EXHIBIT 99.1
[LAKES ENTERTAINMENT, INC. LOGO]
NEWS RELEASE
LAKES ENTERTAINMENT, INC.
130 CHESHIRE LANE
MINNETONKA, MN 55305
952-449-9092
952-449-9353 (FAX)
WWW.LAKESENTERTAINMENT.COM
TRADED: NASDAQ "LACO"
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FOR FURTHER INFORMATION CONTACT:
Timothy J. Cope 952-449-7030
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FOR IMMEDIATE RELEASE:
Tuesday, February 11, 2003
LAKES ENTERTAINMENT, INC. ANNOUNCES RESULTS FOR
YEAR 2002
MINNEAPOLIS, FEBRUARY 11, 2003 - LAKES ENTERTAINMENT, INC. (NASDAQ "LACO") today
announced results for the fiscal year ended December 29, 2002. Revenue for the
year totaled $1.5 million. The net loss for the year was $11.5 million and basic
and diluted losses were $1.08 per share. This compares with a net loss of $2.9
million, and basic and diluted losses of $.27 per share in 2001.
The loss for 2002 includes an impairment charge of $4.0 million after-tax taken
on a note receivable from Living Benefits Financial Services. This impairment
was the result of increased competition in the viatical business and
restrictions on ability to make further policy acquisitions. The current year
loss also includes an impairment charge of $1.8 million after-tax relating to
revised terms for the transfer of title and rights to the Polo Plaza Shopping
Center property and adjacent Travelodge property in Las Vegas, Nevada,
respectively. During 2002, the Shark Club parcel in Las Vegas, Nevada was also
adjusted to its estimated market value of $15.0 million, resulting in an
impairment charge of approximately $0.6 million after-tax. By comparison, net
loss in the previous year also reflected the negative effects of several
one-time charges, including a $17.2 million after-tax charge related to the Polo
Plaza Shopping Center, Travelodge, Shark Club and Cable properties in Las Vegas,
Nevada.
Revenue for the year decreased by $33.4 million from 2001, principally because
2001 revenues included management fees for the management of Grand Casino
Coushatta for the entire year. Since this management contract expired on January
16, 2002, current year revenues include management fees for only 17 days. Due to
the expiration of this management agreement with the Coushatta Tribe of
Louisiana, the company's revenues
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and earnings have not included contributions from the Coushatta operation since
January 16, 2002. The Company currently has no other management contracts from
which it will derive revenues in 2003.
Lakes' balance sheet at December 29, 2002 included approximately $176 million in
assets and $15 million in liabilities for a book value of approximately $15.09
per share. Lakes' assets included $14 million in unrestricted cash, $8 million
in restricted cash, notes receivable from loans related to new Indian casino
projects of $71 million, Las Vegas land held under contract for sale of
approximately $29 million, land held for development consisting of the Shark
Club parcel of $15 million and land purchases at the various casino development
sites of approximately $13 million, deferred tax assets of approximately $11
million and various other items of approximately $15 million.
Lyle Berman, Chairman, CEO and President of Lakes, stated, "2002 was a year of
progress in several areas. A new joint venture was formed during 2002 called the
World Poker Tour. The World Poker Tour has started filming poker tournaments
throughout the world for viewing on television. The Travel Channel recently
announced that they would soon begin broadcasting the World Poker Tour events.
In conjunction with this new business opportunity, the company was renamed Lakes
Entertainment, Inc. to better describe our business model. Regarding the land we
sold in Las Vegas at the end of last year, we have resolved all of the
post-closing conditions to the sale and now expect to receive a substantial
amount of the payment by the end of March of this year. In addition, Lakes
entered into a joint-venture for the purpose of developing the Shark Club parcel
in Las Vegas, Nevada as an upscale time-share project and continue to review
other potential opportunities for this land.
During 2002, the dismissal of the Stratosphere litigation previously referred to
as the "Standby Equity Commitment Litigation", was affirmed by the Appeals
Court. Since Lakes would have been required to indemnify Grand for the amount of
any judgment, we are pleased that this major uncertainly which has previously
surrounded our company has now been definitively removed. In addition, during
January 2002, we completed the purchase of our corporate office building
eliminating the risk of a long-term lease commitment."
Mr. Berman also stated, "We have development and management contracts for what
we feel are the best potential new Native American Casino sites in the country.
Although the regulatory and development approvals are moving more slowly than
expected and no construction was started in 2002, we continue to proceed with
our development and architecture plans so that we may start building as soon as
all necessary approvals are received. We are very pleased that approval of the
new interchange construction for access to tribal land of the Shingle Springs
Band of Miwok Indians was received during 2002. This approval represented a
major step forward in the regulatory approval process for the project. The
neighboring county has commenced litigation against the California regulatory
agencies, attempting to block the approval of the interchange. We are assisting
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the agencies in vigorously defending their position and we hope the litigation
will not result in a significant delay before construction can begin."
Mr. Berman continued, "We remain focused on the successful development of our
five potential new gaming locations as well as successful development of our new
business opportunities to enhance shareholder value."
The fourth quarter financial performance resulted in a loss of approximately
$2.6 million or $.25 per share which included the $0.6 million after-tax charge
relating to impairment of the Shark Club parcel. There were no revenues during
the quarter as described above.
Lakes Entertainment, Inc. currently has development and management agreements
with four separate Tribes for four new casino operations, one in Michigan with
the Pokagon Band of Potawatomi, one in the San Diego, California area with the
Jamul Indian Village, one in the Sacramento, California area with the Shingle
Springs Band of Miwok, and one with the Nipmuc Nation on the East Coast. Lakes
Entertainment also has agreements for the development of one additional casino
on Indian-owned land in California through a joint venture with MRD Gaming.
