EXHIBIT 99.1
NEWS RELEASE
LAKES ENTERTAINMENT, INC.
[LAKES ENTERTAINMENT, INC. LOGO] 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, August 10, 2004
LAKES ENTERTAINMENT, INC. ANNOUNCES RESULTS FOR
SECOND QUARTER 2004
MINNEAPOLIS, AUGUST 10, 2004 - LAKES ENTERTAINMENT, INC. (NASDAQ "LACO") today
announced results for the second quarter ended July 4, 2004. Revenue for the
three months ended July 4, 2004 totaled $4.7 million, compared to $3.0 million
in the prior year period. Net loss for the quarter was $7.2 million and basic
and diluted losses were $0.32 per share. This compares with net earnings of $0.8
million and basic and diluted earnings of $0.04 per share for the quarter ended
June 29, 2003.
Revenues for the current and prior year quarters were derived primarily from
license fees related to the World Poker Tour (WPT) series. The increase in
revenue is primarily due to an increase in license fees related to season two
episodes delivered to the Travel Channel, LLC (TRV) during the second quarter of
2004, compared to license fees related to season one episodes delivered to TRV
during the second quarter of 2003. Also contributing to the increase was revenue
of approximately $0.5 million related to WPT-related licensing, sponsorship and
merchandise included in total revenue for the three months ended July 4, 2004.
In April 2004, TRV exercised its option to broadcast the first of a possible
five additional seasons. WPT receives fixed license payments from TRV subject to
satisfaction of production milestones and other conditions.
Total costs and expenses were $12.4 million and $1.9 million for the three
months ended July 4, 2004 and June 29, 2003, respectively. Included in second
quarter 2004, costs and expenses is an impairment charge of approximately $6.4
million related to the write-off of Lakes' investment in the Nipmuc Nation
casino development project. This impairment charge was the result of the Nipmuc
Nation being denied recognition as an Indian Tribe and sovereign government
within the meaning of federal law by the Bureau of Indian Affairs. During the
three months ended June 29, 2003, costs and expenses were reduced by a reversal
of unused litigation accrual of $3.2 million under the Company's prior agreement
to indemnify Grand Casinos, Inc. in connection with the Stratosphere litigation
matters.
Selling, general and administrative expenses decreased from $3.8 million for the
three months ended June 29, 2003 to $3.2 million for the three months ended July
4, 2004. This decrease is primarily due to a decrease in professional fees
incurred during the 2003 period associated with the sale of property in Las
Vegas, Nevada. World Poker Tour production costs increased from $1.2 million for
the three months ended June 29, 2003 to $2.6 million for the three months ended
July 4, 2004. In the current year period WPT production costs and related
episode revenues were recognized in the period the relative episode was
delivered to TRV. However, because WPT did not have an executed agreement in
2002 when a portion of production costs related to the WPT episodes delivered
during the three months ended, June 29, 2003, were incurred, such costs were
expensed in 2002 and the first quarter of 2003, rather than being capitalized.
Lakes Entertainment, Inc. currently has development and management agreements
with three separate Tribes for one new casino operation in Michigan and two in
California. In addition, Lakes has agreements with the Nipmuc Nation for the
development and management of a potential additional casino on the East Coast.
However, the Nipmuc Nation has been denied recognition as an Indian Tribe by the
Bureau of Indian Affairs. Lakes also has agreements for the development of an
additional casino on Indian-owned land in California through a joint venture
with MRD Gaming, which is currently being disputed by the Tribe. Additionally,
the Company owns approximately 80% of World Poker Tour, LLC, a media and
entertainment company principally engaged in the development, production and
marketing of gaming themed televised programming, the licensing and sale of
branded products and the sale of corporate sponsorships.
Lakes Entertainment, Inc. common shares are traded on the Nasdaq National Market
under the trading symbol "LACO".
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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, 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 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.
