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e8vk
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): May 20, 2010
Lakes Entertainment, Inc.
(Exact name of registrant as specified in its charter)
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| Minnesota
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0-24993
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41-1913991 |
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(State or other
jurisdiction of
incorporation)
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(Commission File Number)
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(IRS Employer
Identification No.) |
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| 130 Cheshire Lane, Minnetonka, Minnesota
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55305 |
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| (Address of principal executive offices)
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(Zip Code) |
Registrant’s telephone number, including area code: (952) 449-9092
Not Applicable
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy
the filing obligation of the registrant under any of the following provisions:
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Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
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Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
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Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
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Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
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| Item 2.02 |
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Results of Operations and Financial Condition. |
On May 20, 2010, Lakes Entertainment, Inc. issued a press release, announcing results for the first
quarter ended April 4, 2010.
A copy of the press release is being furnished to the Securities and Exchange Commission and is
attached as Exhibit 99.1 to this Form 8-K.
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| Item 9.01. |
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Financial Statements and Exhibits. |
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99.1 |
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Lakes Entertainment, Inc. Press Release dated May 20, 2010. |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly
caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
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LAKES ENTERTAINMENT, INC.
(Registrant)
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| Date: May 20, 2010 |
/s/Timothy J. Cope
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Name: |
Timothy J. Cope |
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Title: |
President and Chief Financial Officer |
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exv99w1
Exhibit 99.1
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NEWS RELEASE
Lakes Entertainment, Inc.
130 Cheshire Lane, Suite 101
Minnetonka, MN 55305
952-449-9092
952-449-9353 (fax)
www.lakesentertainment.com
(NASDAQ: LACO) |
FOR FURTHER INFORMATION CONTACT:
Timothy Cope — 952-449-7030
FOR IMMEDIATE RELEASE:
May 20, 2010
LAKES ENTERTAINMENT ANNOUNCES
RESULTS FOR FIRST QUARTER 2010
MINNEAPOLIS — May 20, 2010 — Lakes Entertainment, Inc. (NASDAQ: LACO) today
announced results for the three months ended April 4, 2010.
Net loss for the first quarter of 2010 was $4.7 million, compared to earnings of $1.0 million in
the first quarter of 2009, and the loss from operations was less than $0.1 million for each of
those quarters. Basic and diluted losses were $0.18 per share for the first quarter of 2010
compared to basic and diluted earnings of $0.04 per share for the first quarter of 2009.
Lakes Entertainment reported first quarter 2010 revenues of $7.0 million, compared to
prior-year first quarter revenues of $7.3 million. This decrease was primarily due to new
competition that entered the Four Winds Casino Resort market during the third quarter of 2009.
For the first quarter of 2010, Lakes’ selling, general and administrative expenses were $3.2
million compared to $4.0 million in the first quarter of 2009. Selling, general and administrative
expenses consisted primarily of payroll and related expenses, travel expenses and professional
fees, all of which decreased compared to the prior year’s first quarter.
Net unrealized gains (losses) on notes receivable relate to the Company’s notes receivable from
Indian tribes for casino projects that are not yet open, which are adjusted to estimated fair value
based upon the current status of the related tribal casino projects and evolving market conditions.
In the first quarter of 2010, net unrealized gains on notes receivable were $1.8 million, compared
to net unrealized losses of $0.2 million in the prior year period. The net unrealized gains in the
first quarter of 2010 consisted of $0.9 million related to the project for the Ioway Casino with
the Iowa Tribe of Oklahoma (“Iowa Tribe”). These gains resulted from
the previously announced termination agreement entered into with the Iowa Tribe in May 2010. Also
included in net unrealized gains were gains of $0.9 million related to the Jamul Indian Village
(“Jamul Tribe”) near San Diego, California due primarily to improvements in the credit markets. The
net unrealized losses in the first quarter of 2009 were related to the project with the Jamul Tribe
and the Iowa Tribe due primarily to ongoing issues in the credit markets and general economic
uncertainties.
Lakes recognized impairment losses of $2.7 million during the first quarter of 2010 compared to
$0.6 million in the prior-year period. Included in impairment losses for the first quarter of 2010
were $2.1 million related to the termination of the agreements with the Iowa Tribe discussed above.
In each of the current and prior year first quarters, impairment losses included approximately
$0.6 million due to continued uncertainty surrounding the completion of the Jamul project.
Amortization of intangible assets related to the operating casinos was $2.8 million for the first
quarter of 2010 compared to $2.5 million for the first quarter of 2009.
Other income (expense), net for the first quarters of 2010 and 2009 was $1.5 million.
The income tax provision for the first quarter of 2010 was $6.1 million compared to $0.4 million
for the first quarter of 2009. Lakes’ income tax provision in the current year period is primarily
due to the effect of valuation allowances associated with 2010 timing differences.
Lyle Berman, Chief Executive Officer of Lakes stated, “Although revenue declined slightly in the
first quarter of 2010 compared to the first quarter of 2009, management fees from each of our
managed properties met our expectations for the first quarter of 2010. New competition entered the
Four Winds Casino Resort market during the third quarter of 2009 which affected Four Winds.
However, this property continued to perform well even considering this new competition. At Red
Hawk, the prior year period included New Year’s Eve and the property’s grand opening celebration.
