EX-99.1 3 c67310ex99-1.txt PRESS RELEASE Exhibit 99.1 NEWS RELEASE LAKES GAMING, INC. [LAKES LOGO] 130 CHESHIRE LANE LAKES GAMING, INC. MINNETONKA, MN 55305 952-449-9092 952-449-9353 (FAX) WWW.LAKESGAMING.COM TRADED: NASDAQ "LACO" -------------------------------------------------------------------------------- FOR FURTHER INFORMATION CONTACT: Timothy J. Cope 952-449-7030 -------------------------------------------------------------------------------- FOR IMMEDIATE RELEASE: Monday, February 4, 2002 LAKES GAMING ANNOUNCES RESULTS FOR YEAR 2001 MINNEAPOLIS, FEBRUARY 4, 2002 - LAKES GAMING, INC. (NASDAQ "LACO") today announced results for the fiscal year ended December 30, 2001. Revenue for the year totaled $34.9 million. The net loss for the year was $0.3 million and basic and diluted losses were $.03 per share. This compares with net earnings of $15.7 million, and basic and diluted earnings of $1.47 per share, in 2000. The loss for 2001 includes a combined one-time charge of approximately $17.2 million after-tax, or $1.62 per share, related to the previously announced sale of the Polo Plaza Shopping Center property in Las Vegas, Nevada, sale of the rights to the adjacent Travelodge property in Las Vegas, the write down of the adjacent Shark Club site to its estimated market value and various other non-recurring charges related to allowing the option for the purchase of the adjacent Cable property to lapse. Also included in the current year loss were several other non-recurring charges. The Company wrote off $0.6 million after-tax in loans made relating to the Paskenta project in which Lakes discontinued its involvement during 2001. The Company also incurred a $0.4 million after-tax write-down charge during 2001, resulting from an agreement with New Horizon Kids Quest, Inc. (NHKQ), pursuant to which NHKQ acquired Lakes' interest in NHKQ. Further, the Company wrote off its investment in the development of various new casino game concepts during the year, incurring an after-tax loss of $0.4 million. Net earnings for 2001 excluding the charges relating to the Las Vegas land and other non-recurring charges totaling $18.6 million after tax, were $18.3 million with basic and diluted earnings of $1.72 per share. By comparison, net earnings in the previous year also reflected the negative effects of several one-time charges, including a $10.6 million after-tax litigation loss provision; $1.7 million after-tax for equity in losses of unconsolidated affiliates; and $3.3 million after-tax for write-downs of equity in affiliates. 1 Revenue for the year decreased by $24.2 million from 2000, principally because 2000 revenues included compensation from the early buyout of the Company's management agreement with Grand Casino Avoyelles in the first quarter of 2000. The decrease in revenues also relates to a decline in management fees of approximately $4.2 million from Grand Casino Coushatta in 2001, principally due to decreased tourism and competitive factors. The 2001 revenues reflects the last full year of management fees received from Grand Casino Coushatta. The management contract between the Company and the Coushatta Tribe expired on January 16, 2002. Lakes' balance sheet at December 30, 2001 included approximately $197 million in assets and $21 million in liabilities for a book value of approximately $16.50 per share. The book value is comprised almost entirely of cash, receivables from loans related to new Indian casino projects and land held for development. Lyle Berman, Chairman, CEO and President of Lakes stated, "We have development and management contracts for what we feel are the best potential new Native American Casino sites in the country. Although the regulatory and development approvals are moving more slowly than expected and no construction was started in 2001, we continue to proceed with our development and architecture plans so that we may start building as soon as all necessary approvals are received. During 2001, we were able to complete the Las Vegas land transactions. Although Lakes incurred a large book loss, we were able to monetize a portion of our investment in property on the Las Vegas strip and take advantage of the tax savings generated by these transactions. In addition, during January 2002, we completed the purchase of our corporate office building eliminating the risk of a long-term lease commitment." Mr. Berman continued, "We remain focused on the successful development of our five potential new gaming locations and continue to look for new business opportunities to enhance shareholder value." The fourth quarter financial performance resulted in a loss of approximately $13.4 million or $1.26 per share which included the loss on the Las Vegas land transaction of approximately $17.2 million after-tax, as well as the write-off of the investment in the development of various new casino game concepts which resulted in an after-tax loss of $0.4 million. Net earnings for the quarter excluding these non-recurring charges totaling $17.6 million after-tax, were $4.2 million or $0.39 per share. The Company currently has development and management agreements with four separate Tribes for four new casino operations, one in Michigan, two in California and one with the Nipmuc Nation on the East Coast. In addition, the Company has agreements for the development of one additional casino on Indian-owned land in California through a joint venture with MRD Gaming. Lakes Gaming, Inc. common shares are traded on the Nasdaq National Market under the trading symbol "LACO". 