Drmicrocap
9 years ago
Lakes Entertainment Announces Results for First Quarter 2015
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Business Wire
Lakes Entertainment, Inc.
May 6, 2015 6:30 AM
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MINNEAPOLIS--(BUSINESS WIRE)--
Lakes Entertainment, Inc. (LACO) today announced results for the three months ended March 29, 2015.
First Quarter Results
Lakes Entertainment reported first quarter 2015 net revenues of $12.8 million, compared to prior-year first quarter net revenues of $12.3 million. Net revenues were related to the operation of Rocky Gap Casino Resort near Cumberland, Maryland (“Rocky Gap”). The increase in net revenues was primarily related to an increase in gaming revenues during the first quarter of 2015 compared to the first quarter of 2014.
Net losses for the first quarter of 2015 were approximately $1.7 million, compared to net losses of approximately $1.8 million for the first quarter of 2014. Losses from operations were $1.3 million for the first quarter of 2015 compared to losses from operations of $1.6 million for the first quarter of 2014. Basic and diluted losses per share were $0.13 for each of the first quarters of 2015 and 2014.
During the first quarter of 2015, property operating expenses for Rocky Gap were $7.5 million compared to $7.3 million during the first quarter of 2014 and were primarily related to gaming operations, rooms, food and beverage and golf. The increase in property operating expenses resulted primarily from an increase in gaming-related expenses, most notably gaming taxes, due to the increase in gaming related revenue in the current year quarter.
For the first quarter of 2015, selling, general and administrative expenses were $6.1 million compared to $5.7 million during the first quarter of 2014. Included in these amounts were Lakes corporate selling, general and administrative expenses of $2.4 million and $2.0 million during the first quarters of 2015 and 2014, respectively. Lakes’ corporate selling, general and administrative expenses consist primarily of payroll and related expenses and professional fees. First quarter 2015 professional fees included $0.8 million associated with the previously announced merger agreement with Sartini Gaming, Inc. (“Golden Gaming”), which was executed in January of this year and is expected to close later this year. Rocky Gap selling, general and administrative expenses, which consist primarily of payroll and related expenses, marketing expense and facilities expense, were $3.7 million during the first quarters of 2015 and 2014.
Effective January 25, 2015, Lakes sold all of its 10% interest in Rock Ohio Ventures to DG Ohio Ventures, LLC for approximately $0.8 million. Because this investment had been written down to zero during 2014, Lakes recognized a gain on sale of cost method investment of approximately $0.8 million during the first quarter of 2015.
In connection with entering into the merger agreement with Golden Gaming during January 2015, Lakes implemented a plan to sell its corporate headquarters office building in Minnetonka, Minnesota. On March 26, 2015, Lakes entered into an agreement to sell its corporate headquarters office building at a price of approximately $4.7 million, less approximate fees and closing costs of $0.3 million. Lakes currently expects the sale of the corporate headquarters office building to close during the second quarter of 2015. The corporate headquarters office building was carried at $4.7 million, net of accumulated depreciation, on Lakes’ consolidated balance sheet as of the date of the agreement, resulting in the recognition of an impairment charge of $0.3 million during the first quarter of 2015.
Depreciation and amortization was $0.9 million for the first quarters of 2015 and 2014.
Lyle Berman, Chief Executive Officer of Lakes stated, ”During January 2015, we announced a merger agreement with Golden Gaming. We are currently working through the process of obtaining necessary approvals and we currently expect the closing of the merger transaction to occur later this year. The combination of Lakes’ strong balance sheet and our Rocky Gap property, with Golden Gaming’s casinos and distributed gaming platform and taverns, will make this combined company unique in the marketplace. We believe Lakes’ cash will facilitate refinancing as well as growth and that the company will be well positioned for expansion in Nevada and other jurisdictions. We look forward to closing this transaction and we continue to believe it will provide value to Lakes’ shareholders.”
Further commenting, Tim Cope, President and Chief Financial Officer of Lakes stated, "Rocky Gap maintained operating efficiencies during the first quarter of 2015 and exceeded results compared to the first quarter of 2014, despite inclement weather patterns affecting the property’s weekend traffic during the current year period. The gaming facility features 577 video lottery terminals, 16 table games, two poker tables and a casino bar along with a lobby food and beverage outlet. The AAA Four Diamond Award® winning property also includes a hotel, event center, restaurants, spa, the only Jack Nicklaus signature golf course in Maryland as well as a wide variety of outdoor and water activities.”
About Lakes Entertainment
Lakes Entertainment, Inc. currently owns the Rocky Gap Casino Resort near Cumberland, Maryland. For more information, please visit www.lakesentertainment.com. On January 25, 2015, Lakes entered into an agreement and plan of merger with Sartini Gaming, Inc. (“Golden Gaming”). Golden Gaming is a leading owner and operator of distributed gaming, taverns and casinos, all of which are focused on the Nevada local gaming market. The merger is subject to various closing conditions.
Forward-Looking Statements
Statements in this press release include forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements include, among others, the expected benefits of a potential combination of Lakes and Sartini Gaming, Inc. (“Golden Gaming”) pursuant to an agreement and plan of merger (the “Merger Agreement”) and expectations about future business plans, prospective performance and opportunities; the expected timing of the completion of the transaction; the ability and impact of refinancing Golden Gaming debt; the obtaining of required regulatory approvals and approval by Lakes’ shareholders. These forward-looking statements may be identified by the use of words such as “expect,” “anticipate,” “believe,” “estimate,” “potential,” “should”, “will” or similar words intended to identify information that is not historical in nature. These forward-looking statements are based on current expectations and assumptions of management of Lakes and Golden Gaming and are subject to risks, uncertainty and changes in circumstances that could cause the actual events and results in future periods to differ materially from the expectations of Lakes and Golden Gaming and those expressed or implied by these forward-looking statements. The inclusion of such statements should not be regarded as a representation that such plans, estimates or expectations will be achieved. These risks, uncertainties and changes in circumstances include (a) the possibility that the merger does not close when expected or at all; (b) the ability and timing to obtain required regulatory approvals (including approval from gaming regulators) and Lakes’ shareholder approval, and to satisfy or waive other closing conditions, including expiration of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, or that the parties to the Merger Agreement may be required to modify aspects of the transaction to achieve regulatory approval; (c) the occurrence of any event, change or other circumstance that could give rise to the termination of the Merger Agreement or could otherwise cause the merger to fail to close; (d) the ability of Lakes and Golden Gaming to promptly and effectively integrate their respective businesses; (e) the outcome of any legal proceedings that may be instituted in connection with the transaction; (f) the receipt of an unsolicited offer from another party for an alternative business transaction that could interfere with the proposed merger; (g) the ability to retain key employees of Lakes and Golden Gaming; (h) that there may be a material adverse change affecting Lakes or Golden Gaming, or that the respective businesses of Lakes or Golden Gaming may suffer as a result of uncertainty surrounding the transaction; and (i) the risk factors disclosed in Lakes’ filings with the Securities and Exchange Commission, including its Annual Report on Form 10-K. Forward-looking statements reflect Lakes’ and Golden Gaming’s management’s analysis and expectations only as of the date of this press release, and Lakes does not undertake to update or revise these statements, whether written or oral, to reflect subsequent developments, except as required under the federal securities laws. Readers are cautioned not to place undue reliance on any of these forward-looking statements.
LAKES ENTERTAINMENT, INC. AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
(In thousands)
(Unaudited)
March 29, 2015 December 28, 2014
Assets
Current assets:
Cash and cash equivalents $ 33,967 $ 35,416
Short-term investments 46,145 46,638
Income taxes receivable - -
Other 2,301 1,807
Total current assets 82,413 83,861
Property and equipment, net 28,292 32,739
Other assets:
Property held for sale 4,407 -
Gaming license 1,840 1,875
Land held for development 960 960
Income taxes receivable 2,000 2,155
Other 437 439
Total other assets 9,644 5,429
Total assets $ 120,349 $ 122,029
Liabilities and shareholders' equity
Current liabilities:
Current portion of long-term debt, net of discount $ 1,350 $ 1,368
Other 4,404 4,104
Total current liabilities 5,754 5,472
Long-term debt, net of current portion and discount 8,630 8,941
Total liabilities 14,384 14,413
Total shareholders' equity 105,965 107,616
Total liabilities and shareholders' equity $ 120,349 $ 122,029
LAKES ENTERTAINMENT, INC. AND SUBSIDIARIES
Unaudited Condensed Consolidated Statements of Operations and Comprehensive Loss
(In thousands, except per share data)
Three months ended
March 29, 2015
March 30, 2014
Revenues:
Gaming
$ 10,600 $ 10,320
Room
1,207 1,314
Food and beverage
1,348 1,259
Other operating
331 335
License fees and other
44 33
Gross revenues
13,530 13,261
Less promotional allowances
764 951
Net revenues
12,766 12,310
Costs and expenses:
Gaming
6,065 5,954
Room
158 110
Food and beverage
1,065 1,033
Other operating
226 242
Selling, general and administrative
6,135 5,740
Gain on sale of cost method investment
(750 ) -
Impairments and other losses
331 -
(Gain) loss on disposal of property and equipment
(2 ) 25
Depreciation and amortization
879 853
Total costs and expenses
14,107 13,957
Loss from operations
(1,341 )
(1,647
)
Other income (expense):
Interest income
45 33
Interest expense
(274 ) (318
)
Other
- 164
Total other income (expense), net
(229 ) (121
)
Loss before income taxes
(1,570 ) (1,768
)
Income tax provision
155
-
Net loss
$ (1,725 ) $ (1,768
)
Other comprehensive loss
(1 ) (14
)
Comprehensive loss
$ (1,726 ) $ (1,782
)
Weighted-average common shares outstanding
Basic and diluted
13,391 13,364
Loss per share
Basic and diluted
$ (0.13 ) $ (0.13
)
Contact:
Lakes Entertainment, Inc.
Timothy Cope, 952-449-7030
Drmicrocap
9 years ago
Lakes Entertainment and Golden Gaming Announce Merger Agreement
Business Wire Lakes Entertainment, Inc.
January 26, 2015 6:30 AM
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Lakes Entertainment and Golden Gaming Announce Merger Agreement .
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Lakes Entertainment and Golden Gaming Announce Merger Agreement
MINNEAPOLIS--(BUSINESS WIRE)--
Lakes Entertainment, Inc. (LACO) and Sartini Gaming, Inc. (“Golden Gaming”), which owns and operates Golden Gaming, LLC, announced today that they have entered into an Agreement and Plan of Merger (the “Merger Agreement”). Golden Gaming is a leading owner and operator of distributed gaming, taverns and casinos, all of which are focused on the Nevada local gaming market. At closing, Golden Gaming will combine with a wholly-owned subsidiary of Lakes Entertainment, Inc. (“Lakes”) with Golden Gaming surviving as a wholly-owned subsidiary of Lakes. Lakes will remain publicly traded and be renamed Golden Entertainment, Inc. upon closing.
Under the terms of the Merger Agreement, Lakes is valued at $9.57 per share (representing an approximate 37% premium to the closing share price for Lakes common stock on January 23, 2015), subject to working capital and various other adjustments under the Merger Agreement. The value of Golden Gaming under the Merger Agreement will be determined by multiplying 7.5 times Golden Gaming’s trailing twelve-month consolidated earnings before interest, taxes, depreciation and amortization, less debt and subject to working capital and various other adjustments. Based on current September 30, 2015 financial estimates and assumptions, the legacy Golden Gaming shareholder would be issued 7,858,145 shares of Lakes common stock under the Merger Agreement, which would represent approximately 35.7% of the total fully diluted post-merger shares of Lakes common stock. Lakes’ current shareholders (assuming the exercise of all outstanding options to acquire Lakes common stock) would retain approximately 64.3% of the total post-merger shares of Lakes common stock.
