EXHIBIT 99.2
NEWS RELEASE
LAKES ENTERTAINMENT, INC.
[LAKES LOGO] 130 CHESHIRE LANE
MINNETONKA, MN 55305
952-449-9092
952-449-9353 (FAX)
WWW.LAKESENTERTAINMENT.COM
(LACO)
FOR FURTHER INFORMATION CONTACT:
Timothy J. Cope 952-449-7030
FOR IMMEDIATE RELEASE:
Monday, December 19, 2005
LAKES ENTERTAINMENT, INC. ANNOUNCES
THE FILING OF FORM 10-Q FOR EACH OF THE THREE QUARTERS
OF 2005
MINNEAPOLIS, DECEMBER 19, 2005 - LAKES ENTERTAINMENT, INC. (LACO) announced
today that on December 16, 2005 it filed its Quarterly Reports on Form 10-Q for
each of the three quarterly periods ended April 3, 2005, July 3, 2005 and
October 2, 2005.
Lakes previously announced that as a result of discussions with the staff of the
United States Securities and Exchange Commission, the Company re-evaluated its
accounting methodology surrounding its contractual relationships with Indian
tribes and determined that for purposes of revenue recognition it will
separately recognize the separate elements of its development and management
agreements with Indian tribes. Historically, Lakes recorded its advances to
Indian tribes as notes receivable and deferred recognition of interest income
due to the contingent repayment terms of the notes. Lakes has determined that as
advances are made to a tribe pursuant to the development relationship it will
give separate recognition to the contractual notes receivable established and
the related interests in management contracts that are acquired in conjunction
with the development agreements. As a result of the change in Lakes' accounting
methodology, the unaudited condensed consolidated financial statements for all
periods presented in the Form 10-Qs reflect this accounting policy. Attached are
each Quarter's Unaudited Condensed Consolidated Balance Sheet and Consolidated
Statement of Loss.
Tim Cope, President and Chief Financial Officer of Lakes stated, "The filing of
the Form 10-Qs for 2005 now puts our Company into the position of being a
current filer with the Securities and Exchange Commission. Our next step is to
apply to The NASDAQ Stock Market for relisting of our common stock on The NASDAQ
National Market. Based on our current communication with members, we expect our
relisting process to be completed within the next six to eight weeks, however we
can give no assurances that our common stock will be approved for relisting."
ABOUT LAKES ENTERTAINMENT
Lakes Entertainment, Inc. currently has development and management agreements
with five separate Tribes for new casino operations in Michigan, California, and
Oklahoma, a total of eight separate casino sites. In addition, Lakes has
announced plans to develop a company owned casino resort project in Vicksburg,
Mississippi. The Company also owns approximately 62% 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 television series,
the licensing and sale of branded products and the sale of corporate
sponsorships.
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, the relisting of
Lakes' common stock on The Nasdaq Stock Market; 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 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; reliance on Lakes' management; and
the fact that the WPTE shares held by Lakes are currently not liquid assets, 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 source of revenue; the potential that WPTE's
television programming will fail to maintain a sufficient audience; difficulty
of predicting the growth of WPTE's online casino business, which is a relatively
new industry with an increasing number of market entrants; the uncertainty of
the regulatory environment for online gaming, which may affect WPTE's ability to
pursue its online gaming business fully or cause WPTE's activities to be found
to be in violation of applicable United State or foreign regulations; the risk
that competitors with greater financial resources or marketplace presence might
develop television programming that would directly compete with WPTE's
television programming; the risk that WPTE may not be able to protect its
entertainment concepts, current and future brands and other intellectual
property rights; 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.
