Lakes Entertainment, Inc. Announces Results for Second Quarter 2007.MINNEAPOLIS -- Lakes Entertainment, Inc. (NASDAQ NASDAQ in full National Association of Securities Dealers Automated Quotations U.S. market for over-the-counter securities. Established in 1971 by the National Association of Securities Dealers (NASD), NASDAQ is an automated quotation system that reports on :LACO) today announced results for the second quarter ended July 1, 2007. Revenue for the quarter totaled $8.1 million compared to $11.2 million for the second quarter ended July 2, 2006. Earnings from operations were $1.6 million for the current year quarter compared to earnings from operations of $15.7 million for the prior year comparable period. Net earnings available to common shareholders for the second quarter of 2007 were $6.6 million, and basic and diluted earnings available to common shareholders were $0.28 per share and $0.25 per share, respectively. This compares with net earnings available to common shareholders of $3.2 million, and basic and diluted earnings available to common shareholders of $0.14 per share and $0.13 per share, respectively, in the second quarter of 2006. During the second quarter of 2007, net earnings available to common shareholders were reduced by approximately $1.4 million, resulting from a previously announced amendment to the exercise price of a common stock purchase warrant. As a result of the amendment, the warrant holder purchased the remaining shares underlying the warrant and paid the aggregate exercise price of approximately $7.5 million to Lakes. Revenues for both years were derived primarily from television license fees related to the World Poker Tour For the PBS network with the same abbreviation, see . The World Poker Tour (Abbreviated WPT) is a series of international poker tournaments featuring most of the world's professional players. ("WPT WPT World Poker Tour WPT Waypoint WPT Wisconsin Public Television WPT Watson Poker Tour WPT Wonderlic Personnel Test WPT Wavelet Packet Transform WPT Wireless Power Transmission WPT Windfall Profit WPT Wireless Personal Terminal WPT Word Processing Technician ") television series of Lakes' majority-owned subsidiary majority-owned subsidiary A firm in which more than 50% of outstanding voting stock is owned by the parent company. , WPT Enterprises, Inc. ("WPTE WPTE Western Pacific Tracking Element "). The decrease in revenues during the second quarter of 2007 compared to the second quarter of 2006 was primarily a result of the delivery of nine episodes of the Professional Poker Tour  This article or section contains information about the future of a television show which is currently on a seasonal break or has not yet finished its broadcast run. ("PPT") television series in the second quarter of
2006 versus the delivery of no episodes of the PPT in the 2007 period
and the delivery of nine episodes of Season Five of the WPT television
series in the second quarter of 2007 versus the delivery of 10 episodes
of Season Four of the WPT television series in the 2006 period.
During the second quarter of 2007, casino management fees were approximately $0.4 million, compared to casino management fees of approximately $0.2 million in the second quarter of 2006. Net realized and unrealized gains Unrealized Gain A profit that results from holding on to an asset rather than cashing it in and using the funds. Notes: Let's say you own a stock that has doubled, but you haven't sold it yet. This is said to be an unrealized gain. on notes receivable were $8.9 million and $17.6 million for the second quarter of 2007 and the second quarter of 2006, respectively. The net realized and unrealized gains in the second quarter of 2007 related to the Company's notes receivable from the Shingle shingle Thin piece of building material made of wood, asphaltic material, slate, metal, or concrete, laid in overlapping rows to shed water. Shingles are widely used as roof covering on residential buildings and sometimes also for siding (see Shingle style). Springs Band of Miwok Indians ("Shingle Springs Tribe") and the Jamul Indian Village which are adjusted to estimated fair value based upon the current status of the related tribal casino projects. The $8.9 million in unrealized gains recognized in the second quarter of 2007 were primarily related to favorable events occurring related to the casino project with the Shingle Springs Tribe which increased the fair value of the notes receivable from the Shingle Springs Tribe. As previously announced, during June of 2007, an affiliate of the Shingle Springs Tribe closed on a $450 million senior note financing to fund the Foothill Oaks Casino project in Shingle Springs, California Shingle