Lakes Entertainment Announces Results For Third Quarter 2011

Further commenting, Tim Cope, President and Chief Financial Officer of Lakes stated, "In August we made an additional $7.4 million investment in Rock Ohio Ventures, LLC and its casino developments in Cincinnati and Cleveland. As a result, our total investment in Rock Ohio is now approximately $15.7 million and we look forward to continuing our involvement with these casino projects as they progress.” Mr. Cope continued, “We remain focused on the results of the Red Hawk Casino and we continue to work with the Jamul Indian Village on development efforts for a casino operation near San Diego.”

About Lakes Entertainment

Lakes Entertainment, Inc. currently has development and management or financing agreements with two separate Bands for casino operations in California, for a total of two separate casino sites. Lakes is currently managing the Red Hawk Casino for the Shingle Springs Band of Miwok Indians.

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
(In thousands)
						October 2, 2011				January 2, 2011
Assets						(Unaudited)
Current assets:
	Cash and cash equivalents					$	44,296			$	45,233
	Accounts receivable						12				1,696
	Current portion of notes receivable from Indian casino projects						694				2,405
	Deposit						2,100				-
	Income taxes receivable						1,253				-
	Other						940				1,983
Total current assets							49,295				51,317
Property and equipment, net							5,098				5,103
Long-term assets related to Indian casino projects:
	Notes and interest receivable, net of current portion and allowance						33,575				31,192
	Notes receivable at fair value						9,641				11,129
	Intangible assets						4,448				15,873
	Management fee receivable and other						7,467				6,155
Total long-term assets related to Indian casino projects							55,131				64,349
Other assets:
	Investment in unconsolidated investee						15,706				2,367
	Land held for development						170				3,470
	Land held for sale						3,000				-
	Other						454				40
Total other assets							19,330				5,877
Total assets						$	128,854			$	126,646
Liabilities and shareholders' equity
Current liabilities:
	Current portion of contract acquisition costs payable, net					$	1,008			$	1,326
	Income taxes payable						-				7,822
	Other						1,541				1,683
Total current liabilities							2,549				10,831
Long-term contract acquisition costs payable, net							4,850				5,830
Total liabilities							7,399				16,661
Total Lakes Entertainment shareholders' equity							121,268				109,985
	Noncontrolling interest						187				-
Total equity							121,455				109,985
Total liabilities and shareholders' equity						$	128,854			$	126,646

LAKES ENTERTAINMENT, INC. AND SUBSIDIARIES
Unaudited Condensed Consolidated Statements of Earnings (Loss)
(In thousands, except per share data)
					Three months ended									Nine months ended
					October 2, 2011				October 3, 2010					October 2, 2011				October 3, 2010
Revenues:
	Management fees				$	222			$	8,155				$	34,142			$	19,876
	License fees and other					28				17					158				52
		Total revenues				250				8,172					34,300				19,928
Costs and expenses:
	Selling, general and administrative					2,537				2,936					7,479				9,425
	Loss on convertible note receivable					4,000				-					4,000				-
	Impairments and other losses					1,102				632					2,611				4,002
	Amortization of intangible assets related to operating casinos					264				2,785					11,424				8,355
	Loss on disposal of property and equipment					76				-					76				-
	Depreciation					52				65					164				196
		Total costs and expenses				8,031				6,418					25,754				21,978
Net unrealized gains (losses) on notes receivable						(2,709	)			450					(2,091	)			762
Earnings (loss) from operations						(10,490	)			2,204					6,455				(1,288	)
Other income (expense):
	Gain on divestiture of cost method investment					-				23,100					-				23,100
	Interest income					1,439				1,682					4,420				5,776
	Interest expense					(273	)			(446	)				(915	)			(1,678	)
	Equity in loss of unconsolidated investee					-				-					-				(64	)
	Other					119				(508	)				359				(20	)
		Total other income, net				1,285				23,828					3,864				27,114
Earnings (loss) before income taxes						(9,205	)			26,032					10,319				25,826
	Income taxes (benefit)					(9,149	)			10,976					(490	)			11,548
Net earnings (loss) including noncontrolling interest						(56	)			15,056					10,809				14,278
	Net loss attributable to noncontrolling interest					18				-					18				-
Net earnings (loss) attributable to Lakes Entertainment, Inc.					$	(38	)		$	15,056				$	10,827			$	14,278
Weighted-average common shares outstanding
	Basic					26,406				26,369					26,402				26,369
	Diluted					26,406				26,426					26,427				26,425
Earnings (loss) per share
	Basic				$	0.00			$	0.57				$	0.41			$	0.54
	Diluted				$	0.00			$	0.57				$	0.41			$	0.54

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