MINNEAPOLIS, Mar 12, 2010 (BUSINESS WIRE) –
Lakes Entertainment, Inc.
/quotes/comstock/15*!laco/quotes/nls/laco
(LACO
2.90,
0.00,
0.00%)
today announced results for the
three and twelve-month periods ended January 3, 2010.
Fourth Quarter Results
Lakes Entertainment reported fourth quarter 2009 revenues of $5.3
million, compared to prior-year period revenues of $5.5 million. This
decrease was due to a decline in fees from the Red Hawk Casino near
Sacramento, California.
For the fourth quarter of 2009, Lakes’ selling, general and
administrative expenses were $2.9 million compared to $3.5 million in
the fourth quarter of 2008. Selling, general and administrative expenses
consisted primarily of payroll and related expenses, travel expenses and
professional fees. Included in selling, general and administrative
expenses were costs associated with the application for a gaming site in
the State of Kansas of approximately $0.3 million during the fourth
quarter of 2009.
Net unrealized losses on notes receivable relate to the Company’s notes
receivable from Indian tribes, which are adjusted to estimated fair
value prior to opening, based upon the current status of the related
tribal casino projects and evolving market conditions. In the fourth
quarter of 2009, net unrealized losses on notes receivable were $1.4
million, compared to net unrealized losses of $18.8 million in the
prior-year period. Unrealized losses on notes receivable during the
fourth quarter of 2009 resulted primarily from the recognition of loss
associated with the project with the Jamul Indian Village (“Jamul
Tribe”) near San Diego, California because of further delays in the
expected opening date of this project. The net unrealized losses in the
fourth quarter of 2008 were due to the recognition of an $11.8 million
loss associated with the Jamul Tribe project, which resulted from
uncertainty surrounding the completion of this project, and a $6.6
million loss on notes receivable from the Shingle Springs Tribe related
to the Red Hawk Casino which resulted primarily from a decline in
projected interest rates and an increase in the discount rate associated
with this project as a result of financial market conditions.
Impairments on intangible assets and land held for development during
the fourth quarter related to the Jamul project ($0.8 million in 2009
and $20.0 million in 2008) due to issues described in the previous
paragraph and our Vicksburg project ($0.5 million in 2009 and $4.0
million in 2008) due to continued uncertainty surrounding the
development of this project.
Costs associated with supporting the 2008 Ohio casino resort initiative
were $18.4 million during the fourth quarter of 2008.
The loss from operations was $3.2 million for the fourth quarter of
2009, compared to $61.1 million for the fourth quarter of 2008, and
resulted primarily from the items discussed above.
Other income (expense), net for the three months ended January 3, 2010
was $2.2 million compared to ($0.3) million for the three months ended
December 28, 2008. The increase was due primarily to interest recognized
on notes receivable from the Shingle Springs Tribal Gaming Authority.
The loss from continuing operations for the fourth quarter of 2009 was
$2.4 million, compared to $67.0 million in the fourth quarter of 2008.
Losses applicable to common shareholders were $0.09 per share in the
fourth quarter of 2009, compared to $2.63 per share for the fourth
quarter of 2008.
Twelve Month 2009 Results
Lakes Entertainment reported revenues for the twelve-month period ended
January 3, 2010 of $26.2 million, compared to prior-year revenues of
$24.3 million. This increase was primarily due to a full twelve months
of contribution of management fees from the Red Hawk Casino, which
opened to the public on December 17, 2008.
For 2009, Lakes’ selling, general and administrative expenses were $14.2
million compared to $15.3 million in 2008. This decrease was primarily
the result of a decline in payroll and related costs as well as a
decline in travel expenses during 2009, which were partially offset by
an increase in professional fees, which consisted mainly of legal costs
related to our new business opportunities, compared to the prior year.
Included in 2009 selling, general and administrative expenses were costs
associated with the application for a gaming site in the State of Kansas
of approximately $0.7 million.
Other costs and expenses for the twelve months ended January 3, 2010
included an increase in amortization of intangible assets of
approximately $3.6 million over the prior year, primarily associated
with the casino project with the Shingle Springs Band of Miwok Indians,
which commenced upon the opening of the Red Hawk Casino in December
2008. Also included in other costs and expenses were impairment losses
of $4.2 million and $24.0 million during 2009 and 2008, respectively,
primarily associated with the Jamul project ($2.9 million in 2009 and
$20.0 million in 2008) and the Vicksburg project ($0.5 million in 2009
and $4.0 million in 2008), both discussed above.