2
LAKES ENTERTAINMENT, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
APRIL 3, 2005 AND JANUARY 2, 2005
(IN THOUSANDS)
APRIL 3, 2005 JANUARY 2, 2005
------------- ---------------
(UNAUDITED)
ASSETS
Current assets:
Cash and cash equivalents $ 36,949 $ 28,717
(balance includes $12.2 million and $4.5 of WPT Enterprises, Inc. cash)
Short-term investments 19,447 28,930
(balance includes $19.5 million and $27.8 of WPT Enterprises, Inc. short-term investments)
Accounts receivable 1,223 2,038
Deferred tax asset 166 137
Prepaids 1,008 1,233
Other current assets 1,873 1,159
--------- ---------
Total current assets 60,666 62,214
--------- ---------
Property and equipment, net of accumulated depreciation 7,310 6,795
--------- ---------
Long-term assets related to Indian casino projects
Notes receivable, Indian Tribes 71,609 67,066
Land held for development 15,516 15,433
Intangible asset related to acquisition of management contracts 42,045 41,096
Other 2,417 2,024
--------- ---------
Total long-term assets related to Indian casino projects 131,587 125,619
--------- ---------
Investments 5,266 6,093
Deferred tax asset 4,278 4,278
Other 4,092 4,090
--------- ---------
TOTAL ASSETS $ 213,199 $ 209,089
========= =========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 1,490 $ 780
Income taxes payable 10,026 5,457
Accrued payroll and related costs 490 891
Deferred revenue 3,601 3,280
Other accrued expenses 4,518 3,449
--------- ---------
TOTAL LIABILITIES 20,125 13,857
--------- ---------
COMMITMENTS AND CONTINGENCIES
Common shares issued by subsidiary subject to repurchase 629 618
Minority interest 10,991 11,222
Shareholders' equity:
Capital stock, $.01 par value; authorized 200,000 shares; 22,300 and 22,253
common shares issued and outstanding at April 3, 2005 and January 2, 2005, respectively 223 223
Additional paid-in capital 158,118 157,895
Retained earnings 23,161 25,280
Accumulated other comprehensive loss (48) (6)
--------- ---------
Total shareholders' equity 181,454 183,392
--------- ---------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 213,199 $ 209,089
========= =========
3
LAKES ENTERTAINMENT, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF LOSS
(IN THOUSANDS, EXCEPT LOSS PER SHARE)
THREE MONTHS ENDED
-------------------------------
APRIL 3, 2005 APRIL 4, 2004
------------- -------------
(UNAUDITED) (RESTATED)
REVENUES:
License fee income $ 3,463 $ 3,643
Host fees, sponsorship and other 641 497
-------- --------
Total revenues 4,104 4,140
-------- --------
COSTS AND EXPENSES:
Selling, general and administrative 6,463 3,248
Production costs 3,187 2,472
Depreciation 92 143
-------- --------
Total costs and expenses 9,742 5,863
Net unrealized gain on notes receivable 2,836 576
-------- --------
LOSS FROM OPERATIONS (2,802) (1,147)
-------- --------
OTHER INCOME:
Interest income 449 48
Other - 40
-------- --------
Total other income 449 88
-------- --------
Loss before income taxes, equity in earnings of investments and
minority interest (2,353) (1,059)
Income tax provision (benefit) 355 (407)
-------- --------
Loss before equity in earnings of investments and minority interest (2,708) (652)
Equity in earnings of investments, net of tax 13 260
-------- --------
Loss before minority interest (2,695) (392)
Minority interest in net loss of subsidiary 576 -
-------- --------
NET LOSS ($ 2,119) ($ 392)
======== ========
LOSS PER SHARE, BASIC AND DILUTED ($ 0.10) ($ 0.02)
======== ========
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING 22,267 21,770
======== ========
4
LAKES ENTERTAINMENT, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
JULY 3, 2005 AND JANUARY 2, 2005
(IN THOUSANDS)
JULY 3, 2005 JANUARY 2, 2005
(UNAUDITED)
- ------------------------------------------------------------------------------------------------------------------------------------
ASSETS
Current assets:
Cash and cash equivalents $ 24,436 $ 28,717
(balance includes $5.6 million and $4.5 million of WPT Enterprises, Inc. cash)
Short-term investments 26,566 28,930
(balance includes $26.6 million and $27.8 million of WPT Enterprises, Inc.
short-term investments)
Accounts receivable, net of allowance of $0.2 million and $0 1,402 2,038
Deferred tax asset 162 137
Prepaids 684 1,233
Other current assets 601 1,159
- ------------------------------------------------------------------------------------------------------------------------------------
Total current assets 53,851 62,214
- ------------------------------------------------------------------------------------------------------------------------------------
Property and equipment, net of accumulated depreciation 7,889 6,795
- ------------------------------------------------------------------------------------------------------------------------------------
Long-term assets related to Indian casino projects
Notes receivable, Indian Tribes 73,803 67,066
Land held for development 15,783 15,433
Intangible asset related to acquisition of management contracts 43,247 41,096
Other 3,045 2,024
- ------------------------------------------------------------------------------------------------------------------------------------
Total long-term assets related to Indian casino projects 135,878 125,619