In addition, Lakes will seek to monetize non-core assets prior to closing. Lakes sold all of its interest in Rock Ohio Ventures, LLC to an unrelated third party pursuant to a Membership Interest Purchase Agreement, dated effective as of January 25, 2015, between Lakes and DG Ohio Ventures, LLC for $750,000. Additionally, Lakes shareholders (other than the legacy Golden Gaming shareholder, except with respect to taxes) will be entitled to a possible cash dividend related to any net proceeds the combined company receives from monetizing Lakes’ existing note receivable from the Jamul Indian Village, provided that the combined company enters into an agreement to monetize the note within three years after the merger closes, and receives any amounts due thereunder no later than three years after the Jamul casino opens.
Contemporaneous with entering into the Merger Agreement, Lakes has also amended and restated its Rights Agreement dated as of December 12, 2013, to preserve its ability to utilize approximately $89 million of federal net operating tax loss carryforwards by, among other things, lowering the voting securities ownership threshold of an acquiring person from 15% to 4.99%, and making such other changes which Lakes deemed necessary to effectuate the purposes of the Rights Agreement in light of the transactions contemplated by the Merger Agreement.
Blake L. Sartini, currently Chief Executive Officer of Golden Gaming, will be named the Chairman and Chief Executive Officer of the combined company at closing. Lyle Berman, currently Chairman and Chief Executive Officer of Lakes, will continue as a board member of, and will sign a three-year consulting agreement with, the combined company. Tim Cope, currently President and Chief Financial Officer of Lakes, will also continue as a board member of, and consultant to, the combined company.
“We are excited to announce this transaction, and are thrilled to partner with Golden Gaming, which has done an outstanding job of building a premier diversified gaming company in the state of Nevada,” said Mr. Berman. “The combination of our strong balance sheet and Rocky Gap asset, and Golden Gaming’s casinos and distributed gaming platform, makes the combined company truly unique in the marketplace. Lakes’ cash on hand will facilitate Golden Gaming’s pursuit of growth opportunities and the refinancing of its debt. We believe the combined company will be well positioned to expand not only in Nevada, which has the most stable tax and regulatory record in the country, but also into other jurisdictions.”
“We believe that this transaction establishes a truly diversified gaming company, uniquely positioned to capitalize on a wide spectrum of opportunities,” added Mr. Sartini. “Golden Gaming is the market leader in distributed gaming as well as tavern operations throughout Nevada, and is well positioned with our market leading casino resorts in Nye County. As a result, this merger with Lakes provides the opportunity to expand our business dramatically, both in and outside of Nevada, with the support of a strong balance sheet, the Rocky Gap asset in Maryland and an aggressive and experienced management team.”
Together, the combined company will operate approximately 9,250 slot machines and video lottery terminals in Nevada and Maryland across four casino properties, 48 taverns and over 600 route locations. Lakes and Golden Gaming estimate that on a combined pro forma basis 2015 annual net revenues and adjusted EBITDA will be $348.1 million and $42.5 million, respectively, including $3.0 million of anticipated cost synergies. Additionally, it is estimated that combined pro forma 2015 operating free cash flow and adjusted net income will be $33.7 million and $13.3 million, respectively, including a full year of the anticipated benefit of refinancing Lakes and Golden Gaming indebtedness.
The merger is anticipated to close by year-end 2015 and is subject to customary regulatory and other closing conditions being satisfied, including approval by Lakes’ shareholders of the issuance of the Lakes shares in connection with the merger.
Macquarie Capital is serving as Lakes’ exclusive financial advisor. Gray, Plant, Mooty, Mooty & Bennett, P.A. is serving as legal counsel to Lakes. Union Gaming Advisors, LLC is serving as Golden Gaming’s financial advisor. Latham & Watkins LLP is serving as legal counsel to Golden Gaming.
Conference Call
Lakes and Golden Gaming management will conduct a conference call to discuss the proposed transaction on Wednesday, January 28, 2015, at 12:00 p.m. Central Time. Interested parties may participate in the call by dialing 866-515-2910 and entering participant passcode 93064412.
The conference call will be webcast live via the Investor section of Lakes’ website at www.lakesentertainment.com. To listen to the live webcast please go to the website at least 15 minutes early to register, download and install any necessary audio software.
If you are unable to listen live, the conference call will be archived on the Investor section of the Lakes’ website at www.lakesentertainment.com and on Golden Gaming’s website at www.ggilv.com. If you do not have Internet access and want to listen to an audio replay, call 888-286-8010 and enter conference call passcode 62599403. The conference call archives and the audio replay will be available beginning at 1:00 p.m. Central Time, January 30, 2015 until 12:00 p.m. Central Time, February 4, 2015.
About Lakes Entertainment, Inc.
Lakes Entertainment, Inc. currently owns the Rocky Gap Casino Resort near Cumberland, Maryland. For more information, please visit www.lakesentertainment.com.
About Golden Gaming, LLC
Golden Gaming has three distinct business lines: (1) Golden Route Operations (“GRO”), which is Nevada’s largest slot route operator with more than 7,600 machines in approximately 600 locations throughout the state. Originally founded in 1986 as Southwest Services, GRO is a licensed, established local route operator of gaming devices for bars, taverns, convenience and grocery stores; (2) Golden Casino Group (“GCG”), which currently owns and operates three casinos: Pahrump Nugget Hotel & Casino, Gold Town Casino and Lakeside Casino & RV Park. GCG employs more than 500 team members, making it the largest employer in Nye County; and (3) PT’s Entertainment Group (“PTEG”), which is Nevada’s largest tavern operator with 48 establishments. PTEG’s Southern Nevada holdings include PT’s, Sierra Gold and Sean Patrick’s. PTEG operates under two brands in Northern Nevada: Sierra Gold and Sierra Junction. For more information, please visit www.ggilv.com.
Forward-Looking Statements
Statements in this press release include forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements include, among others, statements regarding the estimated value of Lakes and Golden Gaming in connection with the merger; the amount of shares to be issued to the legacy Golden Gaming shareholder under the Merger Agreement and the expected post-closing shareholdings of legacy Company and Golden Gaming shareholders; the expected benefits of a potential combination of Lakes and Golden Gaming and expectations about future business plans, prospective performance (including estimated combined pro forma financial performance for 2015) and opportunities; the expected timing of the completion of the transaction; the obtaining of required regulatory approvals and approval by Lakes’ shareholders; the monetization of non-core assets and the note receivable from the Jamul Indian Village; and the ability of Lakes to utilize its NOLs to offset future taxable income. These forward-looking statements may be identified by the use of words such as “expect,” “anticipate,” “believe,” “estimate,” “potential,” “should”, “will” or similar words intended to identify information that is not historical in nature. These forward-looking statements are based on current expectations and assumptions of management of Lakes and Golden Gaming and are subject to risks, uncertainty and changes in circumstances that could cause the actual events and results in future periods to differ materially from the expectations of Lakes and Golden Gaming and those expressed or implied by these forward-looking statements. The inclusion of such statements should not be regarded as a representation that such plans, estimates or expectations will be achieved. These risks, uncertainties and changes in circumstances include (a) the possibility that the merger does not close when expected or at all; (b) the ability and timing to obtain required regulatory approvals (including approval from gaming regulators) and Lakes’ shareholder approval, and to satisfy or waive other closing conditions, including expiration of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, or that the parties to the Merger Agreement may be required to modify aspects of the transaction to achieve regulatory approval; (c) the occurrence of any event, change or other circumstance that could give rise to the termination of the Merger Agreement or could otherwise cause the merger to fail to close; (d) the ability of Lakes and Golden Gaming to promptly and effectively integrate their respective businesses; (e) the outcome of any legal proceedings that may be instituted in connection with the transaction; (f) the receipt of an unsolicited offer from another party for an alternative business transaction that could interfere with the proposed merger; (g) Lakes’ ability to monetize non-core assets prior to the closing of the transaction and to monetize the Jamul Indian Village note on terms that generate net cash proceeds to the company or at all; (h) the ability to retain key employees of Lakes and Golden Gaming; (i) that there may be a material adverse change affecting Lakes or Golden Gaming, or that the respective businesses of Lakes or Golden Gaming may suffer as a result of uncertainty surrounding the transaction; (j) the occurrence of an “ownership change,” as defined in Section 382 of the Internal Revenue Code; and (k) the risk factors disclosed in Lakes’ filings with the Securities and Exchange Commission (the “SEC”), including its Annual Report on Form 10-K, which was filed on March 14, 2014. Forward-looking statements reflect Lakes’ and Golden Gaming’s management’s analysis and expectations only as of the date of this press release, and neither Lakes nor Golden Gaming undertake to update or revise these statements, whether written or oral, to reflect subsequent developments, except as required under the federal securities laws. Readers are cautioned not to place undue reliance on any of these forward-looking statements.
Additional Information and Where to Find It
This press release may be deemed to be solicitation material for the shareholder vote with respect to the issuance of shares of Lakes common stock under the Merger Agreement. In connection with the Merger Agreement, Lakes intends to file relevant materials with the SEC, including a preliminary proxy statement and a definitive proxy statement. The definitive proxy statement will be mailed to the Lakes’ shareholders. This press release does not constitute a solicitation of any vote or proxy from any shareholder of Lakes. INVESTORS ARE URGED TO READ THE DEFINITIVE PROXY STATEMENT IN ITS ENTIRETY WHEN IT BECOMES AVAILABLE AND ANY OTHER DOCUMENTS OR MATERIALS TO BE FILED WITH THE SEC IN CONNECTION WITH THE PROPOSED MERGER OR INCORPORATED BY REFERENCE IN THE DEFINITIVE PROXY STATEMENT BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT LAKES, GOLDEN GAMING AND THE PROPOSED MERGER. Investors may obtain free copies of the definitive proxy statement, and other relevant materials and documents filed with the SEC (when they become available), without charge, at the SEC’s web site at www.sec.gov. In addition, investors may obtain free copies of the definitive proxy statement, and other relevant materials and documents filed with the SEC by directing a written request to Investor Relations, Lakes Entertainment, Inc., 130 Cheshire Lane, Suite #101, Minnetonka, MN 55305, or by accessing Lakes’ website at www.lakesentertainment.com under the heading “Investors” and then “SEC Filings.”
Participants in the Solicitation
Lakes, Golden Gaming and their respective directors, executive officers and certain other members of management and employees may be deemed to be “participants” in the solicitation of proxies from shareholders of Lakes in connection with the proposed transaction, including with respect to the issuance of shares of Lakes common stock under the Merger Agreement. Information about Lakes’ directors and executive officers is available in Lakes’ definitive proxy statement, dated July 23, 2014, for its 2014 annual meeting of shareholders. Additional information regarding participants in the proxy solicitation and a description of their interests in the proposed transaction will be contained in the proxy statement that Lakes will file with the SEC in connection with the proposed transaction and other relevant documents or materials to be filed with the SEC regarding the proposed transaction.
Financial Information and Non-GAAP Financial Measures
All years represented in this presentation are fiscal years unless otherwise indicated. Lakes’ fiscal year is the 52 or 53 weeks ending the Sunday closest to December 31 of the specified year. For example, references to the 2015 fiscal year refer to fiscal year ending on January 3, 2016. Golden Gaming’s fiscal year ends on December 31 of each year. This press release includes actual, projected and combined information with respect to Lakes and Golden Gaming. Information relating to Golden Gaming and combined information are presented for illustrative purposes only and do not purport to be indicative of what Lakes’ or Golden Gaming’s actual and combined business, financial condition or results of operations will be if the transaction is consummated.
