Six Month Results

Net earnings for the six months ended July 3, 2011 were $10.9 million, compared to a net loss of $0.8 million for the six months ended July 4, 2010. Earnings from operations were $16.9 million for the first six months of 2011 compared to a loss from operations of $3.5 million for the first six months of 2010. Basic and diluted earnings were $0.41 per share for the six months ended July 3, 2011 compared to losses of $0.03 per share for the six months ended July 4, 2010.

Lakes Entertainment reported revenues of $34.1 million for the six months ended July 3, 2011, compared to prior-year period revenues of $11.8 million. The increase in revenues and net earnings was primarily the result of the previously discussed Buy-Out Agreement between the Pokagon Band and Lakes during the second quarter of 2011, which resulted in a buy-out fee to Lakes of approximately $24.5 million.

For the first six months of 2011, Lakes’ selling, general and administrative expenses were $4.9 million compared to $6.5 million for the first six months of 2010. Selling, general and administrative expenses consisted primarily of payroll and related expenses, travel expenses and professional fees, all of which decreased compared to the prior year period.

Lakes recognized impairment losses of $1.5 million and $3.4 million, during the six months ended July 3, 2011 and the six months ended July 4, 2010, respectively. The current year losses relate primarily to the continued uncertainty surrounding the completion of the Jamul project. The prior year losses related to the termination of the agreements with the Iowa Tribe as well as losses related to the continued uncertainty surrounding the completion of the Jamul project.

For the six months ended July 3, 2011, net unrealized gains on notes receivable were $0.6 million, compared to $0.3 million in the prior year period. The net unrealized gains in the current year relate to the Jamul Tribe due primarily to ongoing volatility in the credit markets. The net unrealized gains in the prior year period included gains related to the Iowa Tribe of $0.9 million which resulted from the previously announced termination agreement with the Iowa Tribe in May 2010. Partially offsetting the prior year gains were losses related to the Jamul Tribe of $0.6 million, due primarily to ongoing issues in the credit markets.

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