Springs is a census-designated place (CDP) in El Dorado County, California, United States. The population was 2,643 at the 2000 census. It is located about 40 miles from Sacramento in the historic Gold Country foothills. and construction on the project began during the second quarter of 2007. During the second quarter of 2006, the net realized and unrealized gains of $17.6 million related primarily to the increased fair value of the Company's notes receivable related to the casino development project with the Pokagon Band of Potawatomi Indians Pokagon Band of Potawatomi Indians are Algonquian-speaking Potawatomi-people located in southwestern Michigan and northeastern Indiana. Tribal government functions are located in Dowagiac, Michigan. The tribal membership has grown to approximately 3,150 members as of 2006. ("Pokagon Band"), due primarily to favorable events occurring during that quarter. Selling, general and administrative expenses were $10.0 million during the second quarter of 2007 compared to $8.8 million in the second quarter of 2006. The increase primarily related to additional headcount and development costs associated with WPTE's online gaming See gaming. efforts. Included in costs and expenses for the second quarter of 2007 is a $2.3 million write-off of online gaming assets, which resulted from WPTE ceasing internal development of its previously planned stand-alone online gaming platform after entering into an agreement with CrypotoLogic in late April 2007 to re-launch WPTE's online gaming site on the Cryptologic cryp·tol·o·gy n. The study of cryptanalysis or cryptography. cryp  to·log platform.
Other income for the second quarter of 2007 was $5.5 million compared to other expense of $7.7 million for the second quarter of 2006. Immediately following the closing of the financing for the project with the Shingle Springs Tribe as discussed above, Lakes was repaid approximately $17.2 million by the Shingle Springs Tribe for land Lakes had previously purchased on behalf of the Shingle Springs Tribe, and for certain construction advances and certain accrued interest Accrued Interest The interest that has accumulated on a bond since the last interest payment up to but not including the settlement date. There are two methods for calculating accrued interest: 1) 360-day year method, used for corporate and municipal bonds. . As a result, Lakes recognized interest income of approximately $4.9 million during the second quarter of 2007. Other expense during the second quarter of 2006 related primarily to a loss on extinguishment The destruction or cancellation of a right, a power, a contract, or an estate. Extinguishment is sometimes confused with merger, though there is a clear distinction between them. of debt of $6.8 million related to the payoff of a financing facility during June of 2006. The provision for income taxes was $0.3 million for the second quarter of 2007 and $3.8 million for the second quarter of 2006. The provision in both quarters related primarily to previously announced tax audit matters. Tim Cope, President and Chief Financial Officer of Lakes, stated, "The second quarter of 2007 was very positive for Lakes. Significant progress was made for the Shingle Springs Tribe when financing was completed and we are very pleased that construction on this project is now underway." Mr. Cope continued, "We are very excited about the recent grand opening of the Pokagon Band's Four Winds Casino Resort in New Buffalo, Michigan New Buffalo is a city in Berrien County in the U.S. state of Michigan. The population was 2,200 at the 2000 census. Geography According to the United States Census Bureau, the city has a total area of 6.4 km² (2.5 mi²). 6.3 km² (2.4 mi²) of it is land and 0.1 km² (0. . Operations are underway and we look forward to continuing our partnership with the Pokagon Band as we manage this outstanding project which includes 130,000 square feet of gaming space, six restaurants, a hotel, retail outlets, a supervised childcare facility and other amenities." Lyle Berman Lyle Berman (born August 6, 1941 in Minneapolis, Minnesota) is a professional poker player and business executive. Business Berman grew up in Minnesota and attended the University of Minnesota where he graduated in 1964 with a degree in business administration. , Chief Executive Officer of Lakes, stated, "In addition to managing the recently opened Four Winds Casino Resort and the Iowa Tribe The Iowa (also spelled Ioway), also known as the Baxoje, are a Native American people. Together with the Missouri, the Omaha, the Oto and the Ponca they are part of the Chiwere-speaking peoples, claiming the Ho-Chunks as their "grandfathers. of Oklahoma's existing Cimarron Casino in