This press release contains certain financial measures that are not in accordance with generally accepted accounting principles (“non-GAAP”). A “non-GAAP financial measure” is defined as a numerical measure of a company’s financial performance that excludes or includes amounts so as to be different than the most directly comparable measure calculated and presented in accordance with generally accepted accounting principles (“GAAP”) in the statements of income, balance sheets or statements of cash flow of the company. These measures are presented as supplemental disclosures because they are widely used measures of performance and bases for valuation of companies in our industry. EBITDA is defined as net income before interest expense, provision for income taxes and depreciation and amortization. Adjusted EBITDA adjusts EBITDA to remove the effects of one-time items including pre-opening expenses, impairments and other losses, gains and losses on non-operating assets and liabilities, discontinued operations and transition expenses related to acquired operations. Uses of cash flows that are not reflected in Adjusted EBITDA include capital expenditures, interest payments, income taxes, debt principal repayments, and certain regulatory gaming assessments which can be significant. Operating Free Cash Flow represents Adjusted EBITDA less maintenance capital expenditures, change in working capital and income taxes. Adjusted Net Income represents net income before gain or loss from non-core assets and a full year of the estimated benefit of refinancing Lakes and Golden Gaming indebtedness. The pro forma presentations of these non-GAAP measures reflect current estimates of the combined results of Lakes and Golden Gaming only. The disclosure of EBITDA, Adjusted EBITDA, Operating Free Cash Flow, Adjusted Net Income and other non-GAAP financial measures may not be comparable to similarly titled measures reported by other companies. EBITDA, Adjusted EBITDA, Operating Free Cash Flow and Adjusted Net Income should be considered in addition to, and not as a substitute, or superior to, net income, operating income, cash flows, revenue, or other measures of financial performance prepared in accordance with GAAP.
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Contact:
Lakes Entertainment, Inc.
Timothy Cope, 952-449-7030
or
The Firm for Golden Gaming, LLC
Jesse Scott, 702-739-9933 ext. 228
Drmicrocap
10 years ago
Lakes Entertainment Announces Results for Third Quarter 2014
Lakes Entertainment, Inc.November 7, 2014 6:30 AM
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MINNEAPOLIS--(BUSINESS WIRE)--
Lakes Entertainment, Inc. ( LACO) today announced results for the three and nine months ended September 28, 2014.
Third Quarter Results
Net losses for the third quarter of 2014 were $23.1 million, compared to net earnings of $19.6 million for the third quarter of 2013. Losses from operations were $22.8 million for the third quarter of 2014 compared to earnings from operations of $18.8 million for the third quarter of 2013. Basic and diluted losses per share were $1.72 for the third quarter of 2014 compared to basic and diluted earnings per share of $1.48 and $1.46, respectively, for the third quarter of 2013.
Lakes Entertainment reported third quarter 2014 net revenues of $15.9 million, compared to prior-year third quarter net revenues of $15.5 million. Third quarter 2014 net revenues were related to the operation of Rocky Gap Casino Resort near Cumberland, Maryland (“Rocky Gap”). Lakes acquired this property in August 2012 and gaming operations began on May 22, 2013. During the third quarter of 2013, net revenues of $14.1 million were related to the operation of Rocky Gap. Also included in prior-year third quarter net revenues were $1.4 million of management fees related to the management of the Red Hawk Casino, near Sacramento, California, owned by the Shingle Springs Band of Miwok Indians (the “Shingle Springs Tribe”). There were no management fees earned during the third quarter of 2014 due to the August 29, 2013 termination of the management agreement for the Red Hawk Casino.
During the third quarters of 2014 and 2013, property operating expenses for Rocky Gap were $8.9 million and $8.2 million, respectively, and primarily related to gaming operations, rooms, food and beverage and golf. The increase in property operating expenses resulted primarily from an increase in gaming-related expenses, most notably gaming taxes, due to the increase in gaming related revenue in the current year quarter.
For the third quarter of 2014, selling, general and administrative expenses were $5.5 million compared to $5.4 million for the third quarter of 2013. Included in these amounts were Lakes corporate selling, general and administrative expenses of $1.5 million and $1.3 million during the third quarters of 2014 and 2013, respectively. Lakes’ corporate selling, general and administrative expenses consist primarily of payroll and related expenses and professional fees. Rocky Gap selling, general and administrative expenses were $4.0 million and $4.1 million during the third quarters of 2014 and 2013, respectively.
Lakes recognized approximately $17.4 million in recovery of impairment charges during the third quarter of 2013 related to a $57.1 million payment it received on notes receivable from the Shingle Springs Tribe that had previously been impaired and were valued at $39.7 million as of the payment date.
During the third quarter of 2013, Lakes recognized a gain of $3.8 million on extinguishment of liabilities associated with contract acquisition costs related to the project with the Shingle Springs Tribe due to the termination of the management agreement.
During the third quarter of 2014 Jerry Argovitz (“Argovitz”) was awarded approximately $2.4 million related to an arbitration action brought by Argovitz against Lakes. As a result, Lakes recognized charges related to arbitration award of $2.5 million during the third quarter of 2014, which included the $2.4 million award and $0.1 million of legal fees. The arbitration action was related to a previous agreement between Lakes and Argovitz.
Lakes recognized non-cash impairments and other losses of $21.0 million during the third quarter of 2014 related to its investment in Rock Ohio Ventures, LLC (“Rock Ohio”), a privately-held company, that owns 80% of the Horseshoe Casino Cleveland in Cleveland, Ohio; the Horseshoe Casino Cincinnati in Cincinnati, Ohio; the Thistledown Racino in North Randall, Ohio; and Turfway Park, a thoroughbred horseracing track located in Florence, Kentucky. Based on current information provided by Rock Ohio, Lakes has determined that there is now significant uncertainty surrounding the recovery of Lakes’ investment in Rock Ohio. The Ohio gaming properties have not performed as expected, which has led to forecasted potential working capital requirement issues that did not exist in prior quarters, based on information previously available to Lakes. As a result, Lakes determined that an other-than-temporary impairment had occurred and reduced the carrying value of the investment to its estimated fair value of zero as of September 28, 2014. Lakes recognized impairments and other losses of $3.4 million during the third quarter of 2013. Included in the impairments were $2.4 million related to intangible assets associated with the development and management agreement with the Shingle Springs Tribe, which were considered fully impaired upon the termination of the management agreement on August 29, 2013. In addition, receivables of approximately $1.0 million from related parties, that were directly related to the development and opening of Lakes’ Indian casino projects, were determined to be uncollectible and were impaired during the third quarter of 2013.
Depreciation and amortization was $0.9 million for the third quarter of 2014 compared to $0.8 million for the third quarter of 2013.
Nine Month Results
Net losses for the nine months ended September 28, 2014 were $24.8 million, compared to net earnings of $19.5 million for the nine months ended September 29, 2013. Losses from operations were $24.1 million for the first nine months of 2014 compared to earnings from operations of $15.6 million for the first nine months of 2013. Basic and diluted losses were $1.85 per share for the nine months ended September 28, 2014 compared to basic and diluted earnings per share of $1.48 and $1.46, respectively for the nine months ended September 29, 2013.
Lakes Entertainment reported net revenues of $42.3 million for the first nine months of 2014, compared to net revenues of $27.3 million in the prior year period. Net revenues in the current year period were related to the operation of Rocky Gap. During the prior year period, net revenues of $19.5 million were related to the operation of Rocky Gap. Also included in the prior-year period were net revenues of $7.8 million in management fees related to the management of the Red Hawk Casino. There were no management fees earned during the current year period due to the August 29, 2013 termination of the management agreement for the Red Hawk Casino.
During the first nine months of 2014, property operating expenses for Rocky Gap which related primarily to gaming operations, rooms, food and beverage and golf were $24.4 million compared to $12.2 million in the prior-year period. The increase in property operating expenses was due to the addition of gaming in May of 2013.
For the nine months ended September 28, 2014, selling, general and administrative expenses were $16.9 million compared to $13.8 million for the nine months ended September 29, 2013. Included in these amounts were Lakes corporate selling, general and administrative expenses of $5.5 million and $5.3 million, during the first nine months of 2014 and 2013, respectively. Rocky Gap selling, general and administrative expenses were $11.4 million and $8.5 million during the first nine months of 2014 and 2013, respectively. Lakes’ 2014 and 2013 corporate selling, general and administrative expenses consist primarily of payroll and related expenses and professional fees, as well as $0.8 million of business development costs in 2014. The increase in Rocky Gap selling, general and administrative expenses was due primarily to increases in payroll and related expenses and marketing and advertising expenses related to the addition of gaming during May 2013.
Lakes recognized approximately $17.4 million in recovery of impairment charges during the third quarter of 2013 related to a $57.1 million payment it received on notes receivable from the Shingle Springs Tribe that had previously been impaired and were valued at $39.7 million as of the payment date.
During the nine months ended September 29, 2013, Lakes recognized a gain of $3.8 million on extinguishment of liabilities associated with contract acquisition costs related to the project with the Shingle Springs Tribe due to the termination of the management agreement.
During the second quarter of 2014, Lakes entered into an agreement to sell its interest in Dania Casino & Jai Alai in Dania Beach, Florida for a total of $2.6 million. Per the agreement, on April 21, 2014, Lakes received $1.0 million in exchange for 40% of Lakes’ interest in the project. Upon the receipt of the payment during the second quarter of 2014, Lakes recognized a $1.0 million gain on sale of cost method investment since this asset had previously been written off. On October 17, 2014, Lakes was paid the entire remaining amount due at a discounted amount of approximately $1.4 million. Upon receipt of such payment, Lakes transferred its remaining ownership. Lakes will account for the receipt of this $1.4 million payment as a gain on sale of cost method investment in the fourth quarter of 2014.
Lakes recognized charges related to arbitration award of $2.5 million during the third quarter of 2014, which included the $2.4 million award and $0.1 million of legal fees. The award resulted from an arbitration action, related to a prior agreement, brought by Argovitz against Lakes.
Lakes recognized non-cash impairments and other losses of $21.0 million during the third quarter of 2014 related to its investment in Rock Ohio. Based on current information provided by Rock Ohio, Lakes has determined that there is now significant uncertainty surrounding the recovery of Lakes’ investment in Rock Ohio. The Ohio gaming properties have not performed as expected, which has led to forecasted potential working capital requirement issues that did not exist in prior quarters, based on information previously available to Lakes. As a result, Lakes determined that an other-than-temporary impairment had occurred and reduced the carrying value of the investment to its estimated fair value of zero as of September 28, 2014. Lakes recognized impairments and other losses of $3.4 million during the nine months ended September 29, 2013. Included in the impairments were $2.4 million related to intangible assets associated with the development and management agreement with the Shingle Springs Tribe, which were considered fully impaired upon the termination of the management agreement on August 29, 2013. In addition, receivables of approximately $1.0 million from related parties, that were directly related to the development and opening of Lakes’ Indian casino projects, were determined to be uncollectible and were impaired during the nine months ended September 29, 2013.
During the nine months ended September 29, 2013, Lakes recognized preopening expenses of $1.2 million related to the Rocky Gap project. There were no preopening expenses during the current year period.
Depreciation and amortization was $2.6 million for the nine months ended September 28, 2014 compared to $1.5 million for the nine months ended September 29, 2013. The increase related to depreciation on Rocky Gap fixed assets.