2 -------------------------------------------------------------------------------- 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 the Company) 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 development and construction activities, dependence on existing management, domestic or global economic conditions, activities of competitors and the presence of new or additional competition, fluctuations and changes in customer preferences and attitudes, changes in federal or state tax laws or the administration of such laws and changes in gaming laws or regulations (including the legalization of gaming in certain jurisdictions). For more information, review the Company's filings with the Securities and Exchange Commission. -------------------------------------------------------------------------------- xxx 3 LAKES GAMING, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (IN THOUSANDS)
DECEMBER 30, 2001 DECEMBER 31, 2000 ------------------------------------------------------------------------------------------------------------------- ASSETS Current Assets: Cash and cash equivalents $42,638 $10,469 Short-term investments 2,027 32,477 Current installments of notes receivable 28,273 16,679 Accounts receivable 3,601 2,373 Deferred tax asset 4,549 13,674 Other current assets 1,079 355 ------------------------------------------------------------------------------------------------------------------- Total Current Assets 82,167 76,027 ------------------------------------------------------------------------------------------------------------------- Property and Equipment-Net 7,524 1,414 ------------------------------------------------------------------------------------------------------------------- Other Assets: Land held for development 16,038 58,671 Notes receivable-less current installments 67,525 35,337 Cash and cash equivalents-restricted 9,175 30,270 Investments in and notes from unconsolidated affiliates 839 3,209 Interest receivable 6,147 2,028 Other long-term assets 7,527 5,853 ------------------------------------------------------------------------------------------------------------------- Total Other Assets 107,251 135,368 ------------------------------------------------------------------------------------------------------------------- TOTAL ASSETS $196,942 $212,809 =================================================================================================================== LIABILITIES AND SHAREHOLDERS' EQUITY Current Liabilities: Accounts payable $105 $79 Current maturities of long-term debt 1,325 525 Current installments of capital lease obligations 123 -- Income taxes payable 3,906 5,479 Litigation and claims accrual 6,572 25,078 Other accrued expenses 3,341 4,521 ------------------------------------------------------------------------------------------------------------------- Total Current Liabilities 15,372 35,682 ------------------------------------------------------------------------------------------------------------------- Long-term Liabilities: Long-term debt-less current maturities -- 1,325 Capital lease obligations-less current installments 5,591 -- Other long-term liabilities 225 -- ------------------------------------------------------------------------------------------------------------------- Total Long-Term Liabilities 5,816 1,325 ------------------------------------------------------------------------------------------------------------------- TOTAL LIABILITIES 21,188 37,007 ------------------------------------------------------------------------------------------------------------------- COMMITMENTS AND CONTINGENCIES Shareholders' Equity: Capital stock, $.01 par value; authorized 100,000 shares; 10,638 common shares issued and outstanding at December 30, 2001, and December 31, 2000 106 106 Additional paid-in-capital 131,525 131,525 Retained Earnings 44,183 44,504 Accumulated other comprehensive loss (60) (333) ------------------------------------------------------------------------------------------------------------------- Total Shareholders' Equity 175,754 175,802 ------------------------------------------------------------------------------------------------------------------- TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $196,942 $212,809 ===================================================================================================================
