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Lakes Gaming Announces Q2 Diluted Earnings of $.5020 July 2000MINNEAPOLIS, Minnesota--(Press Release)--July 20, 2000--Lakes Gaming, Inc. (Nasdaq:LACO - news) today announced results for the second quarter ended July 2, 2000. Revenues for the quarter totaled $10.7 million. There was a net loss of $5.3 million and basic and diluted losses for the quarter were $.50 per share after a provision for litigation loss of $10.6 million net of tax, or ($1.00) per share. Net earnings were $5.3 million and basic and diluted earnings for the quarter were $.50 per share, before the provision for litigation loss. Lakes previously announced that a settlement agreement had been reached regarding both the Stratosphere shareholders' litigation and the Grand Casinos, Inc. shareholders' litigation. The agreement required Lakes to pay a total of $18 million, which has been reflected as a non-operating expense in the second quarter of 2000. This amount was paid into escrow and related accounts in July, 2000 for full and final settlement for all federal and state related actions. The settlement agreement is subject to final approval by the respective courts, which is expected to occur later this year. Lyle Berman, Chairman of the Board, Chief Executive Officer and President of Lakes commented, ``We feel it is in the best interest of Lakes and its shareholders to resolve the above-mentioned lawsuits. Settlement of these two complaints removes one of the major uncertainties that has been associated with our company.'' Revenues for the quarter were derived from fees related to the management of Grand Casino Coushatta. Operating results at Grand Casino Coushatta improved in all areas compared to the same quarter last year including total revenue, gaming revenue and hotel occupancy. The Company's management contract for Grand Casino Avoyelles was bought out by the Tunica-Biloxi Tribe of Louisiana at the end of the first quarter of 2000. Lakes costs and expenses decreased approximately $.3 million compared to the same quarter last year. Second quarter net earnings for 1999 when excluding results related to Grand Casino Avoyelles, were $.61 per share compared to $.50 per share before provision for litigation loss, for the second quarter of 2000. The decrease in earnings relates primarily to decreases in interest income and other income of $.3 million and $.9 million, respectively, and an increase in equity in loss of unconsolidated affiliates of $.3 million during the second quarter of 2000 compared to the second quarter of 1999.
LAKES GAMING, INC. AND SUBSIDIARIES
Consolidated Balance Sheets
(In thousands)
July 2, 2000 January 2, 2000
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Assets
Current Assets:
Cash and cash equivalents $23,740 $24,392
Short-term investments 49,321 27,433
Current installments of
notes receivable 12,674 15,406
Accounts receivable 4,979 5,613
Other current assets 7,426 7,380
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Total Current Assets 98,140 80,224
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Property and Equipment-Net 1,127 1,888
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Other Assets:
Land held for development 56,696 54,812
Notes receivable-less
current installments 26,103 20,022
Cash and cash equivalents-restricted 12,038 12,149
Investments in and notes from
unconsolidated affiliates 8,530 8,446
Other long-term assets 5,006 5,997
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Total Other Assets 108,373 101,426
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Total Assets $207,640 $183,538
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Liabilities and Shareholders' Equity
Current Liabilities:
Accounts payable $214 $488
Income taxes payable 2,920 6,385
Litigation and claims accrual 25,715 8,419
Other accrued expenses 5,799 6,099
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Total Current Liabilities 34,648 21,391
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Long-term Liabilities:
Long-term debt-less
current installments 1,500 1,500
Deferred income taxes 764 786
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Total Long-Term Liabilities 2,264 2,286
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Total Liabilities 36,912 23,677
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Commitments and Contingencies
Shareholders' Equity:
Capital stock, $.01 par value;
authorized 100,000 shares; 10,638
and 10,629 common shares issued
and outstanding at July 2, 2000,
and January 2, 2000, respectively 106 106
Additional paid-in-capital 131,485 131,406
Accumulated other comprehensive
earnings (loss) (494) (478)
Retained Earnings 39,631 28,827
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Total Shareholders' Equity 170,728 159,861
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Total Liabilities and
Shareholders' Equity $207,640 $183,538
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LAKES GAMING, INC. AND SUBSIDIARIES
Consolidated Statements of Earnings
(In thousands, except earnings per share)
Three Months Ended
----------------------------------
July 2, 2000 July 4, 1999
------------ ------------
Revenues:
Management fee income $10,655 $14,892
Costs and Expenses:
Selling, general
and administrative 2,747 2,892
Depreciation and amortization 328 479
----------------------------------------------------------------------
Total Costs and Expenses 3,075 3,371
----------------------------------------------------------------------
Earnings From Operations 7,580 11,521
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Other income (expense):
Interest income 2,116 2,423
Interest expense (24) (24)
Equity in loss of
unconsolidated affiliates (397) (109)
Other - 877
Provision for litigation loss (18,000) -
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Total other income
(expense), net (16,305) 3,167
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Earnings (loss) before income taxes (8,725) 14,688
Provision (benefit) for income taxes (3,414) 6,066
----------------------------------------------------------------------
Net Earnings (Loss) ($5,311) $8,622
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Basic Earnings (Loss) per Share ($0.50) $0.81
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Diluted Earnings (Loss) per Share ($0.50) $0.80
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Weighted Average Common
Shares Outstanding 10,632 10,587
Dilutive Effect of Stock
Compensation Programs 10 192
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Weighted Average Common and Diluted
Shares Outstanding 10,642 10,779
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LAKES GAMING, INC. AND SUBSIDIARIES
Consolidated Statements of Earnings
(In thousands, except earnings per share)
Six Months Ended
------------------------------
July 2, 2000 July 4, 1999
------------ ------------
Revenues:
Management fee income $41,708 $30,001
Costs and Expenses:
Selling, general and administrative 4,800 4,602
Depreciation and amortization 2,249 955
----------------------------------------------------------------------
Total Costs and Expenses 7,049 5,557
----------------------------------------------------------------------
Earnings From Operations 34,659 24,444
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Other income (expense):
Interest income 3,746 4,059
Interest expense (49) (49)
Equity in loss of
unconsolidated affiliates (1,205) (364)
Other - 1,288
Provision for litigation loss (18,000) -
----------------------------------------------------------------------
Total other income
(expense), net (15,508) 4,934
----------------------------------------------------------------------
Earnings before income taxes 19,151 29,378
Provision for income taxes 8,347 12,194
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Net Earnings $10,804 $17,184
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Basic Earnings per Share $1.02 $1.62
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Diluted Earnings per Share $1.02 $1.60
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Weighted Average Common
Shares Outstanding 10,631 10,582
Dilutive Effect of Stock
Compensation Programs 4 153
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Weighted Average Common and Diluted
Shares Outstanding 10,635 10,735
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