Tim Cope, President and Chief Financial Officer of Lakes stated, "Rocky Gap operations continued to perform well during the third quarter of this year. During the quarter, we added 150 new parking spaces, completed the expansion of the fitness center and the remodel of the golf shop. Even with an increase of 19 more machines this year compared to 2013 we saw an increase in slot win per-unit per-day from $181 for the third quarter of 2013 to $199 for the third quarter of this year. The gaming facility features 577 video lottery terminals, 15 table games, two poker tables and a casino bar along with a lobby food and beverage outlet. The AAA Four Diamond Award® winning property also includes a hotel, event center, restaurants, spa, the only Jack Nicklaus signature golf course in Maryland as well as a wide variety of outdoor and water activities.”
Further commenting, Lyle Berman, Chief Executive Officer of Lakes stated, ”We are disappointed that the results of the Ohio gaming properties have now caused uncertainty surrounding the recovery of our investment in Rock Ohio and have resulted in the impairment of this investment during the third quarter.” Mr. Berman continued, “During the third quarter we announced that we had retained the services of Macquarie Capital as our financial advisor in connection with the evaluation of strategic alternatives aimed at enhancing shareholder value. With approximately $80 million in cash and short-term investments on our balance sheet, we continue to consider new ventures in order to maximize shareholder value.”
About Lakes Entertainment
Lakes Entertainment, Inc. currently owns the Rocky Gap Casino Resort near Cumberland, Maryland. Lakes also has an investment in Rock Ohio Ventures, LLC’s casino and racino developments in Ohio, as well as Turfway Park in Florence, Kentucky.
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; Lakes operates in a highly competitive industry; possible changes in regulations; possible need for future financing to meet Lakes' expansion goals; risks of entry into new businesses; reliance on Lakes' management; and litigation costs. For more information, review the company's filings with the Securities and Exchange Commission.
LAKES ENTERTAINMENT, INC. AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
(In thousands)
(Unaudited)
September 28, 2014 December 29, 2013
Assets
Current assets:
Cash and cash equivalents $ 33,356 $ 37,897
Short-term investments 47,327 49,099
Income taxes receivable - 2,155
Other 2,359 1,774
Total current assets 83,042 90,925
Property and equipment, net 33,547 31,659
Other assets:
Investment in unconsolidated investee - 20,997
Gaming license 1,910 2,015
Land held for development 960 1,130
Income taxes receivable 2,155
-
Other 486 535
Total other assets 5,511 24,677
Total assets $ 122,100 $ 147,261
Liabilities and shareholders' equity
Current liabilities:
Current portion of long-term debt $ 1,367 $ 1,251
Other 3,820 3,610
Total current liabilities 5,187 4,861
Long-term debt, net 9,278 10,321
Total liabilities 14,465 15,182
Total shareholders' equity 107,635 132,079
Total liabilities and shareholders' equity $ 122,100 $ 147,261
LAKES ENTERTAINMENT, INC. AND SUBSIDIARIES
Unaudited Condensed Consolidated Statements of Operations
(In thousands, except per share data)
Three months ended Nine months ended
September 28, 2014 September 29, 2013 September 28, 2014 September 29, 2013
Revenues:
Management fees $ - $ 1,384 $ - $ 7,762
Gaming 12,072 10,445 33,460 13,633
Room 1,940 1,849 4,884 2,728
Food and beverage 1,835 1,665 4,660 2,566
Other operating 829 647 1,806 1,154
License fees and other 44 26 107 66
Gross revenues 16,720 16,016 44,917 27,909
Less promotional allowances 790 524 2,570 564
Net revenues 15,930 15,492 42,347 27,345
Costs and expenses:
Gaming 6,841 6,037 19,208 8,055
Room 226 255 509 580
Food and beverage 1,366 1,393 3,589 2,455
Other operating 470 483 1,131 1,116
Selling, general and administrative 5,455 5,398 16,918 13,782
Recovery of impairment on notes receivable - (17,382 ) - (17,382 )
Gain on extinguishment of liabilities - (3,752 ) - (3,752 )
Gain on sale of cost method investment - - (1,000 ) -
Impairments and other losses 20,997 3,356 20,997 3,356
Charges related to arbitration award 2,530 - 2,530 -
Preopening expenses - - - 1,163
Amortization of intangible assets related to Indian casino projects - 187 - 716
Gain on sale of land (66 ) - (66 ) -
Loss on disposal of property and equipment 37 - 61 143
Depreciation and amortization 896 759 2,613 1,476
Total costs and expenses 38,752 (3,266 ) 66,490 11,708
Earnings (loss) from operations (22,822 ) 18,758 (24,143 ) 15,637
Other income (expense):
Interest income 39 1,276 110 4,770
Interest expense (297 ) (450 ) (923 ) (922 )
Other 4 15 169 25
Total other income (expense), net (254 ) 841 (644 ) 3,873
Earnings (loss) before income taxes (23,076 ) 19,599 (24,787 ) 19,510
Income tax benefit - - - -
Net earnings (loss) $ (23,076 ) $ 19,599 $ (24,787 ) $ 19,510
Other comprehensive loss (3 ) (9 ) (2 ) (9 )
Comprehensive income (loss) $ (23,079 ) $ 19,590 $ (24,789 ) $ 19,501
Weighted-average common shares outstanding
Basic 13,389 13,232 13,376 13,225
Dilutive impact of stock options - 184 - 111
Diluted 13,389 13,416 13,376 13,336
Earnings (loss) per share
Basic $ (1.72 ) $ 1.48 $ (1.85 ) $ 1.48
Diluted $ (1.72 ) $ 1.46 $ (1.85 ) $ 1.46
Contact:
Lakes Entertainment, Inc.
Timothy Cope, 952-449-7030
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Drmicrocap
11 years ago
Lakes Entertainment Announces Results for Fourth Quarter and Full Year 2013
Business Wire Lakes Entertainment, Inc.
6 hours ago
MINNEAPOLIS--(BUSINESS WIRE)--
Lakes Entertainment, Inc. (LACO) today announced results for the three and twelve months ended December 29, 2013.
Fourth Quarter Results
Net loss for the fourth quarter of 2013 was $0.9 million, compared to net earnings of $2.0 million for the fourth quarter of 2012. Loss from operations was $2.2 million for the fourth quarter of 2013 compared to a loss from operations of $1.9 million for the fourth quarter of 2012. Basic and diluted loss per share was $0.03 for the fourth quarter of 2013 compared to basic and diluted earnings per share of $0.07 for the fourth quarter of 2012.
Lakes Entertainment reported fourth quarter 2013 net revenues of $11.4 million, compared to prior-year fourth quarter net revenues of $2.8 million. Fourth quarter 2013 net revenues were related to the operation of Rocky Gap Casino Resort near Cumberland, Maryland, (“Rocky Gap”). Lakes acquired this property on August 3, 2012 and gaming operations began on May 22, 2013. During the fourth quarter of 2012, net revenues of $1.4 million were related to the operation of Rocky Gap. Also included in prior-year fourth quarter net revenues were $1.4 million in management fees related to the management of the Red Hawk Casino, near Sacramento, California, owned by the Shingle Springs Band of Miwok Indians (the “Tribe”). There were no management fees earned during the fourth quarter of 2013 due to the August 29, 2013 termination of the management agreement for the Red Hawk Casino.
During the fourth quarter of 2013, property operating expenses for Rocky Gap were $7.3 million, and primarily related to gaming operations, rooms, food and beverage and golf. During the fourth quarter of 2012, property operating expenses for Rocky Gap were $0.8 million, and primarily related to rooms, food and beverage and golf. The increase in property operating expenses resulted primarily from the inclusion of gaming-related expenses in the current year quarter. Gaming commenced in May 2013, therefore, there were no such expenses in the prior year fourth quarter.
For the fourth quarter of 2013, selling, general and administrative expenses were $5.6 million compared to $3.1 million for the fourth quarter of 2012. Included in these amounts were Lakes corporate selling, general and administrative expenses of $1.6 million and $1.9 million during the fourth quarters of 2013 and 2012, respectively. The decrease in Lakes corporate selling, general and administrative expenses was due primarily to decreases in professional fees and payroll and related expenses. Rocky Gap selling, general and administrative expenses were $4.0 million and $1.2 million during the fourth quarters of 2013 and 2012, respectively. The increase in Rocky Gap selling, general and administrative expenses was due primarily to increases in marketing and advertising expenses, and payroll and related expenses related to the addition of gaming during May 2013.
Depreciation and amortization was $0.8 million for the three months ended December 29, 2013 compared to $0.3 million for the three months ended December 30, 2012. The increase related to depreciation on Rocky Gap fixed assets.
During the fourth quarter of 2013, Lakes recognized a $1.7 million gain on modification of debt due to a reduction in the interest rate on its outstanding financing facility that was used to fund a portion of the Rocky Gap project.
The Company has existing net operating loss carry forwards of approximately $72 million that are available to offset future taxable income.
Twelve Month Results
Net earnings for the twelve months ended December 29, 2013 were $18.7 million, compared to net earnings of $3.2 million for the twelve months ended December 30, 2012. Earnings from operations were $13.4 million for the twelve months ended December 29, 2013 compared to a loss of $7.1 million for the twelve months ended December 30, 2012. Basic and diluted earnings per share were $0.70 for the twelve months ended December 29, 2013 compared to basic and diluted earnings of $0.12 per share for the twelve months ended December 30, 2012.
Lakes Entertainment reported net revenues of $38.8 million for 2013, compared to net revenues of $11.0 million for the prior year. Included in these amounts were net revenues of $30.9 million and $3.2 million for 2013 and 2012, respectively, related to the operation of Rocky Gap. Also included in net revenues were management fees of $7.8 million and $7.7 million earned during 2013 and 2012, respectively, related to the Red Hawk Casino.
During 2013, property operating expenses for Rocky Gap were $19.5 million, and primarily related to gaming operations, rooms, food and beverage and golf. During 2012, property operating expenses for Rocky Gap were $1.7 million, and primarily related to rooms, food and beverage and golf. The increase in property operating expenses resulted primarily from the inclusion of gaming-related expenses in the current year. Gaming commenced in May 2013, therefore, there were no such expenses in the prior year. In addition, because Rocky Gap was acquired on August 3, 2012, the prior year included operating expenses beginning on the date of acquisition.
For 2013, selling, general and administrative expenses were $19.3 million compared to $10.2 million for 2012. Included in these amounts were Lakes corporate selling, general and administrative expenses of $6.8 million and $7.8 million, for 2013 and 2012, respectively. The decrease in Lakes corporate selling, general and administrative expenses was due primarily to a decrease in payroll and related expenses and travel expenses. Rocky Gap selling, general and administrative expenses were $12.5 million and $2.4 million during 2013 and 2012, respectively. The increase in Rocky Gap selling, general and administrative expenses was due primarily to increases in marketing and advertising expenses, and payroll and related expenses related to the addition of gaming during May 2013.
As previously announced, on July 17, 2013, Lakes entered into a debt termination agreement (the “Debt Termination Agreement”) with the Tribe relating to amounts Lakes had previously advanced to the Tribe under the development and management agreement for the Red Hawk Casino between Lakes and the Tribe (the “Shingle Springs Notes”). The Debt Termination Agreement required certain conditions to be met, including a lump sum payment by the Shingle Springs Tribe to Lakes of $57.1 million (the “Debt Payment”). The Debt Payment was made on August 29, 2013 (the “Payment Date”) and constituted full and final payment of all debt owed to Lakes as of that date. As a result of the receipt of the Debt Payment, during the third quarter of 2013, Lakes recognized approximately $17.4 million in recovery of impairment charges because the Shingle Springs Notes were valued at $39.7 million as of the Payment Date. The management agreement under which Lakes was managing the Red Hawk Casino also terminated on the Payment Date.