4 LAKES GAMING, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF EARNINGS (IN THOUSANDS, EXCEPT EARNINGS PER SHARE)
THREE MONTHS ENDED ---------------------------------------- DECEMBER 30, 2001 DECEMBER 31, 2000 ----------------- ----------------- REVENUES: Management fee income $7,368 $6,652 COSTS AND EXPENSES: Selling, general and administrative 4,538 1,578 Depreciation and amortization 346 332 -------------------------------------------------------------------------------------------------------- Total Costs and Expenses 4,884 1,910 -------------------------------------------------------------------------------------------------------- EARNINGS FROM OPERATIONS 2,484 4,742 -------------------------------------------------------------------------------------------------------- OTHER INCOME (EXPENSE): Interest income 1,533 2,157 Interest expense (97) (24) Equity in loss of unconsolidated affiliates (102) (901) Loss on sale of land held for development (25,781) -- Write-down of unconsolidated affiliates -- (5,522) Other (683) -- -------------------------------------------------------------------------------------------------------- Total other expense, net (25,130) (4,290) -------------------------------------------------------------------------------------------------------- Earnings (loss) before income taxes (22,646) 452 Provision (benefit) for income taxes (9,285) 556 -------------------------------------------------------------------------------------------------------- NET LOSS ($13,361) ($104) ======================================================================================================== BASIC LOSS PER SHARE ($1.26) ($0.01) ======================================================================================================== DILUTED LOSS PER SHARE ($1.26) ($0.01) ======================================================================================================== WEIGHTED AVERAGE COMMON SHARES OUTSTANDING 10,638 10,638 DILUTIVE EFFECT OF STOCK COMPENSATION PROGRAMS -- 1 -------------------------------------------------------------------------------------------------------- WEIGHTED AVERAGE COMMON AND DILUTED SHARES OUTSTANDING 10,638 10,639 ========================================================================================================
5 LAKES GAMING, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF EARNINGS (IN THOUSANDS, EXCEPT EARNINGS PER SHARE)
TWELVE MONTHS ENDED ---------------------------------------- DECEMBER 30, 2001 DECEMBER 31, 2000 ----------------- ----------------- REVENUES: Management fee income $34,854 $59,044 COSTS AND EXPENSES: Selling, general and administrative 12,599 9,025 Depreciation and amortization 1,329 2,910 -------------------------------------------------------------------------------------------------------- Total costs and expenses 13,928 11,935 -------------------------------------------------------------------------------------------------------- EARNINGS FROM OPERATIONS 20,926 47,109 -------------------------------------------------------------------------------------------------------- OTHER INCOME (EXPENSE): Interest income 6,297 7,943 Interest expense (170) (97) Equity in loss of unconsolidated affiliates (465) (2,904) Loss on sale of land held for development (25,781) -- Provision for litigation loss -- (18,000) Write-down of unconsolidated affiliates (666) (5,522) Other (684) 63 -------------------------------------------------------------------------------------------------------- Total other expense, net (21,469) (18,517) -------------------------------------------------------------------------------------------------------- Earnings (loss) before income taxes (543) 28,592 Provision (benefit) for income taxes (222) 12,915 -------------------------------------------------------------------------------------------------------- NET EARNINGS (LOSS) ($321) $15,677 ======================================================================================================== BASIC EARNINGS (LOSS) PER SHARE ($0.03) $1.47 ======================================================================================================== DILUTED EARNINGS (LOSS) PER SHARE ($0.03) $1.47 ======================================================================================================== WEIGHTED AVERAGE COMMON SHARES OUTSTANDING 10,638 10,635 DILUTIVE EFFECT OF STOCK COMPENSATION PROGRAMS 6 7 -------------------------------------------------------------------------------------------------------- WEIGHTED AVERAGE COMMON AND DILUTED SHARES OUTSTANDING 10,644 10,642 ========================================================================================================
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