taxes	794			(187		)	981			-524.6	%

Interest Expense - Interest expense increased $4.0 million and $15.0 million, respectively, for the three and nine months ended January 23, 2011, as compared to the same period in the prior fiscal year. This increase reflects the amendment of our senior credit facility during the fourth quarter of fiscal year 2010 which increased our interest rate on borrowings under the facility and additional interest on borrowings to fund our acquisition of the Vicksburg casino effective June 8, 2010.

Derivative income (expense) — This is related to the change in fair value of our ineffective interest rate swaps.  Our interest rate swaps became ineffective following the amendment of our senior secured credit facility during the fourth quarter of fiscal year 2010.

Income Tax Benefit (Provision) — Our income tax benefit (provision) from continuing operations and our effective income tax rate has been impacted by our estimate of annual taxable income for financial statement purposes as well as our percentage of permanent and other items in relation to such estimated income or loss. During the prior fiscal year, our effective income tax rate was also impacted by our settlement of certain tax liabilities for $4.7 million less than our estimated accrual.

25

Liquidity and Capital Resources

Cash Flows from Operating Activities - During the nine months ended January 23, 2011, we generated $82.8 million in cash flows from operating activities compared to generating $69.8 million during the nine months ended January 24, 2010. The year over year increase in cash flows from operating activities primarily results from increases in operating income, exclusive of non-cash items, such as depreciation and expense recoveries.

Cash Flows used in Investing Activities - During the nine months ended January 23, 2011, we used $132.2 million for investing activities compared to using $24.9 million during the nine months ended January 24, 2010. Significant investing activities for the nine months ended January 23, 2011 included the purchase of the Rainbow casino in Vicksburg, Mississippi for $76.2 million, purchases of property and equipment of $46.1 million, of which $8.7 million relates to Cape Girardeau, and increases in restricted cash at our captive insurance company by $9.5 million to fund insurance reserves in lieu of providing letters of credit.

For the nine months ended January 24, 2010, significant investing activities included the purchase of property and equipment for $21.6 million and payment of $4.0 million towards our Waterloo gaming license.

Cash Flows used in Financing Activities - During the nine months ended January 23, 2011 we had net borrowings under our line of credit of $58.0 million which included the borrowing of $80 million to fund our acquisition of the Rainbow casino in Vicksburg, Mississippi. We also used $6.6 million to repay other outstanding long-term debt.

During the nine months ended January 24, 2010, our net cash flows used in financing activities were used primarily to repay our outstanding long term debt of $69.1 million.

Availability of Cash and Additional Capital - At January 23, 2011, we had cash and cash equivalents of $70.0 million and marketable securities of $21.8 million. As of January 23, 2011, we had $79.5 million in revolving credit borrowings and $811.0 million in term loans outstanding under the senior secured credit facility. Our line of credit availability at January 23, 2011 was approximately $140 million as limited by our leverage ratio.

Common Stock Offering - On January 25, 2011 we issued 5.3 million shares of our common stock for total net proceeds of approximately $51.7 million.  Proceeds from the common stock offering were used to repay amounts under our Credit Facility and for general corporate purposes.

Capital Expenditures and Development Activities - On December 1, 2010, our proposed casino in Cape Girardeau, Missouri was selected by the Missouri Gaming Commission for prioritization for the 13th and final gaming license in the State of Missouri. We had previously entered into a development agreement with the City of Cape Girardeau. The project is expected to include 1,000 slot machines, 28 table games, 3 restauants, a lounge and terrace overlooking the Mississippi River and a 750-seat event center.  We currently estimate the cost of the project at approximately $125 million with an anticipated opening date by the end of calendar 2012.

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. Our current planned capital expenditures include approximately $10 million in maintenance capital expenditures and approximately $5 million in expenditures related to Cape Girardeau for the balance of fiscal year 2011.

As part of our business development activities, historically 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.

26

We have entered into an agreement to provide management services for a potential casino to be located at the Nemacolin Woodlands Resort in Farmington, Pennsylvania, (“the Resort”). The development of this casino is subject to numerous regulatory approvals including obtaining a state gaming license, which is a competitive award process among four applicants. If the Resort is successful in obtaining a gaming license, we have agreed to complete the build-out of the casino space. We currently estimate the project cost at approximately $50 million.

We have identified several capital projects primarily focused on refreshing our hotel room inventory as well as additional improvements to our Black Hawk and Lake Charles properties, and further Lady Luck conversions. The timing and amount of these capital expenditures will be determined as we gain more clarity as to improvement of economic and local market conditions, cash flows from our continuing operations and availability of cash under our senior secured 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, proceeds from our recent equity offering, cash flow from operations, and available borrowings under our senior secured 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 senior secured 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.

Accounting Standards Codification (“ASC”) Topic 350, Intangibles-Goodwill and Other, requires goodwill and other intangibles to be reviewed for impairment at least annually or on an interim basis if indicators of impairment exist. Goodwill for relevant reporting units is tested for impairment using a cash flow analysis based on forecasted future results discounted using our weighted average cost of capital and by using a market approach based upon valuation multiples for similar companies.

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 2010 Annual Report on Form 10-K/A.  There were no newly identified significant accounting estimates in the third quarter of fiscal year 2011, nor were there any material changes to the critical accounting policies and estimates set forth in our 2010 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, foreign currency exchange rates, commodity prices and equity prices. Our primary exposure to market risk is interest rate risk associated with our Isle of Capri Casinos, Inc. senior secured credit facility (“Credit Facility”).

