Lakes Entertainment (LACO)
Q4 2012 Earnings Call
March 12, 2013 2:00 pm ET
Timothy J. Cope - President, Chief Financial Officer, Principal Accounting Officer, Treasurer and Director
Lyle A. Berman - Executive Chairman and Chief Executive Officer
David Hargreaves - Sterne Agee & Leach Inc., Research Division
James Kayler - BofA Merrill Lynch, Research Division
Previous Statements by LACO
» Lakes Entertainment, Inc. Q3 2008 Earnings Call Transcript
» Lakes Entertainment, Inc. Q2 2008 Earnings Call Transcript
» Lakes Entertainment, Inc. Q1 2008 Earnings Call Transcript
I would now like to turn the presentation over to your host for today Mr. Tim Cope, President of Lakes Entertainment. Please proceed, sir.
Timothy J. Cope
Thank you, operator. Good afternoon, and welcome to Lakes Entertainment's Fourth Quarter 2012 Earnings Conference Call. On the call with me is Lyle Berman, Lakes Chairman of the Board and Chief Executive Officer.
As we begin our prepared remarks, I would like to remind everyone that this call may contain forward-looking statements, including statements concerning business strategies and their intended results and similar statements concerning anticipated future events.
These statements are subject to risks and uncertainties including those risks described in our filings with the SEC, and the actual results may differ materially.
Lyle will begin our discussion today with a general overview and update our casino projects. I'll then discuss the fourth quarter financial results and recent business events, and then we'll conduct a question-and-answer session.
Now I will turn the call over to Mr. Lyle Berman.
Lyle A. Berman
Thank you, Tim, and welcome, everyone, to Lakes Fourth Quarter 2012 Earnings Conference Call. As we previously reported on August 3 last year, we closed on the purchase of the Rocky Gap Lodge & Golf Resort near Cumberland, Maryland. Rocky Gap is a AAA 4-diamond resort that includes a hotel, convention center, spa, 2 restaurants and the only Jack Nicklaus Signature golf course in Maryland. Renovation of the existing facilities to convert convention and meeting space into a gaming facility is ongoing and expected to be completed in the second quarter of 2013.
When finished, the gaming facility will feature approximately 550 video lottery terminals, 10 table games, a casino-centered bar and a new hotel lobby bar and food outlet. The existing hotel, restaurants, spa and golf facilities have remain opened during the renovation. In addition, we plan to begin construction on a new convention space and meeting rooms at Rocky Gap during the second quarter of 2013, which we expect to open during the fourth quarter of this year.
The total cost of the Rocky Gap project is currently expected to be approximately $35 million. During the fourth quarter of 2012, we closed on a $17.5 million financing facility that will be used to finance a portion of Rocky Gap renovation project. At the end of the fourth quarter, we had invested approximately $12 million in the project, including the $6.8 million purchase price and the $2.1 million VLT license fee.
Red Hawk Casino located near Sacramento, California again showed improvements in both top and bottom line financial results during the fourth quarter of this year compared to the fourth quarter of 2011. Red Hawk opened a new lounge that features a bar, stage, dance floor and space to host VIP events. The lounge has received favorable guest reviews and is another example of how Red Hawk is improving the customers' experience, which translates into greater guest satisfaction and better financial results.
With the continued focus on strong business fundamentals and operating efficiencies, the property has been able to convert incremental revenue to improve profitability. We are encouraged by the positive trend at this property.
We continue to maintain a 10% ownership interest in Rock Ohio Ventures, 80% ownership in the open and operating Horseshoe Casino Cleveland; Horseshoe Casino Cincinnati, which opened March 4; and the ThistleDown Racino, which is expected to introduce VLTs next month. The Horseshoe Casino in Cleveland opened during May of last year and features approximately 2,100 slot machines, 63 table games, a 30-table poker room and multiple food and beverage outlets. Horseshoe Casino in Cincinnati features approximately 2,000 slot machines, 85 table games, a 31-table World Series of Poker room, several food and beverage outlets and a parking structure.
The ThistleDown Racino in North Randall, Ohio is planned to feature its existing racetrack, 1,100 VLTs and new dining and nightlife options.
Lakes previously loaned Dania Entertainment Center $4 million, which was written off in 2011 and had a management agreement to manage the Jai Alai facility, which was terminated in the initial transaction purchase -- the Jai Alai facility failed to close in 2011.
In February 28, Boyd Gaming Corporation announced that it had entered into a definitive agreement to sell the assets of Dania Jai Alai in Dania Beach, Florida to Dania Entertainment Center. The Dania Entertainment Center recently partnered with a third party, who's financing the acquisition and who will manage the facility, subject to the completion of the Jai Alai purchase transaction, which is expected to take place in the second quarter of this year. Lakes promissory note has been converted into approximately 5% of Dania Entertainment Center. Lakes will have no management responsibility when this expected purchase closes.
As we enter 2013, we continue to evaluate other business opportunities to determine the best possible manner in which to increase shareholder value. We remain well positioned to pursue these opportunities because of our stable balance sheet.