Lakes Entertainment (NASDAQ:LACOE)
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WPT Enterprises, Inc. (NASDAQ: WPTE) (WPTE) today
announced results for the first quarter ended April 3, 2005. Business
highlights for the quarter included strong product licensing revenues,
the Travel Channel exercising their option to broadcast the fourth
season of the WORLD POKER TOUR(R) television show (WPT), the
finalization of the Company's agreement with WagerWorks to develop a
WPT-branded real-money gaming website, the signing of additional
agreements that will expand distribution of the WPT to France and
Italy, the announcement of Anheuser-Busch Michelob AmberBock as a
sponsor for Season 3 of the WPT and the WPT's televised poker
tournaments crossing the $100 million mark in prize money.
Revenues for the first quarter of 2005 were $4.1 million,
equivalent to revenues for the first quarter of 2004, and reflected
stronger than expected product licensing revenues. Net loss for the
quarter was $1.6 million or a loss per fully diluted share of $0.08,
compared to earnings of $0.8 million, or $0.05 per fully diluted
share, in the 2004 period.
"Our first quarter 2005 results demonstrate the company's
continued ability to execute on our strategic plan and initiatives
that have been targeted to generate growth," said Steve Lipscomb,
President and CEO of WPTE. "The success of the show and strength of
the brand was confirmed by the Travel Channel's decision to exercise
its option for the fourth season of the show. In addition, the show's
strong ratings in international markets enabled us to complete
distribution agreements to broadcast the show in France and Italy, two
major European markets. The WPT continues to achieve worldwide
recognition."
Domestic television license revenues were $2.0 million in the
first quarter of 2005 compared to $3.5 million in the first quarter of
2004. The higher license revenue reported in the first quarter of 2004
reflected the delivery of nine Season 2 episodes during the period
compared to five episodes of Season 3 delivered during the first
quarter of 2005. The remaining eight episodes in Season 3 are expected
to be delivered in the second quarter of 2005. Season 3 currently
consists of 21 episodes - 16 regular events and 5 special events -
while Season 2 consisted of 25 episodes including 14 regular events
and 11 special events.
Additional revenues of $2.1 million in the first quarter of 2005
were derived from a combination of product licensing, international
television licensing, sponsorship fees, casino host fees and
merchandise sales. Additional revenues in the first quarter of 2004
were $0.6 million consisting of international television licensing,
sponsorship fees, casino host fees and merchandise sales.
Cost of revenues of $3.2 million in the first quarter of 2005 were
related primarily to the production of Season 3 episodes of the WPT
and the production of the premiere season of the PROFESSIONAL POKER
TOUR(TM) (PPT). Approximately $1.4 million of cost of revenues in the
first quarter of 2005 were related to PPT production costs as it is
the company's policy to expense production costs if a firm commitment
or an executed distribution agreement is not in place. First quarter
2004 cost of revenues of $2.5 million were related primarily to the
production of Season 2 episodes of the WORLD POKER TOUR show.
Additionally, cost of revenues in the first quarter of 2005 included
approximately $0.4 million of non-cash compensation expenses related
to consultant stock options compared to $0.1 million in the first
quarter of 2004.
Overall gross margins were 22.3% in the first quarter of 2005
compared to 40.3% in the first quarter of 2004. The lower gross
margins in the first quarter of 2005 primarily reflect the impact of
PPT production costs and non-cash compensation expenses related to
consultant stock options included in cost of revenues. Excluding the
non-cash compensation expenses and PPT production costs expensed
during the quarter, gross margin for the first quarter of 2005 was
67.3% compared to 42.6% for the corresponding period in 2004. There
were no PPT production costs recognized in the first quarter of 2004.
Selling and administrative expenses were $2.8 million in the first
quarter of 2005 reflecting increased headcount costs, product
licensing commissions and professional service fees. Selling and
administrative expenses in the first quarter of 2004 were $0.8
million, primarily consisting of headcount costs and professional
service fees.
At April 3, 2005, the Company had no debt, and total cash and
short-term investments available was approximately $31.6 million.
Revenue in the second quarter of 2005 is forecast to range from
$5.5 - 6.0 million due to a higher number of Season 3 episodes
scheduled to be delivered during the period.
"I am encouraged by the overall growth of our franchise in general
as indicated by the increase in total players and prize pools in
Season 3 of the WPT," said Mr. Lipscomb. "We are also excited by
growth trends in the online gaming space and believe that the second
quarter deployment of wptonline.com, our online gaming website, will
further diversify our revenue base as well as create additional
opportunities in various business segments. We continue to make
progress on the strategic objectives that were set for 2005 to enhance
shareholder value."
About WPT Enterprises, Inc.
WPT Enterprises, Inc. (NASDAQ: WPTE) creates branded entertainment
and consumer products driven by the development, production and
marketing of televised programming based on gaming themes. We
developed and own the World Poker Tour(R), a television show based on
a series of high-stakes poker tournaments that airs in the U.S. on the
Travel Channel and in more than 60 other countries through various
cable and network channels. We currently license our brand to
companies in the business of poker equipment and instruction, apparel,
publishing, electronic and wireless entertainment, DVD/home
entertainment, casino games and giftware. WPTE is a majority-owned
subsidiary of Lakes Entertainment, Inc. (NASDAQ: LACOE). For more
information visit the Company's website at www.worldpokertour.com.