- ------------------------------------------------------------------------------------------------------------------------------------
Investments 5,259 6,093
Deferred tax asset 4,278 4,278
Other 4,414 4,090
- ------------------------------------------------------------------------------------------------------------------------------------
TOTAL ASSETS $211,569 $209,089
====================================================================================================================================
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 3,464 $ 780
Income taxes payable 10,369 5,457
Accrued payroll and related costs 697 891
Deferred revenue 3,448 3,280
Other accrued expenses 5,946 3,449
- ------------------------------------------------------------------------------------------------------------------------------------
TOTAL LIABILITIES 23,924 13,857
- ------------------------------------------------------------------------------------------------------------------------------------
COMMITMENTS AND CONTINGENCIES
Common shares issued by subsidiary subject to repurchase 639 618
Minority interest 11,185 11,222
Shareholders' equity:
Capital stock, $.01 par value; authorized 200,000 shares; 22,300 and 22,253
common shares issued and outstanding
at July 3, 2005, and January 2, 2005, respectively 223 223
Additional paid-in capital 158,130 157,895
Retained earnings 17,510 25,280
Accumulated other comprehensive loss (42) (6)
- ------------------------------------------------------------------------------------------------------------------------------------
Total shareholders' equity 175,821 183,392
- ------------------------------------------------------------------------------------------------------------------------------------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $211,569 $209,089
====================================================================================================================================
5
LAKES ENTERTAINMENT, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF LOSS
(IN THOUSANDS, EXCEPT LOSS PER SHARE)
THREE MONTHS ENDED
-----------------------------
JULY 3, 2005 JULY 4, 2004
------------ ------------
(UNAUDITED) (RESTATED)
REVENUES:
License fee income $ 5,341 $ 3,770
Host fees, sponsorship and other 1,260 948
-------- --------
Total revenues 6,601 4,718
-------- --------
COSTS AND EXPENSES:
Selling, general and administrative 6,970 3,146
Production costs 4,377 2,645
Net impairment losses - 5,833
Depreciation 113 150
-------- --------
Total costs and expenses 11,460 11,774
Net unrealized loss on notes receivable (956) (44)
-------- --------
LOSS FROM OPERATIONS (5,815) (7,100)
-------- --------
OTHER INCOME:
Interest income 364 43
-------- --------
Total other income 364 43
-------- --------
Loss before income taxes, equity in loss of investments and
minority interest (5,451) (7,057)
Income tax provision (benefit) 352 (469)
-------- --------
Loss before equity in loss on investments and minority interest (5,803) (6,588)
Equity in loss of investments, net of tax (7) (14)
-------- --------
Loss before minority interest (5,810) (6,602)
Minority interest in net loss of subsidiary 159 -
-------- --------
NET LOSS ($ 5,651) ($ 6,602)
======== ========
LOSS PER SHARE, BASIC AND DILUTED ($ 0.25) ($ 0.30)
======== ========
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING 22,300 22,212
======== ========
6
LAKES ENTERTAINMENT, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF LOSS
(IN THOUSANDS, EXCEPT LOSS PER SHARE)
SIX MONTHS ENDED
-----------------------------
JULY 3, 2005 JULY 4, 2004
------------ ------------
(UNAUDITED) (RESTATED)
REVENUES:
License fee income $ 8,804 $ 7,413
Host fees, sponsorship and other 1,901 1,445
-------- --------
Total revenues 10,705 8,858
-------- --------
COSTS AND EXPENSES:
Selling, general and administrative 13,435 6,394
Production costs 7,564 5,117
Net impairment losses - 5,833
Depreciation 204 293
-------- --------
Total costs and expenses 21,203 17,637
Net unrealized gain on notes receivable 1,880 530
-------- --------
LOSS FROM OPERATIONS (8,618) (8,249)
-------- --------
OTHER INCOME:
Interest income 814 91
Other - 42
-------- --------
Total other income 814 133
-------- --------
Loss before income taxes, equity in earnings of investments and
minority interest (7,804) (8,116)
Income tax provision (benefit) 707 (877)
-------- --------
Loss before equity in earnings of investments and minority interest (8,511) (7,239)
Equity in earnings of investments, net of tax 6 245
-------- --------
Loss before minority interest (8,505) (6,994)
Minority interest in net loss of subsidiary 735 -
-------- --------
NET LOSS ($ 7,770) ($ 6,994)
======== ========
LOSS PER SHARE, BASIC AND DILUTED ($ 0.35) ($ 0.32)
======== ========
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING 22,289 21,982
======== ========
7
LAKES ENTERTAINMENT, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
OCTOBER 2, 2005 AND JANUARY 2, 2005
(IN THOUSANDS)
OCTOBER 2, 2005 JANUARY 2, 2005
-------------- ----------------
(UNAUDITED)
ASSETS
Current assets:
Cash and cash equivalents $ 16,723 $ 28,717
(balance includes $3.0 million and $4.5 million of WPT Enterprises, Inc. cash)
Short-term investments 27,471 28,930
(balance includes $27.5 million and $27.8 million of WPT Enterprises, Inc.
