Golden Entertainment Inc (GDEN) 2005 Q4 法說會逐字稿

At this time, I would like to welcome everyone to the fourth-quarter and 2005 fiscal year earnings conference call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session. (OPERATOR INSTRUCTIONS) Mr. Cope, you may begin your conference.

Thank you. Hello, everyone, and thank you for joining us today for the Lakes Entertainment fiscal year-end 2005 conference call. Here 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 within the meaning of the federal securities law, including statements concerning business strategies and their intended results, and similar statements concerning anticipated future events and expectations that are not historical facts. These forward-looking statements are made pursuant to the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995. These statements do not guarantee future performance and, therefore, undue reliance should not be placed upon them.

A replay of this call will be available beginning today at approximately 3 PM Central Time through Friday, February 24. You may access the replay by visiting the Lakes Entertainment website at www.LakesEntertainment.com; or by dialing 1-800-642-1687 using the pass code 535-9786.

Before I turn the call over to Lyle to provide an update on our casino projects, let me briefly discuss some of Lakes' general business issues. The fourth quarter was a busy and productive time for our Company. In December, we were able to resolve all comments from the SEC regarding our 2003 10-K.

As a result, we reevaluated the accounting methodology surrounding the Company's contractual relationships with Indian Tribes and determined that we will separately record the elements of our developments and management agreements with Indian Tribes. Historically, we recorded the advances to Indian Tribes as notes receivable and deferred recognition of interest income until the interest is received.

We have determined that as we make advances to a Tribe pursuant to a development relationship, we will give separate recognition to the present value of the notes receivable, and assign a separate value to the related interest in the management contract portion of the arrangement. This change in accounting methodology was reflected in the 2004 10-K and the subsequent three 2005 quarter 10-Qs, each of which was filed in December of 2005.

Following the filing of these three Forms 10-Q, which brought our SEC filings current and the Company into compliance with the applicable NASDAQ marketplace rules, we submitted an application for a relisting of Lakes' common stock on the NASDAQ national market.

We continue to work with NASDAQ during the application process, which we expect to be completed soon after our 2005 10-K is filed in mid-March. But there is no assurance that our Common Stock will eventually be approved for a relisting.

In December, we also closed on a $20 million financing facility with the Lyle Berman Family Partnership, which provided the Company with the capital to move forward at that time with our various development projects. An initial draw of $10 million was made on that facility.

We announced yesterday that we closed on a $50 million financing facility with an affiliate of Prentice Capital Management LLP. An initial draw of $25 million was made under the facility; another $10 million is immediately available under the facility; and the remaining $15 million can be drawn in $5 million increments subject to the satisfaction of certain conditions.

Any funds drawn on the facility bear interest at the rate of 12% per annum, subject to adjustment based on the value of the collateral, and are due and payable on the third anniversary of the closing date. Lakes may prepay the facility in whole or in part without penalty at any time.

Approximately $10.2 million of the initial draw was used to repay in full Lakes' December 15, 2005, loan from the Lyle Berman Family Partnership; and as a result of repaying the partnership loan prior to February 28 of 2006, the 2 million common stock purchase warrants previously issued to the partnership were terminated.

The new financing facility is secured by substantially all the material assets of Lakes and certain of its subsidiaries, other than WPT Enterprises, including all of Lakes' shares of WPT Enterprises. Lakes is permitted to sell up to 3 million of the approximate 12.5 million WPTE shares it owns without application to reduction of the amounts owing under the financing facility; again, subject to certain conditions.

As consideration for the financing, Lakes issued to an affiliate of Prentice Capital warrants to purchase 1.25 million shares of common stock that can be immediately exercised at $7.50 per share. The warrants are subject to customary antidilution protections. An additional 1.25 million warrants to purchase common stock are exercisable at $7.50 per share as additional draws under the facility are made. Up to an additional 1.96 million warrants to purchase common stock can be exercised at $7.50 per share upon the occurrence of certain events relating to loan collateral. All warrants expire on February 2013.