(WPTEF)
All trademarks and copyrights contained herein are the property of
their respective holders.
This press release contains forward-looking statements made in
reliance upon the safe harbor provisions of Section 27A of the
Securities Act of 1933, as amended, and section 21E of the Securities
Exchange Act of 1934, as amended. The statements contained herein
which are not historical facts are considered forward-looking
statements under federal securities laws. Such forward-looking
statements are based on the beliefs of our management as well as
assumptions made by and information currently available to them.
Although WPT Enterprises, Inc. believes that the current views and
expectations reflected in these forward-looking statements are
reasonable, these views and expectations, and the related statements,
are inherently subject to risks, uncertainties, and other factors,
many of which are not under WPT Enterprises, Inc.'s control and may
not even be predictable. Any inaccuracy in the assumptions, as well as
those risks, uncertainties, and other factors could cause the actual
results to differ materially from those in the forward-looking
statements. These risks and uncertainties include, but are not limited
to, our short operating history; our significant dependence upon the
Travel Channel as a source of revenue; our reliance on our
relationships with key licensing and strategic partners and agreements
with member casinos; the potential that our television programming
will fail to maintain a sufficient audience; adverse trends that may
apply to the television production business generally; possible
development by our competitors (many of whom have greater financial
resources or marketplace presence) of television programming that will
directly compete with our television programming; a decline in the
popularity of our brand of televised poker tournaments; our ability to
protect our entertainment concepts, our current and future brands and
our other intellectual property rights; risks associated with our
expansion into foreign markets and into new businesses; the
uncertainty of the regulatory environment for online gaming, which may
affect our ability to pursue this business fully or cause our
activities to be found to be in violation of applicable United States
or foreign regulations; and our dependence on our senior management
team. For more information, review WPT's filings with the Securities
and Exchange Commission.
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WPT ENTERPRISES, INC.
Condensed Balance Sheets
April 3, 2005 and January 2, 2005
(unaudited)
April 3, January 2,
2005 2005
---------- ----------
(In thousands)
Assets
Current Assets:
Cash and cash equivalents $12,163 $4,525
Short-term investments 19,447 27,755
Accounts receivable, net 1,204 1,950
Deferred tax assets 166 136
Inventory 55 52
Television costs 1,428 917
Other current assets 688 624
------------------------------------------------------------ --------
Total Current Assets 35,151 35,959
------------------------------------------------------------ --------
Property and Equipment-Net 1,096 703
Cash and cash equivalents-restricted 246 244
Investment 207 207
Other long-term assets 167 -
------------------------------------------------------------ --------
Total Assets $36,867 $37,113
============================================================ ========
Liabilities and Shareholders' Equity
Current Liabilities:
Accounts payable $77 $17
Due to parent 5 16
Deferred revenue 3,601 3,280
Accrued payroll and related 259 292
Accrued expenses 1,952 1,321
------------------------------------------------------------ --------
Total Current Liabilities 5,894 4,926
------------------------------------------------------------ --------
Total Liabilities 5,894 4,926
------------------------------------------------------------ --------
Common Shares Subject to Repurchase 629 618
Commitments and Contingencies
Shareholders' Equity
Preferred Stock, par value of $0.001
Authorized 20,000 shares; 0 issued and
outstanding - -
Common Stock, $0.001 par value authorized
100,000 shares; 20,120 and 19,480 issued
and outstanding, respectively 20 19
Additional paid-in-capital 33,184 32,767
Accumulated deficit (2,807) (1,205)
Accumulated other comprehensive loss (48) (6)
Deferred compensation (5) (6)
------------------------------------------------------------ --------
Total Shareholders' Equity 30,344 31,569
------------------------------------------------------------ --------
Total Liabilities and Shareholders' Equity $36,867 $37,113
============================================================ ========
WPT ENTERPRISES, INC.
Condensed Statements of Earnings (Loss)
Three months ended April 3, 2005 and April 4, 2004
(unaudited)
2005 2004
--------------------
(In thousands, except
per share data)
Revenues:
License fees:
Domestic television $1,963 $3,540
International television 419 103
Product licensing 1,079 -
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Total License Fees 3,461 3,643
Casino host fees 250 250
Sponsorship 293 128
Merchandise 68 119
Home Entertainment 31 -
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Total Revenues 4,103 4,140
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Cost of Revenues 3,188 2,472
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Gross Profit 915 1,668
Expenses:
Selling and administrative 2,753 801
Depreciation 20 34
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Total Expenses 2,773 835
---------------------------------------------------------------------
Earnings (Loss) From Operations (1,858) 833
---------------------------------------------------------------------
Other Income (Expense):
Interest income 256 -
Interest expense - (41)
---------------------------------------------------------------------
Net Earnings (Loss) ($1,602) $792
=====================================================================
Net Earnings (Loss) Per Common Share - Basic ($0.08) $0.06
=====================================================================
Net Earnings (Loss) Per Common Share - Diluted ($0.08) $0.05
=====================================================================
Weighted Average Common Shares Outstanding -
Basic 19,058 13,653
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Dilutive Effect of Restricted Stock - 1,598
Dilutive Effect of Stock Options - 746
---------------------------------------------------------------------
Weighted Average Common Shares Outstanding -
Diluted 19,058 15,997
=====================================================================
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