Lakes Entertainment, Inc. (NASDAQ: LACO) today announced results for the three and twelve months ended January 1, 2012.
Fourth Quarter Results
Net losses for the fourth quarter of 2011 were $12.7 million, compared to $28.1 million in the fourth quarter of 2010. Losses from operations were $16.8 million for the fourth quarter of 2011, compared to losses of $39.5 million for the fourth quarter of 2010. Basic and diluted losses were $0.48 per share for the fourth quarter of 2011 compared to losses of $1.07 per share for the fourth quarter of 2010.
Lakes Entertainment reported fourth quarter 2011 revenues of $1.3 million, compared to fourth quarter 2010 revenues of $4.7 million. This decline was due to the elimination of management fees from the Four Winds Casino Resort as a result of the early buy-out of the management agreement for that property during the second quarter of 2011.
For the fourth quarter of 2011, Lakes’ selling, general and administrative expenses were $2.0 million compared to $2.3 million in the fourth quarter of 2010. Selling, general and administrative expenses consisted primarily of payroll and related expenses, travel expenses and professional fees. This decline resulted primarily from decreases in payroll and related expenses and travel expenses during the fourth quarter of 2011 compared to the fourth quarter of 2010.
At the end of 2010, Lakes concluded that the notes receivable from the Shingle Springs Tribal Gaming Authority were impaired, resulting in an impairment charge on notes receivable of $21.0 million during the fourth quarter of 2010. This impairment was taken because it was estimated that substantial amounts due would not be repaid within the contract terms due to various factors which negatively impacted cash flows for the property. No additional impairment charges were recorded during 2011.
Lakes recognized impairments and other losses of $5.9 million during the fourth quarter of 2011 and $18.8 million during the fourth quarter of 2010. Impairment losses for the fourth quarter of 2011 included losses of $3.3 million related to the early termination of the Company’s airplane lease. Also included were impairments of $1.3 million during the fourth quarter of 2011, and $1.6 million during the fourth quarter of 2010, due to declines in the estimated fair value of land owned by Lakes in Vicksburg, Mississippi. Fourth quarter 2011 impairment losses of $1.3 million in 2011, and $0.5 million in 2010, were due to the continued uncertainty surrounding the completion of the project with the Jamul Indian Village (“Jamul Tribe”) near San Diego, California. As previously announced, due to Lakes’ corporate strategic objectives, during March 2012, Lakes determined that it would not continue to move forward with the Jamul casino project and terminated its agreement with the Jamul Tribe. In addition, the fourth quarter 2010 impairment losses included $16.7 million related to intangible assets associated with the Shingle Springs project. These intangible assets were impaired because their carrying value exceeded estimated future cash flows. There were no additional impairment charges taken on these intangible assets during 2011.