For the twelve months ended January 3, 2010, net unrealized gains on
notes receivable were $1.9 million, compared to net unrealized losses of
$17.8 million in the prior-year. Net unrealized losses during 2008 were
primarily due to the unrealized losses associated with the notes
receivable from the Jamul Tribe and the Shingle Springs Tribe discussed
above. The net unrealized gains of $1.9 million in 2009 were primarily
related to the notes receivable from the Jamul Tribe primarily due to
improvements in the credit markets during 2009, which were partially
offset by losses related to further delays in the expected opening date
of this project.
Costs associated with supporting the 2008 Ohio casino resort initiative
were $28.7 million during 2008.
The loss from operations was $1.0 million for the twelve months ended
January 3, 2010, compared to $68.7 million for the twelve months ended
December 28, 2008.
Other income (expense), net for the twelve months ended January 3, 2010
was $6.1 million compared to $(0.3) million for the twelve months ended
December 28, 2008. The increase was due primarily to interest recognized
on notes receivable from the Shingle Springs Tribal Gaming Authority.
Earnings from continuing operations for the twelve months ended January
3, 2010 were $3.7 million, compared to a loss of $78.0 million in the
prior-year. Earnings applicable to common shareholders were $0.14 per
share in the twelve months ended January 3, 2010, compared to losses of
$3.43 per share in 2008.
Tim Cope, President and Chief Financial Officer of Lakes, stated, “Two
of the casinos we manage, the Four Winds Casino Resort and the Cimarron
Casino, continued to meet our expectations during 2009 and we continue
to focus on operating these properties as efficiently as possible.”
Mr. Cope continued, “2009 also marked the first full year of operations
for the Red Hawk Casino near Sacramento, California. The uncertain
economic environment continues to impact this property’s ability to
achieve consistently strong results. Because operating results did not
meet our expectations, we made a number of substantial changes
throughout the year including the mix of slot machines and table games
offered for play, the variety and type of marketing plans and many of
the senior management positions at the property have either been
eliminated or replaced. We remain focused on achieving improved results
and we continue to be optimistic about this property’s long-term
operating prospects.”
Further commenting, Lyle Berman, Chief Executive Officer of Lakes
stated, “We fully recognize that our long-term success depends not only
on achieving strong operating performance at each of our managed
properties, but also on seeking and developing new business
opportunities which will help us reach our goals. We continue to work
through the application process for a gaming site in the State of
Kansas. We have also invested in each of the four casino projects in the
State of Ohio that were approved in the November 2009 election and we
recently announced the execution of a management agreement for a
potential casino located in Tunica, Mississippi. We continue to move
forward with these and other potential projects, focused on increasing
shareholder value.”
About Lakes Entertainment
Lakes Entertainment, Inc. currently has development and management or
financing agreements with four separate Tribes for casino operations in
Michigan, California, and Oklahoma, for a total of five separate casino
sites. Lakes is currently managing the Cimarron Casino for the Iowa
Tribe of Oklahoma, the Four Winds Casino Resort for the Pokagon Band of
Potawatomi Indians and the Red Hawk Casino for the Shingle Springs Band
of Miwok Indians. Lakes is also involved in other business activities,
including the development of new table games for licensing to Tribal and
non-Tribal casinos.
The Private Securities Litigation Reform Act of 1995 provides a safe
harbor for forward-looking statements. Certain information included in
this press release (as well as information included in oral statements
or other written statements made or to be made by Lakes Entertainment,
Inc.) contains statements that are forward-looking, such as statements
relating to plans for future expansion and other business development
activities as well as other capital spending, financing sources and the
effects of regulation (including gaming and tax regulation) and
competition. Such forward-looking information involves important risks
and uncertainties that could significantly affect anticipated results in
the future and, accordingly, such results may differ from those
expressed in any forward-looking statements made by or on behalf of the
company. These risks and uncertainties include, but are not limited to,
need for potential future financing to meet Lakes’ development needs;
those relating to the inability to complete or possible delays in
completion of Lakes’ casino projects, including various regulatory
approvals and numerous other conditions which must be satisfied before
completion of these projects; possible termination or adverse
modification of management or development contracts; Lakes operates in a
highly competitive industry; possible changes in regulations; reliance
on continued positive relationships with Indian tribes and repayment of
amounts owed to Lakes by Indian tribes; possible need for future
financing to meet Lakes’ expansion goals; risks of entry into new
businesses; and reliance on Lakes’ management. For more information,
review the company’s filings with the Securities and Exchange Commission.