During 2013, Lakes also recognized a gain of $3.8 million on extinguishment of liabilities associated with contract acquisition costs related to the project with the Tribe that were no longer owed upon the termination of the management agreement between Lakes and the Tribe.
Lakes recognized impairments and other losses of $3.4 million during 2013 compared to $4.5 million during 2012. Included in the current year impairments were $2.4 million related to the intangible assets associated with the development and management agreement with the Tribe, which were considered fully impaired upon the termination of the management agreement on August 29, 2013 and were written down to zero. In addition, receivables of approximately $1.0 million, that are directly related to the development and opening of Lakes’ Indian casino projects, were determined to be uncollectible and were impaired during 2013. The prior period impairments and other losses included $1.8 million due to the termination of Lakes’ agreement with the Jamul Indian Village for a project near San Diego, California and $1.3 million related to the write-down of land held for sale near Vicksburg, Mississippi to its agreed upon sale price, as well as $1.2 million related to costs associated with development plans for Rocky Gap which were subsequently revised.
During 2013, Lakes recognized preopening expenses of $1.2 million related to the Rocky Gap project. There were no preopening expenses during the prior year period.
Depreciation and amortization was $2.3 million for 2013 compared to $0.7 million for 2012. The increase related to depreciation on Rocky Gap fixed assets.
During 2013, Lakes recognized a $1.7 million gain on modification of debt due to a reduction in the interest rate on its outstanding financing facility that was used to fund a portion of the Rocky Gap project.
During 2012 Lakes recognized other income of $2.2 million related to a favorable legal settlement.
There was no income tax provision for 2013 because the Company released valuation allowance against deferred tax assets available to offset current income. The $2.5 million income tax benefit for the prior year was primarily due to the Company’s ability to carry back its estimated 2012 taxable loss to a prior year and receive a refund of taxes previously paid.
Tim Cope, President and Chief Financial Officer of Lakes stated, "We are pleased that during the fourth quarter, we were able to open the new event center space at our Rocky Gap Casino Resort near Cumberland, Maryland. Now that the event space is open, we look forward to expanding our business with this new amenity. Although inclement weather has impacted our operations to an extent this winter, we are encouraged by this property’s results since the gaming space opened in May of 2013. We plan to invest additional capital in this property during 2014, including the addition of 150 new parking spaces and refurbishing or expanding various existing spaces at the property including the expansion of the fitness center and the addition of new retail space. The gaming facility currently features 558 video lottery terminals, 10 table games, three poker tables, a casino bar and a new lobby food and beverage outlet. The AAA Four Diamond Award® winning property also includes a hotel, event center, restaurants, spa, and the only Jack Nicklaus signature golf course in Maryland.”
Further commenting, Lyle Berman, Chief Executive Officer of Lakes stated, “We continue to maintain a 10% ownership interest in Rock Ohio Ventures, LLC’s 80% ownership in the open and operating Horseshoe Casino Cleveland, the Horseshoe Casino Cincinnati, the Thistledown Racino in North Randall, Ohio and Turfway Park, a racetrack located in Florence, Kentucky. We also effectively own 5% of the company that now owns the Dania Jai Alai fronton in Dania Beach, Florida. That company has a Florida gaming license and recently opened its Dania Casino with 550 slot machines and 12 poker tables in the first phase of its master plan to expand the existing property into a full scale casino operation.” Mr. Berman continued, “With the receipt of the $57.1 million cash payment, from the Shingle Springs Tribe during 2013, we now have in excess of $80 million in available funds on our balance sheet which allows us flexibility as we consider new ventures in order to increase shareholder value.”
About Lakes Entertainment
Lakes Entertainment, Inc. currently owns the Rocky Gap Casino Resort near Cumberland, Maryland. Lakes also has an investment in Rock Ohio Ventures, LLC’s casino and racino developments in Ohio, as well as Turfway Park in Florence, Kentucky; and an investment in Dania Entertainment Center, LLC’s Dania Casino & Jai Alai in Dania Beach, Florida.
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; Lakes operates in a highly competitive industry; possible changes in regulations; possible need for future financing to meet Lakes' expansion goals; risks of entry into new businesses; reliance on Lakes' management; and litigation costs. For more information, review the company's filings with the Securities and Exchange Commission.
LAKES ENTERTAINMENT, INC. AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
(In thousands)
(Unaudited)
December 29, 2013 December 30, 2012
Assets
Current assets:
Cash and cash equivalents $ 37,897 $ 32,480
Short-term investments 49,099 -
Income taxes receivable 2,155 2,161
Other 1,774 1,255
Total current assets 90,925 35,896
Property and equipment, net 31,659 13,279
Long-term assets related to Indian casino projects:
Notes and interest receivable, net of current portion and allowance - 38,247
Intangible assets - 3,127
Management fees receivable and other - 4,786
Total long-term assets related to Indian casino projects - 46,160
Other assets:
Investment in unconsolidated investee 20,997 20,161
License fee 2,015 2,100
Land held for development 1,130 1,130
Other 535 996
Total other assets 24,677 24,387
Total assets $ 147,261 $ 119,722
Liabilities and shareholders' equity
Current liabilities:
Current portion of contract acquisition costs payable, net $ - $ 1,265
Current portion of long-term debt 1,251 -
Other 3,610 2,978
Total current liabilities 4,861 4,243
Long-term debt, net 10,321 -
Long-term contract acquisition costs payable, net - 3,302
Total long-term liabilities 10,321 3,302
Total liabilities 15,182 7,545
Total shareholders' equity 132,079 112,177
Total liabilities and shareholders' equity $ 147,261 $ 119,722
LAKES ENTERTAINMENT, INC. AND SUBSIDIARIES
Unaudited Condensed Consolidated Statements of Operations
(In thousands, except per share data)
Three months ended Twelve months ended
December 29, 2013 December 30, 2012 December 29, 2013 December 30, 2012
Revenues:
Management fees $ - $ 1,395 $ 7,762 $ 7,726
Gaming 9,040 - 22,673 -
Room 1,368 620 4,096 1,383
Food and beverage 1,209 663 3,775 1,281
Other operating 372 140 1,526 498
License fees and other 28 13 94 64
Gross revenues 12,017 2,831 39,926 10,952
Less promotional allowances 572 - 1,136 -
Net revenues 11,445 2,831 38,790 10,952
Costs and expenses:
Gaming 5,415 - 13,470 -
Room 283 150 863 296
Food and beverage 1,303 484 3,758 955
Other operating 304 199 1,420 415
Selling, general and administrative 5,550 3,137 19,332 10,191
Recovery of impairment on notes receivable - - (17,382 ) -
Gain on extinguishment of liabilities - - (3,752 ) -
Impairments and other losses - 139 3,356 4,453
Preopening expenses 21 - 1,184 -
Amortization of intangible assets related to Indian casino projects - 264 716 1,056
Loss on disposal of property and equipment - 143
Depreciation and amortization 797 340 2,273 675
Total costs and expenses
13,673 4,713 25,381 18,041
Earnings (loss) from operations (2,228 ) (1,882 ) 13,409 (7,089 )
Other income (expense):
Interest income 33 1,667 4,803 6,442
Interest expense (322 ) (218 ) (1,244 ) (940 )
Gain on modification of debt 1,658 - 1,658 -
Legal settlement - 2,160 - 2,160
Other - 10 25 123
Total other income, net 1,369 3,619 5,242 7,785
Earnings (loss) before income taxes (859 ) 1,737 18,651 696
Income tax benefit - (235 ) - (2,464 )
Net earnings (loss) including noncontrolling interest (859 ) 1,972 18,651 3,160
Net loss attributable to noncontrolling interest - - - 61
Net earnings (loss) attributable to Lakes Entertainment, Inc. $ (859 ) $ 1,972 $ 18,651 $ 3,221
Other comprehensive loss 9 - - -
Comprehensive earnings (loss) $ (850 ) $ 1,972 $ 18,651 $ 3,221
Weighted-average common shares outstanding
Basic 26,585 26,441 26,483 26,438
Diluted 26,919 26,480 26,689 26,439
Earnings (loss) per share
Basic $ (0.03 ) $ 0.07 $ 0.70 $ 0.12
Diluted $ (0.03 ) $ 0.07 $ 0.70 $ 0.12
Contact:
Investor Relations Contact:
BPC Financial Marketing
John Baldissera, 800-368-1217
or
For Further Information Contact:
Lakes Entertainment, Inc.
Timothy Cope, 952-449-7030
Drmicrocap
11 years ago
Lakes Entertainment Announces Results for Third Quarter 2013
Business WirePress Release: Lakes Entertainment, Inc. – 7 hours ago..
MINNEAPOLIS--(BUSINESS WIRE)--
Lakes Entertainment, Inc. (LACO) today announced results for the three and nine months ended September 29, 2013.
Third Quarter Results
Net earnings for the third quarter of 2013 were $19.6 million, compared to a net loss of $1.0 million for the third quarter of 2012. Earnings from operations were $18.8 million for the third quarter of 2013 compared to a loss from operations of $2.5 million for the third quarter of 2012. Basic and diluted earnings per share were $0.74 and $0.73, respectively, for the third quarter of 2013 compared to basic and diluted losses of $0.04 per share for the third quarter of 2012.
Lakes Entertainment reported third quarter 2013 net revenues of $15.5 million, compared to prior-year third quarter net revenues of $3.6 million. Included in these amounts were net revenues of $14.1 million and $1.7 million for the third quarters of 2013 and 2012, respectively, related to the operation of the Rocky Gap Casino Resort near Cumberland, Maryland (“Rocky Gap”), which Lakes acquired on August 3, 2012 and which commenced gaming operations on May 22, 2013. Also included in net revenues were $1.4 million in management fees earned during the third quarter of 2013 compared to $1.9 million earned during the third quarter of 2012 related to the Red Hawk Casino, owned by the Shingle Springs Band of Miwok Indians (the “Tribe”), near Sacramento, California. The decrease in management fees earned during the third quarter of 2013 compared to the third quarter of 2012 was due to the August 29, 2013, termination of the management agreement between Lakes and the Tribe for the management of the Red Hawk Casino which resulted in only two months of management fees in the current year third quarter.
As previously announced, on July 17, 2013, Lakes entered into a debt termination agreement (the “Debt Termination Agreement”) with the Tribe relating to amounts Lakes had previously advanced to the Tribe under the development and management agreement for the Red Hawk Casino between Lakes and the Tribe (the “Shingle Springs Notes”). The Debt Termination Agreement required certain conditions to be met, including a lump sum payment by the Shingle Springs Tribe to Lakes of $57.1 million (the “Debt Payment”). The Debt Payment was made on August 29, 2013 (the “Payment Date”) and constituted full and final payment of all debt owed to Lakes as of that date. As a result of the receipt of the Debt Payment, during the third quarter of 2013, Lakes recognized approximately $17.4 million in recovery of impairment charges because the Shingle Springs Notes were valued at $39.7 million as of the Payment Date. The management agreement under which Lakes was managing the Red Hawk Casino also terminated on the Payment Date.
During the third quarter of 2013, Lakes also recognized a gain of $3.8 million on extinguishment of liabilities associated with contract acquisition costs related to the project with the Shingle Springs Tribe that were no longer owed upon the termination of the management agreement between Lakes and the Shingle Springs Tribe.