27

We have entered into interest rate swap and cap arrangements with aggregate notional value of $320 million as of January 23, 2011. The swap agreements effectively convert portions of the Credit Facility variable debt to a fixed-rate basis until the respective swap agreements terminate, which occurs during fiscal years 2011, 2012 and 2014.  Our interest expense is impacted by the relationship between our Credit Facility variable rate debt and our interest rate derivatives, and as such, based on current debt levels, relative changes in future interest rates would impact future annual interest expense as follows:

Increase to	Increase/(decrease)
variable rate	(in millions)
1%	$	(1.0	)
2%	0.4
3%	6.9
4%	12.6
5%	18.3

ITEM 4.   CONTROLS AND PROCEDURES

EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES

We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our Exchange Act reports is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.

Our management is responsible for establishing and maintaining adequate internal control over financial reporting for the Company, as such term is defined in Exchange Act Rule 13a-15(f).  Under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, we conducted an evaluation of the effectiveness of our internal control over financial reporting based on the framework in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”).  Based on the evaluation, management has concluded that the design and operation of our disclosure controls and procedures are effective as of January 23, 2011.

Because of its inherent limitations, systems of internal control over financial reporting can provide only reasonable assurance with respect to financial statement preparation and presentation.

CHANGES IN INTERNAL CONTROL OVER FINANCIAL REPORTING

There have been no changes in our internal controls over financial reporting during the fiscal quarter ended January 23, 2011, 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 14 of our unaudited condensed consolidated financial statements included herein, which is incorporated herein by reference.

ITEM 1A.RISK FACTORS

Except as follows, there are no material changes to the disclosure regarding risk factors presented in our Annual Report on Form 10-K/A for the fiscal year ended April 25, 2010.

28

We are effectively controlled by the Goldstein Parties and their decisions may differ from those that may be made by other stockholders.

Robert S. Goldstein, our Vice Chairman, and Jeffrey D. Goldstein and Richard A. Goldstein, two of our directors, GFIL Holdings, LLC, spouses, children and grandchildren of certain members of the Goldstein family and entities associated with certain members of the Goldstein family (collectively the “Goldstein Parties”) collectively own and control approximately 42.6% of our common stock as of February 21, 2011.  GFIL Holdings, LLC, which is managed by Jeffrey D. Goldstein, Richard A. Goldstein and Robert S. Goldstein, provides for the collective ownership of the Goldstein Parties’ shares of our common stock.

The Goldstein Parties have substantial influence over the election of our board of directors and the outcome of the vote on substantially all other matters, including amendment of our amended and restated certificate of incorporation, amendment of our by-laws and significant corporate transactions, such as the approval of a merger or other transactions involving a sale of the Company. Such substantial influence may have the effect of discouraging transactions involving an actual or potential change of control, which in turn could have a material adverse effect on the market price of our common stock or prevent our stockholders from realizing a premium over the market price for their shares of common stock. The interests of the Goldstein Parties may differ from those of our other stockholders.

Additionally, pursuant to the Governance Agreement, dated January 19, 2011 (as amended, the “Goldstein Governance Agreement”), between us and the Goldstein Parties, we have called a special meeting of stockholders for March 18, 2011, to vote on certain amendments to our amended and restated certificate of incorporation and, if approved by our stockholders, to effect the amendments to our amended and restated certificate of incorporation and to our by-laws. The amendments to our amended and restated certificate of incorporation will provide that, until the Supermajority Expiration Time (as defined in the amendments to our amended and restated certificate of incorporation), we may not, without the affirmative vote of the holders of at least two-thirds of our voting power, voting as a single class, authorize, adopt or approve certain extraordinary corporate transactions and pro vide for the classification of our board of directors and three-year terms of service for each class of directors. Further, we agreed that until the Nomination Expiration Date (as defined in the Goldstein Governance Agreement), we will take all action reasonably necessary for the board of directors to nominate and recommend for election by the stockholders each of Robert S. Goldstein, Jeffrey D. Goldstein and Richard A. Goldstein, at any annual meeting at which their respective directorship terms are scheduled to expire.  Notwithstanding the foregoing, if our stockholders do not approve the amendments to our amended and restated certificate of incorporation, we will not proceed with the amendments to our amended and restated certificate of incorporation or by-laws and will take all steps necessary to effect such abandonment and the Goldstein Parties will take all steps reasonably requested by us to effect such abandonment.

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 were made during the nine months ended January 23, 2011.

ITEM 3.DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4.SUBMISSION OF MATTERS SUBJECT TO A VOTE OF SECURITY HOLDERS

None.

ITEM 5.OTHER INFORMATION

None.

29

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.

30

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: February 28, 2011	/s/ DALE R. BLACK
	Dale R. Black
	Senior Vice President and Chief Financial Officer
	(Principal Financial Officer and Authorized Officer)

31

EXHIBIT NUMBER	DESCRIPTION
10.1	Amendment Number One to Governance Agreement, dated February 23, 2011, by and among Isle of Capri Casinos, Inc., GFIL Holdings, LLC, Jeffrey D. Goldstein, Robert S. Goldstein and Richard A. Goldstein
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

32