LAKES ENTERTAINMENT, INC. AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
January 3, 2010 December 28, 2008
Assets (In thousands)
Current assets:
Cash $ 3,751 $ 6,170
Accounts receivable 1,457 2,407
Current portion of notes receivable from Indian casino projects 6,671 9,151
Investment securities, including rights 24,317 -
Other 2,478 1,232
Total current assets 38,674 18,960
Property and equipment, net 5,334 5,585
Long-term assets related to Indian casino projects:
Notes receivable, net of current portion 46,100 44,002
Notes receivable at fair value 13,254 10,703
Intangible assets 45,064 47,586
Other 6,137 6,591
Total long-term assets related to Indian casino projects 110,555 108,882
Other assets:
Investment securities, including rights - 26,544
Investment in unconsolidated investees 12,441 -
Land held for development 4,900 5,400
Deferred taxes and other 1,833 73
Total other assets 19,174 32,017
Total assets $ 173,737 $ 165,444
Liabilities and shareholders' equity
Current liabilities:
Line of credit payable $ 16,346 $ 18,152
Non-revolving line of credit payable 2,000 -
Current portion of acquisition costs payable 2,232 2,089
Income taxes payable 17,069 16,241
Other 2,454 3,659
Total current liabilities 40,101 40,141
Long-term liabilities:
Non-revolving line of credit payable - 2,000
Contract acquisition costs payable, net of current portion 10,197 5,253
Long-term liabilities 10,197 7,253
Total liabilities 50,298 47,394
Total shareholders' equity 123,439 118,050
Total liabilities and shareholders' equity $ 173,737 $ 165,444
LAKES ENTERTAINMENT, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Earnings (Loss)
(In thousands, except per share data)
Three months ended Twelve months ended
January 3, 2010 December 28, 2008 January 3, 2010 December 28, 2008
Revenues:
Management fees $ 5,245 $ 5,452 $ 26,161 $ 24,269
License fees 16 10 59 61
Total revenues 5,261 5,462 26,220 24,330
Costs and expenses:
Selling, general and administrative 2,912 3,537 14,204 15,258
Ohio initiative costs 3 18,366 28 28,749
Impairment losses 1,289 23,962 4,166 23,962
Amortization of intangible assets related to Indian casino projects 2,787 1,814 10,417 6,856
Depreciation 68 80 279 336
Total costs and expenses 7,059 47,759 29,094 75,161
Net unrealized gains (losses) on notes receivable (1,372 ) (18,820 ) 1,875 (17,836 )
Loss from operations (3,170 ) (61,117 ) (999 ) (68,667 )
Other income (expense):
Interest income 2,749 134 8,033 985
Equity in loss of unconsolidated investee (231 ) - (248 ) -
Interest expense & other (322 ) (410 ) (1,663 ) (1,235 )
Total other income (expense), net 2,196 (276 ) 6,122 (250 )
Earnings (loss) from continuing operations before income taxes (974 ) (61,393 ) 5,123 (68,917 )
Income taxes 1,456 5,598 1,420 9,108
Earnings (loss) from continuing operations (2,430 ) (66,991 ) 3,703 (78,025 )
Discontinued operations, net of tax (net of $5.2 million and $3.7 - (1,519 ) - (8,298 )
million allocated to the prior noncontrolling interest)
Net earnings (loss) applicable to Lakes Entertainment, Inc. $ (2,430 ) $ (68,510 ) $ 3,703 $ (86,323 )
Earnings (loss) applicable to Lakes Entertainment, Inc. per share $ (0.09 ) $ (2.63 ) $ 0.14 $ (3.43 )
- basic & diluted
Weighted-average common shares outstanding - basic 26,328 26,082 26,327 25,201
Dilutive effect of common stock equivalents N/A N/A 84 N/A
Weighted-average common shares outstanding - diluted N/A N/A 26,411 N/A
SOURCE: Lakes Entertainment, Inc.
Lakes Entertainment, Inc.
Timothy Cope, 952-449-7030
Copyright Business Wire 2010