As of the Payment Date, $2.4 million of intangible assets related to the development and management agreement with the Shingle Springs Tribe were considered fully impaired and were written down to zero resulting in Lakes recognizing an impairment charge of $2.4 million during the third quarter of 2013.
During the third quarter of 2013, property operating expenses for Rocky Gap, which primarily related to gaming operations, rooms, food and beverage and golf, were $8.2 million. During the third quarter of 2012, property operating expenses for Rocky Gap, which primarily related to rooms, food and beverage and golf were $0.8 million. The increase in property operating expenses resulted primarily from the inclusion of gaming-related expenses in the current year quarter. Gaming commenced in May 2013, therefore, there were no such expenses in the prior year third quarter. In addition, because Rocky Gap was acquired on August 3, 2012, the prior year third quarter included only a partial quarter of operating expenses.
For the third quarter of 2013, selling, general and administrative expenses were $5.4 million compared to $2.8 million for the third quarter of 2012. Included in these amounts were Lakes corporate selling, general and administrative expenses of $1.3 million and $2.0 million during the third quarters of 2013 and 2012, respectively. The decrease in Lakes corporate selling, general and administrative expenses was due primarily to a decrease in professional fees as well as decreases in payroll and related expenses and travel expenses. Rocky Gap selling, general and administrative expenses were $4.1 million and $0.8 million during the third quarters of 2013 and 2012, respectively. The increase in Rocky Gap selling, general and administrative expenses was due primarily to increases in professional fees, marketing and advertising expenses, and payroll and related expenses related to the addition of gaming during May 2013.
Lakes recognized impairments and other losses of $3.4 million during the three months ended September 29, 2013 compared to $2.0 million during the three months ended September 30, 2012. Included in the current year impairments were $2.4 million related to the intangible assets associated with the development and management agreement with the Shingle Springs Tribe. In addition, receivables of approximately $1.0 million from related parties, that are directly related to the development and opening of Lakes’ Indian casino projects, were determined to be uncollectible and were impaired during the three months ended September 29, 2013. The prior period impairments and other losses included $1.3 million related to the write-down of land held for sale near Vicksburg, Mississippi to its agreed upon sale price as well as $0.7 million related to costs associated with development plans for Rocky Gap which were subsequently revised.
Depreciation and amortization was $0.8 million for the three months ended September 29, 2013 compared to $0.2 million for the three months ended September 30, 2012. The increase related to depreciation on Rocky Gap fixed assets.
The Company has existing net operating loss carry forwards of approximately $57.0 million related to prior years, that are available to offset future taxable income. In addition, during 2013, as a result of the Debt Termination Agreement and the discount in the amount received on the Shingle Springs Notes compared to their face value, the Company expects a tax deduction of approximately $13.0 million.
There was no income tax provision for the third quarter of 2013 because the Company released valuation allowance against deferred tax assets relating to taxable losses available to offset current income. The $0.1 million income tax benefit for the third quarter of 2012 related primarily to current income tax benefit.
Nine Month Results
Net earnings for the nine months ended September 29, 2013 were $19.5 million, compared to net earnings of $1.2 million for the nine months ended September 30, 2012. Earnings from operations were $15.6 million for the nine months ended September 29, 2013 compared to losses of $5.2 million for the nine months ended September 30, 2012. Basic and diluted earnings per share were $0.74 and $0.73, respectively for the nine months ended September 29, 2013 compared to basic and diluted earnings of $0.05 per share for the nine months ended September 30, 2012.
Lakes Entertainment reported net revenues of $27.3 million for the first nine months of 2013, compared to net revenues of $8.1 million for the prior year period. Included in these amounts were net revenues of $19.5 million and $1.7 million for the nine months ended September 29, 2013 and September 30, 2012, respectively, related to the operation of Rocky Gap. Also contributing to the increase in net revenues was an additional $1.4 million in management fees earned during the first nine months of 2013 compared to the prior year period related to the Red Hawk Casino.
During the first nine months of 2013, property operating expenses for Rocky Gap which primarily related to gaming operations, rooms, food and beverage and golf were $12.2 million. During the first nine months of 2012, property operating expenses for Rocky Gap, which primarily related to rooms, food and beverage and golf were $0.8 million. The increase in property operating expenses resulted primarily from the inclusion of gaming-related expenses in the current year period. Gaming commenced in May 2013, therefore, there were no such expenses in the prior year period. In addition, because Rocky Gap was acquired on August 3, 2012, the prior year period included operating expenses beginning on the date of acquisition.
For the nine months ended September 29, 2013, selling, general and administrative expenses were $13.8 million compared to $7.1 million for the nine months ended September 30, 2012. Included in these amounts were Lakes corporate selling, general and administrative expenses of $5.3 million and $5.9 million, for the first nine months of 2013 and 2012, respectively. The decrease in Lakes corporate selling, general and administrative expenses was due primarily to a decrease in payroll and related expenses and travel expenses. Rocky Gap selling, general and administrative expenses were $8.5 million and $1.2 million during the first nine months of 2013 and 2012, respectively. The increase in Rocky Gap selling, general and administrative expenses was due primarily to increases in professional fees, marketing and advertising expenses, and payroll and related expenses related to the addition of gaming during May 2013.
As a result of the receipt of the Debt Payment, during the third quarter of 2013, Lakes recognized approximately $17.4 million in recovery of impairment charges because the Shingle Springs Notes had previously been impaired and were valued at $39.7 million as of the Payment Date.
During the nine months ended September 29, 2013, Lakes also recognized a gain of $3.8 million on extinguishment of liabilities associated with contract acquisition costs related to the project with the Tribe that were no longer owed upon the termination of the management agreement between Lakes and the Tribe.
Lakes recognized impairments and other losses of $3.4 million during the nine months ended September 29, 2013 compared to $4.3 million during the nine months ended September 30, 2012. Included in the current year impairments were $2.4 million related to the intangible assets associated with the development and management agreement with the Shingle Springs Tribe, which were considered fully impaired upon the termination of the management agreement on August 29, 2013 and were written down to zero. In addition, receivables of approximately $1.0 million from related parties, that are directly related to the development and opening of Lakes’ Indian casino projects, were determined to be uncollectible and were impaired during the nine months ended September 29, 2013. The prior period impairments and other losses included $1.8 million due to the termination of Lakes’ agreement with the Jamul Indian Village for a project near San Diego, California and $1.3 million related to the write-down of land held for sale near Vicksburg, Mississippi to its agreed upon sale price as well as $1.2 million related to costs associated with development plans for Rocky Gap which were subsequently revised.
During the nine months ended September 29, 2013, Lakes recognized preopening expenses of $1.2 million related to the Rocky Gap project. There were no preopening expenses during the prior year period.
Depreciation and amortization was $1.5 million for the nine months ended September 29, 2013 compared to $0.3 million for the nine months ended September 30, 2012. The increase related to depreciation on Rocky Gap fixed assets.
There was no income tax provision for the nine months ended September 29, 2013 because the Company released valuation allowance against deferred tax assets relating to taxable losses available to offset current income. The $2.2 million income tax benefit for the prior year period was primarily due to the Company’s ability to carry back its estimated 2012 taxable loss to a prior year and receive a refund of taxes previously paid.
Tim Cope, President and Chief Financial Officer of Lakes stated, "We are pleased that during the third quarter, our Rocky Gap Casino Resort near Cumberland, Maryland, met our expectations for both gross casino revenues of $10.4 million and other gross operating revenues of $4.2 million and while this casino space is still newly opened we are encouraged by its recent results. Construction of a new event center at Rocky Gap has stayed on track and will be available for use beginning next week. The new event center will be able to accommodate large groups and will feature multiple flexible use meeting rooms. We look forward to expanding our business with this new amenity. The gaming facility features 558 video lottery terminals, 10 table games, three poker tables, a casino bar and a new lobby food and beverage outlet. The AAA Four Diamond Award® winning property also includes a hotel, restaurants, spa, and the only Jack Nicklaus signature golf course in Maryland.”
Further commenting, Lyle Berman, Chief Executive Officer of Lakes stated, “During the third quarter, we received a cash payment of $57.1 million per the terms of our debt termination agreement with the Shingle Springs Tribe. Our management agreement for the Red Hawk Casino also terminated during the third quarter. With the receipt of the $57.1 million, we now have approximately $90 million in available funds on our balance sheet which allows us flexibility as we consider new investments in order to increase shareholder value.” Mr. Berman continued, “In addition, we continue to maintain a 10% ownership interest in Rock Ohio Ventures, LLC’s 80% ownership in the open and operating Horseshoe Casino Cleveland, the Horseshoe Casino Cincinnati, and the Thistledown Racino in North Randall, Ohio. We also effectively own 5% of the company that now owns the Dania Jai Alai fronton in Dania Beach, Florida. That company has a Florida gaming license and is in the development phase of expanding the existing property into a full scale casino operation.”
About Lakes Entertainment
Lakes Entertainment, Inc. currently owns the Rocky Gap Casino Resort near Cumberland, Maryland. Lakes also has an investment in Rock Ohio Ventures, LLC’s casino and racino developments in Ohio, and an investment in Dania Entertainment Center, LLC’s Dania Jai Alai fronton in Dania Beach, Florida.
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; Lakes operates in a highly competitive industry; possible changes in regulations; possible need for future financing to meet Lakes' expansion goals; risks of entry into new businesses; reliance on Lakes' management; and litigation costs. For more information, review the company's filings with the Securities and Exchange Commission.
LAKES ENTERTAINMENT, INC. AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
(In thousands)
(Unaudited)
September 29, 2013 December 30, 2012
Assets
Current assets:
Cash and cash equivalents $ 41,932 $ 32,480
Short-term investments 48,951 -
Income taxes receivable 2,166 2,161
Prepaid expenses 1,097 186
Other 1,096 1,069
Total current assets 95,242 35,896
Property and equipment, net 29,932 13,279
Long-term assets related to Indian casino projects:
Notes and interest receivable, net of current portion and allowance - 38,247
Intangible assets - 3,127
Management fees receivable and other - 4,786
Total long-term assets related to Indian casino projects - 46,160
Other assets:
Investment in unconsolidated investee 20,997 20,161
License fee 2,050 2,100
Land held for development 1,130 1,130
Other 931 996
Total other assets 25,108 24,387
Total assets $ 150,282 $ 119,722
Liabilities and shareholders' equity
Current liabilities:
Current portion of contract acquisition costs payable, net $ - $ 1,265
Current portion of long-term debt 794 -
Other 4,379 2,978
Total current liabilities 5,173 4,243
Long-term debt, net 12,909 -
Long-term contract acquisition costs payable, net - 3,302
Total long-term liabilities 12,909 3,302
Total liabilities 18,082 7,545
Total shareholders' equity 132,200 112,177
Total liabilities and shareholders' equity $ 150,282 $ 119,722
LAKES ENTERTAINMENT, INC. AND SUBSIDIARIES
Unaudited Condensed Consolidated Statements of Operations
(In thousands, except per share data)
Three months ended Nine months ended
September 29, 2013 September 30, 2012 September 29, 2013 September 30, 2012
Revenues:
Management fees $ 1,384 $ 1,885 $ 7,762 $ 6,331
Gaming 10,445 - 13,633 -
Room 1,849 763 2,728 763
Food and beverage 1,665 618 2,566 618
Other operating 647 358 1,154 358
License fees and other 26 15 66 51
Gross revenues 16,016 3,639 27,909 8,121
Less promotional allowances 524 - 564 -
Net revenues 15,492 3,639 27,345 8,121
Costs and expenses:
Gaming 6,037 - 8,055 -
Room 255 146 580 146
Food and beverage 1,393 471 2,455 471
Other operating 483 216 1,116 216
Selling, general and administrative 5,398 2,846 13,782 7,054
Recovery of impairment on notes receivable (17,382 ) - (17,382 ) -
Gain on extinguishment of liabilities (3,752 ) - (3,752 ) -
Impairments and other losses 3,356 1,986 3,356 4,314
Preopening expenses - - 1,163 -
Amortization of intangible assets related to Indian casino projects 187 264 716 792
Loss on disposal of property and equipment - - 143 -
Depreciation and amortization 759 229 1,476 335
Total costs and expenses (3,266 ) 6,158 11,708 13,328
Earnings (loss) from operations 18,758 (2,519 ) 15,637 (5,207 )
Other income (expense):
Interest income 1,276 1,614 4,770 4,775
Interest expense (450 ) (228 ) (922 ) (722 )
Other 15 55 25 113
Total other income, net 841 1,441 3,873 4,166
Earnings (loss) before income taxes 19,599 (1,078 ) 19,510 (1,041 )
Income tax benefit - (87 ) - (2,229 )
Net earnings (loss) including noncontrolling interest 19,599 (991 ) 19,510 1,188
Net loss attributable to noncontrolling interest - - - 61
Net earnings (loss) attributable to Lakes Entertainment, Inc. $ 19,599 $ (991 ) $ 19,510 $ 1,249
Other comprehensive loss (9 ) - (9 ) -
Comprehensive earnings (loss) $ 19,590 $ (991 ) $ 19,501 $ 1,249
Weighted-average common shares outstanding
Basic 26,464 26,441 26,449 26,438
Diluted 26,832 26,441 26,670 26,438
Earnings (loss) per share
Basic $ 0.74 $ (0.04 ) $ 0.74 $ 0.05
Diluted $ 0.73 $ (0.04 ) $ 0.73 $ 0.05
.