However, improved operating efficiencies in 2010 helped Red Hawk Casino maintain consistent
year-over-year results.”
Further commenting, Tim Cope, President and Chief Financial Officer of Lakes, stated, “Our primary
focus remains on operating our managed casino properties as efficiently as possible to achieve the
best possible operating results. As we recently announced, we withdrew our application for a
gaming site in the State of Kansas. As a result, in mid-April, we were refunded our $8.3 million
deposit related to that application and have terminated our involvement with that project.
Progress continues on each of the four casino projects in Ohio that were approved in the November
2009 election. We look forward to investing in these projects which we believe will add value to
our company in the future.”
About Lakes Entertainment
Lakes Entertainment, Inc. currently has development and management or financing agreements with
three separate Tribes for casino operations in Michigan, and California, for a total of three
separate casino sites. Lakes is currently managing the Four Winds Casino Resort
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for the Pokagon Band of Potawatomi Indians and the Red Hawk Casino for the Shingle Springs Band of
Miwok Indians. Lakes is also involved in other business activities, including the development of
new table games for licensing to Tribal and non-Tribal casinos.
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; 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; possible need for future financing to meet
Lakes’ expansion goals; risks of entry into new businesses; and reliance on Lakes’ management. For
more information, review the company’s filings with the
Securities and Exchange Commission.
# # #
3
LAKES ENTERTAINMENT, INC. AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
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April 4, 2010 |
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(Unaudited) |
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January 3, 2010 |
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(In thousands) |
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Assets |
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Current assets: |
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Cash |
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$ |
6,072 |
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$ |
3,751 |
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Accounts receivable |
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3,375 |
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1,457 |
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Current portion of notes receivable from Indian
casino projects |
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8,246 |
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6,671 |
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Investment securities, including rights |
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21,917 |
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24,317 |
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Other |
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2,622 |
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2,478 |
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Total current assets |
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42,232 |
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38,674 |
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Property and equipment, net |
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5,269 |
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5,334 |
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Long-term assets related to Indian casino projects: |
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Notes receivable, net of current portion |
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47,609 |
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46,100 |
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Notes receivable at fair value, net of current portion |
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11,859 |
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13,254 |
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Intangible assets |
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40,891 |
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45,064 |
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Other |
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5,726 |
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6,137 |
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Total long-term assets related to Indian casino projects |
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106,085 |
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110,555 |
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Other assets: |
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Investment in unconsolidated investees |
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12,414 |
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12,441 |
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Land held for development |
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4,900 |
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4,900 |
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Deferred taxes and other |
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1,826 |
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1,833 |
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Total other assets |
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19,140 |
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19,174 |
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Total assets |
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$ |
172,726 |
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$ |
173,737 |
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Liabilities and shareholders’ equity |
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Current liabilities: |
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Line of credit payable |
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14,680 |
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$ |
16,346 |
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Non-revolving line of credit payable |
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2,000 |
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2,000 |
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Current portion of contract acquisition costs payable |
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2,138 |
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2,232 |
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Income taxes payable |
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22,544 |
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17,069 |
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Other |
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2,494 |
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2,454 |
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Total current liabilities |
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43,856 |
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40,101 |
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Long-term contract acquisition costs payable, net of current portion |
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9,541 |
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10,197 |
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Total liabilities |
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53,397 |
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50,298 |
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Total shareholders’ equity |
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119,329 |
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123,439 |
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Total liabilities and shareholders’ equity |
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$ |
172,726 |
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$ |
173,737 |
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LAKES ENTERTAINMENT, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Earnings (Loss)
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Three months ended |
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April 4, 2010 |
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March 29, 2009 |
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(In thousands, except per share data) |
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(Unaudited) |
Revenues: |
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Management fees |
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$ |
6,937 |
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$ |
7,266 |
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License fees |
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17 |
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12 |
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Total revenues |
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6,954 |
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7,278 |
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Costs and expenses: |
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Selling, general and administrative |
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3,235 |
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4,042 |
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Impairment losses |
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2,664 |
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569 |
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Amortization of intangible assets related to operating casinos |
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2,785 |
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2,479 |
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Depreciation |
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65 |
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73 |
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Total costs and expenses |
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8,749 |
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7,163 |
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Net unrealized gains (losses) on notes receivable |
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1,770 |
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(163 |
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Loss from operations |
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(25 |
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(48 |
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Other income (expense): |
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Interest income |
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2,247 |
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1,862 |
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Equity in loss of unconsolidated investee |
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(27 |
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Interest expense & other |
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(759 |
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(403 |
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Total other income (expense), net |
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1,461 |
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1,459 |
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Earnings before income taxes |
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1,436 |
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1,411 |
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Income taxes |
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6,123 |
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386 |
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Net earnings (loss) |
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$ |
(4,687 |
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$ |
1,025 |
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Earnings (loss) per share — basic & diluted |
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$ |
(0.18 |
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$ |
0.04 |
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Weighted-average common shares outstanding — basic |
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26,361 |
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26,325 |
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Dilutive effect of common stock equivalents |
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— |
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61 |
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Weighted-average common shares outstanding — diluted |
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26,361 |
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26,386 |
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