MINNEAPOLIS, Mar 12, 2010 (BUSINESS WIRE) –
Lakes Entertainment, Inc.
/quotes/comstock/15*!laco/quotes/nls/laco
(LACO
2.90,
0.00,
0.00%)
today announced results for the
three and twelve-month periods ended January 3, 2010.

Fourth Quarter Results

Lakes Entertainment reported fourth quarter 2009 revenues of $5.3
million, compared to prior-year period revenues of $5.5 million. This
decrease was due to a decline in fees from the Red Hawk Casino near
Sacramento, California.

For the fourth quarter of 2009, Lakes’ selling, general and
administrative expenses were $2.9 million compared to $3.5 million in
the fourth quarter of 2008. Selling, general and administrative expenses
consisted primarily of payroll and related expenses, travel expenses and
professional fees. Included in selling, general and administrative
expenses were costs associated with the application for a gaming site in
the State of Kansas of approximately $0.3 million during the fourth
quarter of 2009.

Net unrealized losses on notes receivable relate to the Company’s notes
receivable from Indian tribes, which are adjusted to estimated fair
value prior to opening, based upon the current status of the related
tribal casino projects and evolving market conditions. In the fourth
quarter of 2009, net unrealized losses on notes receivable were $1.4
million, compared to net unrealized losses of $18.8 million in the
prior-year period. Unrealized losses on notes receivable during the
fourth quarter of 2009 resulted primarily from the recognition of loss
associated with the project with the Jamul Indian Village (“Jamul
Tribe”) near San Diego, California because of further delays in the
expected opening date of this project. The net unrealized losses in the
fourth quarter of 2008 were due to the recognition of an $11.8 million
loss associated with the Jamul Tribe project, which resulted from
uncertainty surrounding the completion of this project, and a $6.6
million loss on notes receivable from the Shingle Springs Tribe related
to the Red Hawk Casino which resulted primarily from a decline in
projected interest rates and an increase in the discount rate associated
with this project as a result of financial market conditions.

Impairments on intangible assets and land held for development during
the fourth quarter related to the Jamul project ($0.8 million in 2009
and $20.0 million in 2008) due to issues described in the previous
paragraph and our Vicksburg project ($0.5 million in 2009 and $4.0
million in 2008) due to continued uncertainty surrounding the
development of this project.

Costs associated with supporting the 2008 Ohio casino resort initiative
were $18.4 million during the fourth quarter of 2008.

The loss from operations was $3.2 million for the fourth quarter of
2009, compared to $61.1 million for the fourth quarter of 2008, and
resulted primarily from the items discussed above.

Other income (expense), net for the three months ended January 3, 2010
was $2.2 million compared to ($0.3) million for the three months ended
December 28, 2008. The increase was due primarily to interest recognized
on notes receivable from the Shingle Springs Tribal Gaming Authority.

The loss from continuing operations for the fourth quarter of 2009 was
$2.4 million, compared to $67.0 million in the fourth quarter of 2008.
Losses applicable to common shareholders were $0.09 per share in the
fourth quarter of 2009, compared to $2.63 per share for the fourth
quarter of 2008.

Twelve Month 2009 Results

Lakes Entertainment reported revenues for the twelve-month period ended
January 3, 2010 of $26.2 million, compared to prior-year revenues of
$24.3 million. This increase was primarily due to a full twelve months
of contribution of management fees from the Red Hawk Casino, which
opened to the public on December 17, 2008.

For 2009, Lakes’ selling, general and administrative expenses were $14.2
million compared to $15.3 million in 2008. This decrease was primarily
the result of a decline in payroll and related costs as well as a
decline in travel expenses during 2009, which were partially offset by
an increase in professional fees, which consisted mainly of legal costs
related to our new business opportunities, compared to the prior year.
Included in 2009 selling, general and administrative expenses were costs
associated with the application for a gaming site in the State of Kansas
of approximately $0.7 million.