.
Contact:.
.
Investor Relations Contact:
BPC Financial Marketing
John Baldissera, 800-368-1217
or
For Further Information Contact:
Lakes Entertainment, Inc.
Timothy Cope, 952-449-7030.
...
Drmicrocap
11 years ago
Lakes Entertainment Announces Results for Second Quarter 2013
Business WirePress Release: Lakes Entertainment, Inc. – 7 hours ago..
Lakes Entertainment, Inc. (LACO) today announced results for the three months ended June 30, 2013.
Second Quarter Results
Net earnings for the second quarter of 2013 were $0.2 million, compared to net earnings of $0.4 million in the second quarter of 2012. Loss from operations was $1.2 million for the second quarter of 2013 compared to a loss from operations of $1.1 million for the second quarter of 2012. Basic and diluted earnings were $0.01 per share for the second quarter of 2013 compared to earnings of $0.02 per share for the second quarter of 2012.
Lakes Entertainment reported second quarter 2013 net revenues of $8.5 million, compared to prior-year second quarter net revenues of $2.5 million. The increase was due primarily to the addition of $4.9 million in net revenue related to the operation of the Rocky Gap Casino Resort near Cumberland, Maryland (“Rocky Gap”), which Lakes acquired on August 3, 2012 and which commenced gaming operations on May 22, 2013. Also contributing to the increase in revenues was an additional $1.1 million in management fees earned during the second quarter of 2013 compared to the second quarter of 2012 related to the Red Hawk Casino, owned by the Shingle Springs Band of Miwok Indians, near Sacramento, California.
During the second quarter of 2013, property operating expenses for Rocky Gap, which primarily related to gaming operations, rooms, food and beverage and golf were $3.4 million.
For the second quarter of 2013, selling, general and administrative expenses were $4.6 million compared to $1.9 million in the second quarter of 2012. Included in these amounts were Lakes corporate selling, general and administrative expenses of $2.0 million and $1.9 million during the second quarters of 2013 and 2012, respectively. The increase in Lakes corporate selling, general and administrative expenses was due primarily to an increase in professional fees which was partially offset by a decrease in payroll and related expenses and travel expenses. Rocky Gap selling, general and administrative expenses were $2.6 million during the second quarter of 2013.
On May 22, 2013, Rocky Gap opened its recently completed gaming facility which features 558 video lottery terminals, 10 table games, a casino bar and a new lobby food and beverage outlet. The AAA Four Diamond Award® winning property also includes a hotel, restaurants, spa, and the only Jack Nicklaus signature golf course in Maryland. A new event center is being constructed which will be able to accommodate large groups and will feature multiple flexible use meeting rooms and is expected to be available for use in the fourth quarter of 2013. Lakes expenses certain project preopening costs as incurred. During the second quarter of 2013, Lakes recognized preopening expenses of $0.9 million related to the Rocky Gap project. There were no preopening expenses during the second quarter of 2012.
There were no impairments and other losses during the second quarter of 2013. Lakes recognized impairments and other losses of $1.4 million during the second quarter of 2012 which included $0.8 million due to the March 2012 determination that Lakes would not continue to move forward with the casino project with the Jamul Indian Village (“Jamul Tribe”) near San Diego, California, and the termination of Lakes’ agreement with the Jamul Tribe. Also included in impairments and other losses for the three months ended July 1, 2012 were $0.6 million related to costs associated with development plans for the Rocky Gap project which were subsequently revised.
Amortization of intangible assets related to Indian casino projects was $0.3 million for each of the second quarters of 2013 and 2012.
Depreciation and amortization was $0.5 million for the three months ended June 30, 2013 compared to $0.1 million for the three months ended July 1, 2012. The increase related to depreciation on Rocky Gap fixed assets.
Other income, net, was $1.5 million for the second quarter of 2013 compared to $1.4 million for the second quarter of 2012, a significant portion of which relates to non-cash accretion of interest on the Company’s notes receivable.
As of June 30, 2013, the Company was in a year-to-date pre-tax book loss position. There was no income tax benefit for the second quarter of 2013 because the Company has utilized all carry back potential and future realization of benefits is uncertain. The income tax benefit for the second quarter of 2012 was $0.1 million and resulted from the Company’s ability to carry back its taxable losses to a prior year and receive a refund of taxes previously paid.
Six Month Results
Net losses for the six months ended June 30, 2013 were $0.1 million, compared to net earnings of $2.2 million for the six months ended July 1, 2012. Loss from operations was $3.1 million for the first six months of 2013 compared to $2.7 million for the first six months of 2012. Basic and diluted losses were less than $0.01 per share for the first half of 2013 compared to earnings of $0.08 per share for the first half of 2012.
Lakes Entertainment reported net revenues of $11.9 million for the first six months of 2013, compared to net revenues of $4.5 million in the prior year period. The increase was due primarily to the addition of $5.4 million in net revenue related to the operation of Rocky Gap. Also contributing to the increase in revenues was an additional $1.9 million in management fees earned during the first half of 2013 compared to the prior year period related to the Red Hawk Casino.
During the first six months of 2013, property operating expenses for Rocky Gap which related primarily to gaming operations, rooms, food and beverage and golf were $4.0 million.
For the six months ended June 30, 2013, selling, general and administrative expenses were $8.4 million compared to $4.2 million for the six months ended July 1, 2012. Included in these amounts were Lakes corporate selling, general and administrative expenses of $4.0 million and $4.2 million, during the first six months of 2013 and 2012, respectively. The decrease in Lakes corporate selling, general and administrative expenses was due primarily to a decrease in payroll and related expenses and travel expenses which was partially offset by an increase in professional fees. Rocky Gap selling, general and administrative expenses were $4.4 million during the first six months of 2013.
During the six months ended June 30, 2013, Lakes recognized preopening expenses of $1.2 million related to the Rocky Gap project. There were no preopening expenses during the prior year period.
There were no impairments and other losses during the six months ended June 30, 2013. Lakes recognized impairments and other losses of $2.3 million during the six months ended July 1, 2012 which included $1.7 million due to the March 2012 determination that Lakes would not continue to move forward with the casino project with the Jamul Tribe, and the termination of Lakes’ agreement with the Jamul Tribe. Also included in impairments and other losses for the six months ended July 1, 2012 were $0.6 million related to costs associated with development plans for the Rocky Gap project which were subsequently revised.
Amortization of intangible assets related to Indian casino projects was $0.5 million for both the six months ended June 30, 2013 and the six months ended July 1, 2012.
Depreciation and amortization was $0.7 million for the six months ended June 30, 2013 compared to $0.1 million for the six months ended July 1, 2012. The increase related to depreciation on Rocky Gap fixed assets.
Other income, net, was $3.0 million for the six months ended June 30, 2013 compared to $2.7 million for the six months ended July 1, 2012. A significant portion of the remaining other income, net, in both periods relates to non-cash accretion of interest on the Company’s notes receivable.
There was no income tax benefit for the six months ended June 30, 2013 because the Company has utilized all carry back potential. The income tax benefit for the six months ended July 1, 2012 was $2.1 million and was primarily due to the Company’s ability to carry back its estimated taxable losses to a prior year and receive a refund of taxes previously paid
Tim Cope, President and Chief Financial Officer of Lakes stated, "We are excited to have opened the new gaming facility at our Rocky Gap Casino Resort near Cumberland, Maryland. Construction of the event center at Rocky Gap is on track and we expect to open that space during the fourth quarter of this year.” Mr. Cope continued, “While initial results at Rocky Gap were below expectation, we have been able to implement marketing plans to make the surrounding market aware of our offerings and we have seen increases in visitation and a growth in revenue during the month of July. Management fees from the Red Hawk Casino were up again this quarter over the prior year second quarter due primarily to a decrease in operating expenses related to a favorable state revenue share audit.”
Further commenting, Lyle Berman, Chief Executive Officer of Lakes stated, “During the month of July, we entered into a debt termination agreement with the Shingle Springs Tribe which is contingent upon the Tribe making a payment to us of $57.1 million. If the Tribe makes this payment our management agreement for the Red Hawk Casino would also terminate at that time. All existing agreements will remain as is until such payment is made and if the payment is not made then the existing agreements with the tribe will remain in place under their existing terms until their original expiration, which is December 2015. If the accelerated payment of $57.1 million is made to us under this agreement, it will allow us greater flexibility in considering new investments.” Mr. Berman continued, “In addition, we effectively own 5% of the company that now owns the Dania Jai Alai fronton in Dania Beach, Florida. That company has a Florida gaming license and is in the development phase of expanding the existing property into a full scale casino operation. We continue to maintain a 10% ownership interest in Rock Ohio Ventures, LLC’s 80% ownership in the open and operating Horseshoe Casino Cleveland, the Horseshoe Casino Cincinnati, and the Thistledown Racino in North Randall, Ohio.”
About Lakes Entertainment
Lakes Entertainment, Inc. currently owns the Rocky Gap Casino Resort near Cumberland, Maryland. Lakes has a management agreement with the Shingle Springs Band of Miwok Indians to manage the Red Hawk Casino. Lakes has an investment in Rock Ohio Ventures, LLC’s casino and racino developments in Ohio, and an investment in Dania Entertainment Center, LLC’s Dania Jai Alai fronton in Dania Beach, Florida.
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, 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; risks of entry into new businesses; reliance on Lakes' management and litigation costs. For more information, review the company's filings with the Securities and Exchange Commission.
