For 2011, net unrealized losses on notes receivable were $11.9 million, compared to net unrealized gains on notes receivable of $1.6 million in the prior year. The net unrealized losses in the current year consisted of losses related to the Jamul project due primarily to the previously announced termination of the agreement with the Jamul Tribe. The net unrealized gains in the prior year consist of gains related to the Iowa Tribe of $0.9 million which resulted from the 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 during that period.
Other income, net was $5.2 million for 2011 compared to $28.1 million for 2010. During the third quarter of 2010, Lakes entered into a termination agreement with Penn Ventures, LLC and received $25 million in exchange for the Company’s interest in two potential casinos in Ohio. As a result, other income, net for 2010 includes a gain of $23.1 million related to this agreement.
The income tax benefit for 2011 was $3.2 million compared to a provision of $1.2 million for 2010. The current year benefit results from the Company’s ability to carry back the 2011 taxable loss to the prior year. The prior-year provision primarily consists of changes in valuation allowance of $10.8 million and $1.1 million related to state taxes, partially offset by $8.5 million of tax benefit for the reduction of the liability related to the ongoing tax litigation matter with the State of Louisiana discussed above, and current tax benefit of $2.2 million.
Tim Cope, President and Chief Financial Officer of Lakes stated, "While the economy in Northern California continues to suffer, especially in the Sacramento market, the Red Hawk Casino showed improvements in both top-line and bottom-line results. We continue to work closely with the Shingle Springs Gaming Authority to help Red Hawk achieve strong operating results while focusing on guest loyalty, trip frequency, employee pride and superior service to ensure that this property is operated as efficiently as possible for the benefit of the Shingle Springs Tribe and Lakes.” Mr. Cope continued, “We continue to believe in the Jamul Indian Village project and have worked closely with the Jamul Tribe on an ongoing basis to move this project forward. However, due to Lakes’ corporate strategic objectives at this time, we determined that we will not proceed with this project and we terminated our agreement with the Jamul Tribe earlier this month. All amounts due from the Jamul Tribe to Lakes including principal advances and accrued interest will remain legally owed. We wish the Jamul Tribe much success with its continued progress toward development of their casino project.”
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