Other costs and expenses for the twelve months ended January 3, 2010
included an increase in amortization of intangible assets of
approximately $3.6 million over the prior year, primarily associated
with the casino project with the Shingle Springs Band of Miwok Indians,
which commenced upon the opening of the Red Hawk Casino in December
2008. Also included in other costs and expenses were impairment losses
of $4.2 million and $24.0 million during 2009 and 2008, respectively,
primarily associated with the Jamul project ($2.9 million in 2009 and
$20.0 million in 2008) and the Vicksburg project ($0.5 million in 2009
and $4.0 million in 2008), both discussed above.

For the twelve months ended January 3, 2010, net unrealized gains on
notes receivable were $1.9 million, compared to net unrealized losses of
$17.8 million in the prior-year. Net unrealized losses during 2008 were
primarily due to the unrealized losses associated with the notes
receivable from the Jamul Tribe and the Shingle Springs Tribe discussed
above. The net unrealized gains of $1.9 million in 2009 were primarily
related to the notes receivable from the Jamul Tribe primarily due to
improvements in the credit markets during 2009, which were partially
offset by losses related to further delays in the expected opening date
of this project.

Costs associated with supporting the 2008 Ohio casino resort initiative
were $28.7 million during 2008.

The loss from operations was $1.0 million for the twelve months ended
January 3, 2010, compared to $68.7 million for the twelve months ended
December 28, 2008.

Other income (expense), net for the twelve months ended January 3, 2010
was $6.1 million compared to $(0.3) million for the twelve months ended
December 28, 2008. The increase was due primarily to interest recognized
on notes receivable from the Shingle Springs Tribal Gaming Authority.

Earnings from continuing operations for the twelve months ended January
3, 2010 were $3.7 million, compared to a loss of $78.0 million in the
prior-year. Earnings applicable to common shareholders were $0.14 per
share in the twelve months ended January 3, 2010, compared to losses of
$3.43 per share in 2008.

Tim Cope, President and Chief Financial Officer of Lakes, stated, “Two
of the casinos we manage, the Four Winds Casino Resort and the Cimarron
Casino, continued to meet our expectations during 2009 and we continue
to focus on operating these properties as efficiently as possible.”

Mr. Cope continued, “2009 also marked the first full year of operations
for the Red Hawk Casino near Sacramento, California. The uncertain
economic environment continues to impact this property’s ability to
achieve consistently strong results. Because operating results did not
meet our expectations, we made a number of substantial changes
throughout the year including the mix of slot machines and table games
offered for play, the variety and type of marketing plans and many of
the senior management positions at the property have either been
eliminated or replaced. We remain focused on achieving improved results
and we continue to be optimistic about this property’s long-term
operating prospects.”

Further commenting, Lyle Berman, Chief Executive Officer of Lakes
stated, “We fully recognize that our long-term success depends not only
on achieving strong operating performance at each of our managed
properties, but also on seeking and developing new business
opportunities which will help us reach our goals. We continue to work
through the application process for a gaming site in the State of
Kansas. We have also invested in each of the four casino projects in the
State of Ohio that were approved in the November 2009 election and we
recently announced the execution of a management agreement for a
potential casino located in Tunica, Mississippi. We continue to move
forward with these and other potential projects, focused on increasing
shareholder value.”

About Lakes Entertainment

Lakes Entertainment, Inc. currently has development and management or
financing agreements with four separate Tribes for casino operations in
Michigan, California, and Oklahoma, for a total of five separate casino
sites. Lakes is currently managing the Cimarron Casino for the Iowa
Tribe of Oklahoma, the Four Winds Casino Resort 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.