Additionally, the Company owns approximately 80% of World Poker Tour, LLC, a
joint venture formed to film and produce poker tournaments for television
broadcast.
Lakes Entertainment, Inc. common shares are traded on the Nasdaq National Market
under the trading symbol "LACO".
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 plan 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, 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 contracts;
continued indemnification obligations to Grand Casinos; highly competitive
industry; possible changes in regulations; reliance on continued positive
relationships with Indian tribes and repayment of amounts owned 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.
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LAKES GAMING, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)
<Table>
<Caption>
DECEMBER 29, 2002 DECEMBER 30, 2001
----------------- -----------------
ASSETS
Current Assets:
Cash and cash equivalents $ 14,106 $ 42,638
Short-term investments -- 2,027
Current installments of notes receivable -- 67
Related party receivables -- 4,000
Accounts receivable, net 116 3,601
Deferred tax asset 6,771 4,549
Other current assets 547 1,079
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Total Current Assets 21,540 57,961
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Property and Equipment-Net 6,962 6,300
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Other Assets:
Land held under contract for sale 28,832 30,826
Land held for development 27,791 24,965
Notes receivable-less current installments 70,955 53,201
Cash and cash equivalents-restricted 8,300 9,175
Investments in and notes from unconsolidated affiliates 1,013 839
Deferred tax asset 3,835 3,870
Other long-term assets 6,657 6,042
---------------- ----------------
Total Other Assets 147,383 128,918
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TOTAL ASSETS $ 175,885 $ 193,179
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LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Accounts payable $ 226 $ 105
Current maturities of long-term debt -- 1,325
Current installments of capital lease obligations -- 123
Income taxes payable 5,564 3,906
Litigation and claims accrual 5,847 6,572
Accrued payroll and related 252 671
Other accrued expenses 3,486 2,670
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Total Current Liabilities 15,375 15,372
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Long-term Liabilities:
Capital lease obligations-less current installments -- 5,591
Other long-term liabilities -- 225
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Total Long-Term Liabilities -- 5,816
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TOTAL LIABILITIES 15,375 21,188
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COMMITMENTS AND CONTINGENCIES
Shareholders' Equity:
Capital stock, $.01 par value; authorized 100,000 shares; 10,638 common
shares issued and outstanding
at December 29, 2002, and December 30, 2001 106 106
Additional paid-in-capital 131,525 131,525
Retained Earnings 28,879 40,420
Accumulated other comprehensive loss -- (60)
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Total Shareholders' Equity 160,510 171,991
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TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 175,885 $ 193,179
================ ================
</Table>
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LAKES GAMING, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
(IN THOUSANDS, EXCEPT EARNINGS PER SHARE)
<Table>
<Caption>
THREE MONTHS ENDED
----------------------------------------
DECEMBER 29, 2002 DECEMBER 30, 2001
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REVENUES:
Management fee income $ -- $ 7,368
COSTS AND EXPENSES:
Selling, general and administrative 3,521 26,588
Depreciation and amortization 132 346
------------------ ------------------
Total Costs and Expenses 3,653 26,934
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LOSS FROM OPERATIONS (3,653) (19,566)
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OTHER INCOME (EXPENSE):
Interest income 118 279
Interest expense (20) (97)
Equity in loss of unconsolidated affiliates (143) (100)
Loss on sale of land held for development -- (3,731)
Other -- (684)
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Total other expense, net (45) (4,333)
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Loss before income taxes (3,698) (23,899)
Benefit for income taxes (1,054) (9,798)
------------------ ------------------
NET LOSS $ (2,644) $ (14,101)
================== ==================
BASIC LOSS PER SHARE $ (0.24) $ (1.33)
================== ==================
DILUTED LOSS PER SHARE $ (0.24) $ (1.33)
================== ==================
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING 10,638 10,638
DILUTIVE EFFECT OF STOCK COMPENSATION PROGRAMS -- --
------------------ ------------------
WEIGHTED AVERAGE COMMON AND DILUTED
SHARES OUTSTANDING 10,638 10,638
================== ==================
</Table>
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LAKES GAMING, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
(IN THOUSANDS, EXCEPT EARNINGS PER SHARE)
<Table>
<Caption>
TWELVE MONTHS ENDED
----------------------------------------
DECEMBER 29, 2002 DECEMBER 30, 2001
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REVENUES:
Management fee income $ 1,502 $ 34,854
COSTS AND EXPENSES:
Selling, general and administrative 17,892 34,649
Depreciation and amortization 481 1,329
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Total Costs and Expenses 18,373 35,978
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LOSS FROM OPERATIONS (16,871) (1,124)
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OTHER INCOME (EXPENSE):
Interest income 1,424 1,983
Interest expense (90) (170)
Equity in loss of unconsolidated affiliates (459) (465)
Loss on land held for development -- (3,731)
Write-down of unconsolidated affiliates -- (666)
Other -- (684)
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Total other income (expense), net 875 (3,733)
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Loss before income taxes (15,996) (4,857)
Benefit for income taxes (4,455) (1,991)
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NET LOSS $ (11,541) $ (2,866)
================== ==================
BASIC LOSS PER SHARE $ (1.08) $ (0.27)
================== ==================
DILUTED LOSS PER SHARE $ (1.08) $ (0.27)
================== ==================
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING 10,638 10,638
DILUTIVE EFFECT OF STOCK COMPENSATION PROGRAMS -- --
------------------ ------------------
WEIGHTED AVERAGE COMMON AND DILUTED
SHARES OUTSTANDING 10,638 10,638
================== ==================
</Table>
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