The lender has demand registration rights with respect to the Lakes common stock underlying the warrants and, upon certain events, the WPTE shares pledged by Lakes to the lender. Lakes has agreed to pay substantially all of the costs incurred in the preparation and filing of these registration statements.

As previously announced, Lakes will continue to explore additional financing alternatives to fund its continued future operational and development needs. Now I would like to turn the call over to Lyle to provide you with an update of our casino projects.

Good afternoon. Thank you for joining us today. I want to start by saying that we are extremely proud to be associated with each of our tribal partners as we move forward with the successful development and management of their casinos. We continue to believe that a number of casinos will be under construction sometime during 2006, with revenues beginning to be generated in 2007.

As I review each casino project, please keep in mind that they are not in any order of significance or state of completion. Dates of construction and anticipated openings are subject to change.

Let me briefly explain the requirements for an Indian Tribe to have a casino. They must be a federally recognized Tribe. They must have what is legally deemed to be Indian land. To operate any type of gaming other than what is considered class I or class II gaming, they must have a compact, which is an agreement with the state. Finally, if they approve a management company or employ a management company, that management company must have a contract which is approved by the National Indian Gaming Commission.

Once these four conditions are met, construction may commence upon -- and upon completion the casino open. Each of the projects in our portfolio has met the first three requirements. They're federally recognized, have Indian land, and all have compacts with their respective states. Only the final condition, approval of the management company contract by the National Indian Gaming Commission, remains as part of the formal approval process. Nonetheless, projects of this magnitude also entail a variety of legal and regulatory issues, which I will outline as part of each update.

Foothill Oaks Casino, Shingle Springs Tribe. Let me begin with Foothill Oaks Casino, which is with the Shingle Springs Tribe near Sacramento, California. Lakes has contracts which have been approved by the National Indian Gaming Commission to develop and manage this casino, to be built on the Rancheria of the Shingle Springs Band of Miwok Indians in El Dorado County, California, approximately 30 miles east of Sacramento.

Two lawsuits are pending against this project. The first is a federal lawsuit filed in Superior Court of the state of California by El Dorado County, raising two issues. First, the validity of the environmental assessment, prepared by the National Indian Gaming Commission as required for the approval of the management contract. The second issue challenges the validity of the Tribe and whether the Rancheria is properly Indian land which would allow gaming.

In early 2005, the judge in this case issued a final ruling dismissing all allegations against the BIA and the National Indian Gaming Commission. The plaintiffs have filed appeal, which is now pending in federal appeals court.

The second suit is a state court case challenging the validity of the environmental documents prepared for the approval of the Highway 50 interchange by Caltrans under the California Environmental Quality Act. This case received an initial ruling in late December 2003 which denied all claims of the plaintiffs except one. All approvals have been received from the California Department of Transportation and the Bureau of Indian Affairs to allow this portion of the project to proceed.

The design of the interchange is complete. Upon issuance of the final positive ruling on the state lawsuit, Caltrans has indicated its willingness to immediately issue the final permit to allow construction of the interchange to commence.

Assuming a positive outcome in the state court case, construction of this casino could begin approximately 120 days later. We currently estimate Foothill Oaks Casino to open in the first half of 2008.

Pokagon Band of Potawatomi Indians, called the Four Winds Casino. Lakes also has contracts to develop and manage the Four Winds Casino resort to be built on land placed in trust for the Pokagon Band of Potawatomi Indians in New Buffalo Township, Michigan, approximately 75 miles east of Chicago.

Last month we announced that the federal government had taken action to acquire the Pokagon Band's 675-acre parcel of land in due trust for the Tribe. It is now currently in trust. This action by the BIA paves the way for Pokagon Band to move forward on the Four Winds Casino.

We are now waiting for the final approval of our contract. Once approved, and financing is completed, we anticipate construction to begin this spring, with a targeted opening date in the middle of 2007.

