Lakes Entertainment, Inc. (NASDAQ: LACO) today announced results for the three and six months ended July 1, 2012.
Second Quarter Results
Net earnings for the second quarter of 2012 were $0.4 million, compared to net earnings of $9.5 million in the second quarter of 2011. Loss from operations was $1.1 million for the second quarter of 2012 compared to earnings from operations of $15.8 million for the second quarter of 2011. Basic and diluted earnings were $0.02 per share for the second quarter of 2012 compared to earnings of $0.36 per share for the second quarter of 2011.
Lakes Entertainment reported second quarter 2012 revenues of $2.5 million, compared to prior-year second quarter revenues of $28.2 million. The decrease in revenues was primarily due to the buy-out of the management agreement for the Four Winds Casino Resort in New Buffalo, Michigan, during June of 2011. Pursuant to the buy-out agreement, the Pokagon Band of Potawatomi Indians paid to Lakes a buy-out fee of approximately $24.5 million. The decrease was partially offset by an increase in fees earned from the management of the Red Hawk Casino near Sacramento, California, during the second quarter of 2012 compared to the second quarter of 2011. Revenues in the current year quarter related to the management of the Red Hawk Casino.
For the second quarter of 2012, Lakes’ selling, general and administrative expenses decreased in comparison to the second quarter of 2011 by approximately $0.4 million to $1.9 million. This decline resulted primarily from decreases in travel and related expenses due to the termination of the Company’s aircraft lease during the fourth quarter of 2011 as well as decreases in payroll and related expenses.
Lakes recognized impairments and other losses of $1.4 million and $0.6 million during the second quarters of 2012 and 2011, respectively. The current quarter impairments and other losses included $0.8 million due to the March 2012 determination that Lakes would not continue to move forward with the casino project with the Jamul Indian Village (“Jamul Tribe”) near San Diego, California, and the termination of Lakes’ agreement with the Jamul Tribe. Also included in impairments and other losses for the three months ended July 1, 2012 were $0.6 million related to costs associated with development plans for the Rocky Gap project which were subsequently revised. The prior year second quarter impairments and other losses were due primarily to uncertainty surrounding the completion of the project with the Jamul Tribe.