Other income (expense), net for 2010 was $28.1 million compared to $6.1 million for 2009. 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 (expense), net for 2010 includes a gain of $23.1 million related to this agreement.

The income tax provision for 2010 was $1.2 million compared to $1.4 million for 2009. The current-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. In fiscal 2009, the provision consisted primarily of changes in the valuation allowance for deferred tax assets.

Tim Cope, President and Chief Financial Officer of Lakes stated, "While we have concluded that it is probable that substantial amounts due from the Shingle Springs Tribe will not be repaid within the contract term, the Shingle Springs Tribe will remain legally obligated to repay any remaining amounts due to Lakes subsequent to the conclusion of the contract. The general overall economy in northern California continues to be one of the worst in the country and the Red Hawk Casino continues to feel its effects. Red Hawk however, is taking proactive steps to improve the casino’s performance by implementing a variety of new marketing initiatives. Feedback from extensive guest research has enabled the property to offer a new variety of liberal slot and table game products and increase player rewards, as well as continue to emphasize quality dining with exceptional new value menus. The renewed emphasis at Red Hawk is clearly on providing great guest service, a great gamble and superior food offerings in an overall fun and exciting atmosphere. Recent trends indicate that guests are responding favorably to these initiatives and 2011 operating results are showing improvements compared to the fourth quarter. We are committed to achieving consistently strong operating results at this property while focusing on guest loyalty, trip frequency and employee pride and we are working closely with the Shingle Springs Tribal Gaming Authority 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 are pleased with the Settlement Agreement reached between Lakes and the State of Louisiana regarding the tax litigation matter which allowed us to reduce our recorded liability related to this matter and remove the uncertainty that had existed relating to this issue.”

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