Lakes Entertainment, Inc. (NASDAQ: LACO) today announced results for the three months and nine months ended October 2, 2011.
Third Quarter Results
Net loss for the third quarter of 2011 was less than $0.1 million, compared to net earnings of $15.1 million in the third quarter of 2010. Losses from operations were $10.5 million for the third quarter of 2011 compared to earnings from operations of $2.2 million for the third quarter of 2010. Basic and diluted losses were less than $0.01 per share for the third quarter of 2011 compared to earnings of $0.57 per share for the third quarter of 2010.
Lakes Entertainment reported third quarter 2011 revenues of $0.3 million, compared to prior-year third quarter revenues of $8.2 million. The elimination of revenues from the management of the Four Winds Casino Resort as a result of the buy-out of the management agreement for that property during the second quarter of 2011 was the primary reason for the decrease in revenues during the third quarter of 2011 compared to the third quarter of 2010.
For the third quarter of 2011, Lakes’ selling, general and administrative expenses decreased in comparison to the third quarter of 2010 by approximately $0.4 million to $2.5 million. This decline resulted primarily from decreases in payroll and related expenses partially offset by an increase in professional fees related to a potential casino development project in Maryland.
During the third quarter of 2011, Lakes entered into an agreement for the purpose of managing and redeveloping the existing Dania Jai Alai fronton in Dania Beach, Florida. The Company’s partner in this project has an agreement to purchase the Jai Alai fronton. Lakes made an initial investment of $4.0 million related to the project via a convertible promissory note that would convert to equity upon the closing of the Jai Alai fronton purchase. As a result of third party litigation recently filed against the city of Dania Beach relating to the development agreement for the renovation of the Dania Jai Alai fronton, the Florida legislature introducing legislation to permit full casino resorts in southern Florida, and the deterioration of the credit market since advancing the funds for this note, the value of the note was written down to zero as of October 2, 2011 and Lakes recognized a loss on convertible note receivable of $4.0 million during the third quarter of 2011.