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LAKES ENTERTAINMENT, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)
JULY 4, 2004 DECEMBER 28, 2003
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ASSETS
Current Assets:
Cash and cash equivalents $19,405 $25,340
Accounts receivable, net 323 1,038
Deferred tax asset 5,385 5,385
Prepaids 2,878 2,119
Other current assets 914 1,645
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Total Current Assets 28,905 35,527
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Property and Equipment-Net 6,485 6,492
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Other Assets:
Land held under contract for sale 4,863 4,612
Land held for development 14,159 14,536
Notes receivable 88,135 84,682
Investments 7,893 8,717
Deferred tax asset 7,472 6,634
Other long-term assets 9,036 8,860
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Total Other Assets 131,558 128,041
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TOTAL ASSETS $166,948 $170,060
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LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Accounts payable $1,360 $1,906
Income taxes payable 7,042 7,215
Accrued payroll and related costs 589 497
Other accrued expenses 4,445 3,018
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Total Current Liabilities 13,436 12,636
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TOTAL LIABILITIES 13,436 12,636
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COMMITMENTS AND CONTINGENCIES
Shareholders' Equity:
Capital stock, $.01 par value; authorized 100,000 shares; 22,226 and 21,474
common shares issued and outstanding
at July 4, 2004, and December 28, 2003, respectively 222 215
Additional paid-in-capital 136,290 132,291
Retained Earnings 17,000 24,918
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Total Shareholders' Equity 153,512 157,424
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TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $166,948 $170,060
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LAKES ENTERTAINMENT, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
(IN THOUSANDS, EXCEPT EARNINGS PER SHARE)
THREE MONTHS ENDED
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JULY 4, 2004 JUNE 29, 2003
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REVENUES:
License fee income $4,718 $2,954
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Total Revenues 4,718 2,954
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COSTS AND EXPENSES:
Selling, general and administrative 3,155 3,788
Production costs 2,645 1,162
Impairment losses 6,407 -
Reversal of litigation and claims accrual - (3,212)
Depreciation and amortization 150 131
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Total Costs and Expenses 12,357 1,869
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EARNINGS (LOSS) FROM OPERATIONS (7,639) 1,085
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OTHER INCOME (EXPENSE):
Interest income 43 314
Equity in earnings (loss) of unconsolidated affiliates (23) (60)
Other - (1)
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Total other income, net 20 253
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Earnings (loss) before income taxes (7,619) 1,338
Provision (benefit) for income taxes (461) 549
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NET EARNINGS (LOSS) ($7,158) $789
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BASIC EARNINGS (LOSS) PER SHARE ($0.32) $0.04
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DILUTED EARNINGS (LOSS) PER SHARE ($0.32) $0.04
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WEIGHTED AVERAGE COMMON SHARES OUTSTANDING 22,212 21,276
DILUTIVE EFFECT OF STOCK COMPENSATION PROGRAMS - 1
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WEIGHTED AVERAGE COMMON AND DILUTED
SHARES OUTSTANDING 22,212 21,277
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LAKES ENTERTAINMENT, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
(IN THOUSANDS, EXCEPT EARNINGS PER SHARE)
SIX MONTHS ENDED
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JULY 4, 2004 JUNE 29, 2003
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REVENUES:
License fee income 8,858 $3,504
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Total Revenues 8,858 3,504
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COSTS AND EXPENSES:
Selling, general and administrative 6,415 5,866
Production costs 5,117 2,063
Impairment losses 6,407 -
Reversal of litigation and claims accrual - (3,212)
Depreciation and amortization 293 259
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Total Costs and Expenses 18,232 4,976
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LOSS FROM OPERATIONS (9,374) (1,472)
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OTHER INCOME (EXPENSE):
Interest income 91 551
Equity in loss of unconsolidated affiliates 396 (147)
Other 42 158
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Total other income, net 529 562
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Loss before income taxes (8,845) (910)
Benefit for income taxes (927) (372)
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NET LOSS ($7,918) ($538)
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BASIC LOSS PER SHARE ($0.36) ($0.03)
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DILUTED LOSS PER SHARE ($0.36) ($0.03)
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WEIGHTED AVERAGE COMMON SHARES OUTSTANDING 21,982 21,276
DILUTIVE EFFECT OF STOCK COMPENSATION PROGRAMS - -
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WEIGHTED AVERAGE COMMON AND DILUTED
SHARES OUTSTANDING 21,982 21,276
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