LAKES ENTERTAINMENT, INC. AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
(In thousands)
(Unaudited)
June 30, 2013 December 30, 2012
Assets
Current assets:
Cash and cash equivalents $ 26,753 $ 32,480
Management fees receivable 2,131 -
Income taxes receivable 2,166 2,161
Prepaids 1,092 186
Other 2,166 1,069
Total current assets 34,308 35,896
Property and equipment, net 28,238 13,279
Long-term assets related to Indian casino projects:
Notes and interest receivable, net of current portion and allowance 40,661 38,247
Intangible assets 2,599 3,127
Management fees receivable and other 553 4,786
Total long-term assets related to Indian casino projects 43,813 46,160
Other assets:
Investment in unconsolidated investee 20,997 20,161
License fee 2,085 2,100
Land held for development 1,130 1,130
Other 955 996
Total other assets 25,167 24,387
Total assets $ 131,526 $ 119,722
Liabilities and shareholders' equity
Current liabilities:
Current portion of contract acquisition costs payable, net $ 1,391 $ 1,265
Current portion of Long-term debt 475 -
Other 3,926 2,978
Total current liabilities 5,792 4,243
Long-term debt, net 10,813 -
Long-term contract acquisition costs payable, net 2,550 3,302
Total long-term liabilities 13,363 3,302
Total liabilities 19,155 7,545
Total shareholders' equity 112,371 112,177
Total liabilities and shareholders' equity $ 131,526
$
119,722
LAKES ENTERTAINMENT, INC. AND SUBSIDIARIES
Unaudited Condensed Consolidated Statements of Operations
(In thousands, except per share data)
Three months ended Six months ended
June 30, 2013 July 1, 2012 June 30, 2013 July 1, 2012
Revenues:
Management fees $ 3,650 $ 2,503 $ 6,378 $ 4,446
Gaming 3,188 - 3,188 -
Room 615 - 879 -
Food and beverage 703 - 901 -
Other operating 410 - 507 -
License fees and other 23 16 40 36
Gross revenues 8,589 2,519 11,893 4,482
Less promotional allowances 40 - 40 -
Net revenues 8,549 2,519 11,853 4,482
Costs and expenses:
Gaming 2,018 - 2,018 -
Room 214 - 325 -
Food and beverage 759 - 1,062 -
Other operating 418 - 633 -
Selling, general and administrative 4,613 1,905 8,380 4,208
Impairments and other losses - 1,399 - 2,328
Preopening expenses 902 - 1,167 -
Amortization of intangible assets related to Indian casino projects 265 265 529 528
Loss on disposal of property and equipment 143 143
Depreciation and amortization 460 51 717 106
Total costs and expenses 9,792 3,620 14,974 7,170
Loss from operations (1,243 ) (1,101 ) (3,121 ) (2,688 )
Other income (expense):
Interest income 1,741 1,578 3,494 3,161
Interest expense (264 ) (242 ) (472 ) (494 )
Other 10 44 10 58
Total other income, net 1,487 1,380 3,032 2,725
Earnings (loss) before income taxes 244 279 (89 ) 37
Income tax benefit - (145 ) - (2,142 )
Net earnings (loss) including noncontrolling interest 244 424 (89 ) 2,179
Net loss attributable to noncontrolling interest - 1 - 61
Net earnings (loss) attributable to Lakes Entertainment, Inc. $ 244 $ 425 $ (89 ) $ 2,240
Weighted-average common shares outstanding
Basic 26,441 26,441 26,441 26,436
Diluted 26,643 26,441 26,441 26,436
Earnings (loss) per share
Basic $ 0.01 $ 0.02 $ 0.00 $ 0.08
Diluted $ 0.01 $ 0.02 $ 0.00 $ 0.08
.
.
Contact:.
.
Investor Relations Contact:
BPC Financial Marketing
John Baldissera, 800-368-1217
or
For Further Information Contact:
Lakes Entertainment, Inc.
Timothy Cope, 952-449-7030.
...
Drmicrocap
11 years ago
Lakes Entertainment Announces Results for First Quarter 2013
Business WirePress Release: Lakes Entertainment, Inc. – Thu, May 9, 2013 6:30 AM EDTEmail0Share0PrintRELATED QUOTESSymbol Price Change
LACO 3.30 0.02
MINNEAPOLIS--(BUSINESS WIRE)--
Lakes Entertainment, Inc. (LACO) today announced results for the three months ended March 31, 2013.
First Quarter Results
Net loss for the first quarter of 2013 was $0.3 million, compared to net earnings of $1.8 million in the first quarter of 2012. Loss from operations was $1.9 million for the first quarter of 2013 compared to $1.6 million for the first quarter of 2012. Basic and diluted losses were $0.01 per share for the first quarter of 2013 compared to earnings of $0.07 per share for the first quarter of 2012.
Lakes Entertainment reported first quarter 2013 revenues of $3.3 million, compared to prior-year first quarter revenues of $2.0 million. The increase in revenues was due to an additional $0.8 million in management fees earned during the first quarter of 2013 compared to the first quarter of 2012 related to the Red Hawk Casino, owned by the Shingle Spring Band of Miwok Indians, near Sacramento, California. Also contributing to the increase was the addition of $0.6 million in revenue related to the operation of the Rocky Gap Lodge and Golf Resort near Cumberland, Maryland (“Rocky Gap”), which Lakes acquired on August 3, 2012.
During the first quarter of 2013, property operating expenses for Rocky Gap, which primarily related to rooms, food and beverage and golf were $0.6 million. Rocky Gap was acquired on August 3, 2012, therefore, there were no such expenses for the first quarter of 2012.
For the first quarter of 2013, selling, general and administrative expenses were $3.8 million compared to $2.3 million in the first quarter of 2012. Included in these amounts were Lakes corporate selling, general and administrative expenses of $2.0 million during each of the first quarters of 2013 and 2012 and Rocky Gap selling, general and administrative expenses of $1.8 million during the first quarter of 2013.
Rocky Gap is currently undergoing renovation of existing convention center space and upon completion will feature a gaming facility that will include approximately 550 video lottery terminals, 10 table games, a casino bar and a new lobby food and beverage outlet. A new event center is being constructed which will be able to accommodate large groups and will feature multiple flexible use meeting rooms. The gaming facility is expected to open in late May 2013 and the event center is expected to be available for use in the fourth quarter of 2013. Lakes expenses certain project preopening costs as incurred. During the first quarter of 2013, Lakes recognized preopening expenses of $0.3 million related to the Rocky Gap project. There were no preopening expenses during the first quarter of 2012.
There were no impairments and other losses during the first quarter of 2013. Lakes recognized impairments and other losses of $0.9 million during the first quarter of 2012 which were the result of the March 2012 determination that Lakes would not continue to move forward with the casino project with the Jamul Indian Village (“Jamul Tribe”) and the termination of its agreement with the Jamul Tribe.
Amortization of intangible assets related to the operating casinos was $0.3 million for each of the first quarters of 2013 and 2012.
Other income, net, was $1.5 million for the first quarter of 2013 compared to $1.3 million for the first quarter of 2012, a significant portion of which relates to non-cash accretion of interest on the Company’s notes receivable.
There was no income tax benefit for the first quarter of 2013 because the Company has utilized all carry back potential. The income tax benefit for the first quarter of 2012 was $2.0 million and resulted from the Company’s ability to carry back its taxable losses to a prior year and receive a refund of taxes previously paid.
Tim Cope, President and Chief Financial Officer of Lakes stated, “We continue to move forward with the renovation of our AAA Four Diamond Award® winning Rocky Gap Lodge and Golf Resort near Cumberland, Maryland which has now been renamed the Rocky Gap Casino Resort. We are looking forward to a successful MLGCA controlled demonstration of gaming on the 20th of this month, which will allow us to officially open for gaming shortly thereafter. In addition, we recently began construction of an event center at Rocky Gap which we expect to open during the fourth quarter of this year.” Mr. Cope continued, “Management fees from the Red Hawk Casino were up again this quarter over the prior year first quarter due to continued improvements in results at this property. We continue to work closely with Red Hawk’s executive team, as well as the Shingle Springs Tribal Gaming Authority, to manage this property as efficiently as possible.”
Further commenting, Lyle Berman, Chief Executive Officer of Lakes stated, “We look forward to the opening of the gaming facility at our company-owned Rocky Gap Casino Resort where we will focus on providing an outstanding guest service experience along with a superior gaming product to all of our guests. We continue to maintain a 10% ownership interest in Rock Ohio Ventures, LLC’s 80% ownership in the open and operating Horseshoe Casino Cleveland, the Horseshoe Casino Cincinnati, and the Thistledown Racino in North Randall, Ohio.” Mr. Berman continued, “We will continue to focus on operating our business as effectively as possible while we consider new investments in order to increase shareholder value.”
About Lakes Entertainment
Lakes Entertainment, Inc. currently owns the Rocky Gap Casino Resort near Cumberland, Maryland. Lakes has a management agreement with the Shingle Springs Band of Miwok Indians to manage the Red Hawk Casino. Lakes has an investment in Rock Ohio Ventures, LLC’s casino developments in Ohio.
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, 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; risks of entry into new businesses; reliance on Lakes' management and litigation costs. For more information, review the company's filings with the Securities and Exchange Commission.
LAKES ENTERTAINMENT, INC. AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
(In thousands)
(Unaudited)
March 31, 2013 December 30, 2012
Assets
Current assets:
Cash and cash equivalents $ 23,369 $ 32,480
Income taxes receivable 2,179 2,161
Other 2,541 1,255
Total current assets 28,089 35,896
Property and equipment, net 21,276 13,279
Long-term assets related to Indian casino projects:
Notes and interest receivable, net of current portion and allowance 39,503 38,247
Intangible assets 2,863 3,127
Management fees receivable and other 3,680 4,786
Total long-term assets related to Indian casino projects 46,046 46,160
Other assets:
Investment in unconsolidated investee 20,997 20,161
License fee 2,100 2,100
Land held for development 1,130 1,130
Other 983 996
Total other assets 25,210 24,387
Total assets $ 120,621 $ 119,722
Liabilities and shareholders' equity
Current liabilities:
Current portion of contract acquisition costs payable, net $ 1,324 $ 1,265
Other 4,384 2,978
Total current liabilities 5,708 4,243
Long-term contract acquisition costs payable, net 2,948 3,302
Total liabilities 8,656 7,545
Total shareholders' equity 111,965 112,177
Total liabilities and shareholders' equity $ 120,621 $ 119,722
LAKES ENTERTAINMENT, INC. AND SUBSIDIARIES
Unaudited Condensed Consolidated Statements of Operations
(In thousands, except per share data)
Three months ended
March 31, 2013 April 1, 2012
Revenues:
Management fees $ 2,728 $ 1,943
Room 264 -
Food and beverage 198 -
Other operating 97 -
License fees and other 17 20
Total revenues 3,304 1,963
Costs and expenses:
Room 111 -
Food and beverage 303 -
Other operating 215 -
Selling, general and administrative 3,767 2,303
Impairments and other losses - 929
Preopening expenses 265 -
Amortization of intangible assets related to operating casinos 264 264
Depreciation and amortization 257 54
Total costs and expenses 5,182 3,550
Loss from operations (1,878 ) (1,587 )
Other income (expense):
Interest income 1,753 1,583
Interest expense (208 ) (252 )
Other - 14
Total other income, net 1,545 1,345
Loss before income taxes (333 ) (242 )
Income tax benefit - (1,997 )
Net earnings (loss) including noncontrolling interest (333 ) 1,755
Net loss attributable to noncontrolling interest - 60
Net earnings (loss) attributable to Lakes Entertainment, Inc. $ (333 ) $ 1,815
Weighted-average common shares outstanding
Basic 26,441 26,431
Diluted 26,441 26,431
Earnings (loss) per share
Basic $ (0.01 ) $ 0.07
Diluted $ (0.01 ) $ 0.07
Contact:
Lakes Entertainment, Inc.
Timothy Cope, 952-449-7030