short-term investments)
Accounts receivable, net of allowance of $0.1 million and $0 1,509 2,038
Deferred tax asset 95 137
Prepaids 1,025 1,233
Other current assets 1,842 1,159
--------- ---------
Total current assets 48,665 62,214
--------- ---------
Property and equipment, net of accumulated depreciation 12,555 6,795
--------- ---------
Long-term assets related to Indian casino projects
Notes receivable, Indian Tribes 77,789 67,066
Land held for development 16,164 15,433
Intangible asset related to acquisition of management contracts 44,290 41,096
Other 4,247 2,024
--------- ---------
Total long-term assets related to Indian casino projects 142,490 125,619
--------- ---------
Investments 260 6,093
Deferred tax asset 4,278 4,278
Other 4,586 4,090
--------- ---------
TOTAL ASSETS $ 212,834 $ 209,089
========= =========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 12,970 $ 780
Income taxes payable 10,619 5,457
Accrued payroll and related costs 941 891
Deferred revenue 4,764 3,280
Other accrued expenses 3,611 3,449
--------- ---------
TOTAL LIABILITIES 32,905 13,857
--------- ---------
COMMITMENTS AND CONTINGENCIES
Common shares issued by subsidiary subject to repurchase - 618
Minority interest 11,000 11,222
Shareholders' equity:
Capital stock, $.01 par value; authorized 200,000 shares; 22,300 and 22,253
common shares issued and outstanding at October 2, 2005 and January 2, 2005,
respectively 223 223
Additional paid-in capital 158,316 157,895
Retained earnings 10,469 25,280
Accumulated other comprehensive loss (79) (6)
--------- ---------
Total shareholders' equity 168,929 183,392
--------- ---------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 212,834 $ 209,089
========= =========
8
LAKES ENTERTAINMENT, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF LOSS
(IN THOUSANDS, EXCEPT LOSS PER SHARE)
THREE MONTHS ENDED
-------------------------------
OCTOBER 2, 2005 OCTOBER 3, 2004
--------------- ---------------
(UNAUDITED) (RESTATED)
REVENUES:
License fee income $ 1,766 $ 2,854
Host fees, sponsorship and other 365 119
-------- --------
Total revenues 2,131 2,973
-------- --------
COSTS AND EXPENSES:
Selling, general and administrative 6,936 3,697
Production costs 561 1,942
Net impairment losses 94 -
Depreciation 133 163
-------- --------
Total costs and expenses 7,724 5,802
Net unrealized gain (loss) on notes receivable (2,120) 790
-------- --------
LOSS FROM OPERATIONS (7,713) (2,039)
-------- --------
OTHER INCOME:
Interest income 443 104
Other - 1
-------- --------
Total other income 443 105
-------- --------
Loss before income taxes, equity in earnings (loss) of investments and
minority interest (7,270) (1,934)
Income tax provision (benefit) 354 (791)
-------- --------
Loss before equity in earnings (loss) of investments and minority interest (7,624) (1,143)
Equity in earnings (loss) of investments, net of tax 1 (19)
-------- --------
Loss before minority interest (7,623) (1,162)
Minority interest in net (income) loss of subsidiary 581 (53)
-------- --------
NET LOSS ($ 7,042) ($ 1,215)
======== ========
LOSS PER SHARE, BASIC AND DILUTED ($ 0.32) ($ 0.05)
======== ========
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING 22,300 22,232
======== ========
9
LAKES ENTERTAINMENT, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF LOSS
(IN THOUSANDS, EXCEPT LOSS PER SHARE)
NINE MONTHS ENDED
---------------------------------
OCTOBER 2, 2005 OCTOBER 3, 2004
--------------- ---------------
(UNAUDITED) (RESTATED)
REVENUES:
License fee income $ 10,568 $ 10,266
Host fees, sponsorship and other 2,266 1,565
-------- --------
Total revenues 12,834 11,831
-------- --------
COSTS AND EXPENSES:
Selling, general and administrative 20,368 10,088
Production costs 8,125 7,059
Net impairment losses 94 5,833
Depreciation 337 456
-------- --------
Total costs and expenses 28,924 23,436
Net unrealized gain (loss) on notes receivable (241) 1,318
-------- --------
LOSS FROM OPERATIONS (16,331) (10,287)
-------- --------
OTHER INCOME:
Interest income 1,256 195
Other - 42
-------- --------
Total other income 1,256 237
-------- --------
Loss before income taxes, equity in earnings of investments and
minority interest (15,075) (10,050)
Income tax provision (benefit) 1,061 (1,667)
-------- --------
Loss before equity in earnings of investments and minority interest (16,136) (8,383)
Equity in earnings of investments, net of tax 7 227
-------- --------
Loss before minority interest (16,129) (8,156)
Minority interest in net (income) loss of subsidiary 1,317 (53)
-------- --------
NET LOSS ($14,812) ($ 8,209)
======== ========
LOSS PER SHARE, BASIC AND DILUTED ($ 0.66) ($ 0.37)
======== ========
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING 22,296 22,063
======== ========
10