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TheStreet Open House

Lakes Entertainment Announces Results For Fourth Quarter And Full Year 2010

Stocks in this article: LACO

Lakes concluded that the notes receivable from the Shingle Springs Tribal Gaming Authority were impaired as of January 2, 2011 resulting in an impairment charge on notes receivable of $21.0 million during 2010. Lakes does not currently estimate that these amounts will be repaid within the contract term due to the continued harsh economic climate in northern California and increased competition from a neighboring casino expansion in the Red Hawk market which have negatively impacted cash flows for the property. There were no impairment charges on notes receivable during 2009.

Lakes recognized other non-cash impairment losses of $22.8 million and $4.2 million, during the twelve months ended January 2, 2011 and the twelve months ended January 3, 2010, respectively. The current-year impairment losses included $16.7 million related to the intangible assets associated with the Shingle Springs project. These intangible assets were impaired because their carrying value exceeded expected future cash flows. Also contributing to the current-year impairments were losses of $2.0 million related to the termination of the agreements with the Iowa Tribe of Oklahoma as well as losses of $2.5 million related to the continued uncertainty surrounding the completion of the Jamul project. Also included were impairments related to land held for development during 2010 and 2009 of $1.6 million and $0.5 million, respectively, related to the continued uncertainty surrounding the development of the Vicksburg project in Mississippi. The remaining prior year period losses were due primarily to the continued uncertainty surrounding the completion of the Jamul project.

Amortization of intangible assets related to the operating casinos was $11.1 million for 2010 compared to $10.4 million for 2009.

For 2010, net unrealized gains on notes receivable were $1.6 million, compared to $1.9 million in the prior year. The net unrealized gains in the current year consisted of gains related to the Iowa Tribe of $0.9 million which resulted from the previously announced termination agreement with the Iowa Tribe in May 2010 and net gains of $0.7 million related to the Jamul project due primarily to improvements in the credit markets. The net unrealized gains in the prior year period were related to the Jamul project due primarily to improvements in the credit markets during that period which were partially offset by losses related to further delays in the expected opening date of this project.

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