Oklahoma, we continue to move forward with all of our casino development projects and look forward to successfully opening each of them." About Lakes Entertainment Lakes Entertainment, Inc. currently has development and management agreements with five separate Tribes for casino operations in Michigan, California, and Oklahoma, for a total of eight separate casino sites. In addition, Lakes has announced plans to develop a company owned casino resort project in Vicksburg, Mississippi Vicksburg is a city in Warren County, Mississippi. It is located 234 miles (377 km) north by west of New Orleans on the Mississippi and Yazoo rivers, and 40 miles (65 km) due west of Jackson, the state capital. . The Company also owns approximately 61% of WPT Enterprises, Inc. (NASDAQ: WPTE), a separate publicly held media and entertainment company principally engaged in the development, production and marketing of gaming themed televised programming including the World Poker Tour([R]) television series, the operation of an online gaming website, the licensing and sale of branded consumer products and the sale of corporate sponsorships. The Private Securities Litigation Reform Act The Private Securities Litigation Reform Act of 1995 (PSLRA) implemented several significant substantive changes affecting certain cases brought under the federal securities laws, including changes related to pleading, discovery, liability, class representation and awards fees and of 1995 provides a "safe harbor Safe Harbor 1. A legal provision to reduce or eliminate liability as long as good faith is demonstrated. 2. A form of shark repellent implemented by a target company acquiring a business that is so poorly regulated that the target itself is less attractive. " 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 relating to relate prep → concernant relating to relate prep → bezüglich +gen, mit Bezug auf +acc plans for future expansion and other business development activities as well as other capital spending capital spending Spending for long-term assets such as factories, equipment, machinery, and buildings that permits the production of more goods and services in future years. , 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 current financing to meet Lakes' operational and 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; continued contracts with the Pawnee Nation as a result of the change in its business council membership; possible need for future financing to meet Lakes' expansion goals; risks of entry into new businesses; reliance on Lakes' management; and the fact that the WPTE shares held by Lakes are currently not liquid assets Cash, or property immediately convertible to cash, such as Securities, notes, life insurance policies with cash surrender values, U.S. savings bonds, or an account receivable. , and there is no assurance that Lakes will be able to realize value from these holdings equal to the current or future market value of WPTE common stock. There are also risks and uncertainties relating to WPTE that may have a material effect on the Company's consolidated results of operations or the market value of the WPTE shares held by the Company, including WPTE's significant dependence on the Travel Channel as a current source of revenue and GSN GSN Game Show Network GSN GCOS Surface Network GSN Gelsolin GSN Global Seismic Network GSN Government Security News GSN Gigabyte System Network (CERN) GSN GPRS Support Node (3GPP) as a future source of revenue, and the risk that GSN will not exercise its options to air seasons of the WPT series beyond Season Six; difficulty of predicting the growth of WPTE's online gaming business, which is a relatively new industry with an increasing number of market entrants; reliance on the efforts of CryptoLogic to develop and maintain the online gaming website in compliance with WPTE's business model and applicable gaming laws; the potential that WPTE's television programming will fail to maintain a sufficient audience; the risk that WPTE may not be able to protect its entertainment concepts, current and future brands and other intellectual property rights; the risk that competitors with greater financial resources or marketplace presence might develop television programming that would directly compete with WPTE's television programming; risks associated with future expansion into new or complementary businesses; the termination or impairment of WPTE's relationships with key licensing and strategic partners; and WPTE's dependence on its senior management team. For more information, review the Company's filings with the Securities and Exchange Commission. [TABLE OMITTED] [TABLE OMITTED] |
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