LAKES ENTERTAINMENT, INC. AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
                                                                                              January 3, 2010  December 28, 2008
Assets                                                                                        (In thousands)
Current assets:
                             Cash                                                             $       3,751    $        6,170
                             Accounts receivable                                                      1,457             2,407
                             Current portion of notes receivable from Indian casino projects          6,671             9,151
                             Investment securities, including rights                                  24,317            -
                             Other                                                                    2,478             1,232
Total current assets                                                                                  38,674            18,960
Property and equipment, net                                                                           5,334             5,585
Long-term assets related to Indian casino projects:
                             Notes receivable, net of current portion                                 46,100            44,002
                             Notes receivable at fair value                                           13,254            10,703
                             Intangible assets                                                        45,064            47,586
                             Other                                                                    6,137             6,591
Total long-term assets related to Indian casino projects                                              110,555           108,882
Other assets:
                             Investment securities, including rights                                  -                 26,544
                             Investment in unconsolidated investees                                   12,441            -
                             Land held for development                                                4,900             5,400
                             Deferred taxes and other                                                 1,833             73
Total other assets                                                                                    19,174            32,017
Total assets                                                                                  $       173,737  $        165,444
Liabilities and shareholders' equity
Current liabilities:
                             Line of credit payable                                           $       16,346   $        18,152
                             Non-revolving line of credit payable                                     2,000             -
                             Current portion of acquisition costs payable                             2,232             2,089
                             Income taxes payable                                                     17,069            16,241
                             Other                                                                    2,454             3,659
Total current liabilities                                                                             40,101            40,141
Long-term liabilities:
                             Non-revolving line of credit payable                                     -                 2,000
                             Contract acquisition costs payable, net of current portion               10,197            5,253
Long-term liabilities                                                                                 10,197            7,253
Total liabilities                                                                                     50,298            47,394
Total shareholders' equity                                                                            123,439           118,050
Total liabilities and shareholders' equity                                                    $       173,737  $        165,444

LAKES ENTERTAINMENT, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Earnings (Loss)
(In thousands, except per share data)
                                                                                           Three months ended                 Twelve months ended
                                                                                           January 3, 2010 December 28, 2008  January 3, 2010 December 28, 2008
Revenues:
                      Management fees                                                      $     5,245     $     5,452        $     26,161    $     24,269
                      License fees                                                               16              10                 59              61
                                                        Total revenues                           5,261           5,462              26,220          24,330
Costs and expenses:
                      Selling, general and administrative                                        2,912           3,537              14,204          15,258
                      Ohio initiative costs                                                      3               18,366             28              28,749
                      Impairment losses                                                          1,289           23,962             4,166           23,962
                      Amortization of intangible assets related to Indian casino projects        2,787           1,814              10,417          6,856
                      Depreciation                                                               68              80                 279             336
                                                        Total costs and expenses                 7,059           47,759             29,094          75,161
Net unrealized gains (losses) on notes receivable                                                (1,372 )        (18,820 )          1,875           (17,836 )
Loss from operations                                                                             (3,170 )        (61,117 )          (999   )        (68,667 )
Other income (expense):
                      Interest income                                                            2,749           134                8,033           985
                      Equity in loss of unconsolidated investee                                  (231   )        -                  (248   )        -
                      Interest expense & other                                                   (322   )        (410    )          (1,663 )        (1,235  )
                                                        Total other income (expense), net        2,196           (276    )          6,122           (250    )
Earnings (loss) from continuing operations before income taxes                                   (974   )        (61,393 )          5,123           (68,917 )
                      Income taxes                                                               1,456           5,598              1,420           9,108
Earnings (loss) from continuing operations                                                       (2,430 )        (66,991 )          3,703           (78,025 )
                      Discontinued operations, net of tax (net of $5.2 million and $3.7          -               (1,519  )          -               (8,298  )
                      million allocated to the prior noncontrolling interest)
Net earnings (loss) applicable to Lakes Entertainment, Inc.                                $     (2,430 )  $     (68,510 )    $     3,703     $     (86,323 )
Earnings (loss) applicable to Lakes Entertainment, Inc. per share                          $     (0.09  )  $     (2.63   )    $     0.14      $     (3.43   )
- basic & diluted
Weighted-average common shares outstanding - basic                                               26,328          26,082             26,327          25,201
Dilutive effect of common stock equivalents                                                      N/A             N/A                84              N/A
Weighted-average common shares outstanding - diluted                                             N/A             N/A                26,411          N/A

SOURCE: Lakes Entertainment, Inc.

Lakes Entertainment, Inc. 
Timothy Cope, 952-449-7030

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