Jamul Indian Village. In Southern California Lakes has contracts to develop and manage a casino to be built on the Rancheria of the Jamul Indian Village located near San Diego. We continue to work with the various architects and engineers to prepare the final environmental report and develop a first-class gaming facility on the Tribe's existing reservation. We currently anticipate construction to begin this fall with a casino opening date in early 2008.

Pawnee Nation Trading Post, Travel Plaza, and Chilocco. Moving to Oklahoma, Lakes has signed consulting and management agreements with the Pawnee Nation to assist in the development, construction, and management of three gaming facilities on tribal lands.

One is the existing Trading Post Casino located in Pawnee, Oklahoma. The second is the expansion of an existing Travel Plaza and convenience store to provide a gaming facility. The third is a full-scale casino resort project on the Tribe's trust land three miles south of the Kansas border.

The Pawnee Nation has signed the state compact for all three locations. Our consulting and management agreements with the Tribe have been completed and submitted to the National Indian Gaming Commission for approval.

The Trading Post Reservation. Lakes assisted the Tribe under its consulting agreements with renovations to the Trading Post Casino by replacing 40 under-performing class II machines with 66 new machines according to the -- that comply with the compact; and completing some physical improvements to the interior of the property.

The Travel Plaza Casino will be an expansion of the existing truck stop with a new gaming facility and a sit-down, full-service restaurant. The initial phase of this project will include approximately 175 slot machines, four electronic games, and a 65-seat restaurant. We await approval of the National Indian Gaming Commission's management contract. Once received, we anticipate construction to begin in the second quarter of this year, with an opening date later this summer or early fall.

The Pawnee Tribe owns approximately 800 acres of trust land referred to as the Chilocco site. The intent is to develop a facility with 1,200 slot machines, 24 table games, and eight poker tables. Additional resort facilities are planned to include four restaurants, a 150-room hotel, and a Kids Quest child care facility. We are waiting for approval of the management contract, which could be received within the next fiscal quarter. Construction is planned to be completed and the Casino opened within 12 months from the time of approval.

Also in Oklahoma, Lakes has consulting and management contracts with the Iowa Tribe of Oklahoma in connection with the development, equipping, and managing of both the new casino project and the Tribe's existing Cimarron Casino. The Cimarron Casino is an existing 240-game machine and 200-seat bingo parlor located on the northern edge of Perkins, Oklahoma, which is near Stillwater.

This site is being renovated to provide space for 325 gaming machines, six table games, required back of office space, and a new food outlet. Although there are no expansion plans to this project outside of its existing walls, the National Indian Gaming Commission does require approval of a management contract. We await approval on this and anticipate the renovation to be completed this spring. It is currently under construction.

The second project for the Iowa Tribe of Oklahoma is to develop a full-service casino resort on tribal land on Route 66 midway between Warwick and Chandler, which is a suburb of Oklahoma City, Oklahoma, approximately 30 miles from the greater Oklahoma City market.

The proposed development will have an initial phase of approximately 1,500 slot machines, four restaurants, a Kids Quest, parking and required back-office support facility. Additionally, a 250-room hotel is planned to open with Phase I. We have begun drafting the environmental assessment required for the approval of the NIGC management contract. We plan to begin construction in the latter part of this fiscal year with an opening to follow one year later.

With regards to the Vicksburg project, we are continuing to work with the Army Corps of Engineers to obtain their approval. We're working to finalize the site plans and to acquire all the necessary land. However, due to the rising construction costs attributable to the various hurricanes, coupled with the need to obtain construction financing in a manner that would provide a reasonable return on our investment, the balance of our equity capital will not be available until after one of our other projects opens, which is expected to be sometime in 2007.

Let me take a moment to discuss our relationship with the Kickapoo Tribe of Texas. In January of 2005, we entered into a consulting agreement and management contracts with the Kickapoo Tribe of Texas to improve the performance of their Lucky Eagle Casino. Last November we announced that our relationship with the Kickapoo Tribe had deteriorated and that we had terminated the business relationship. It is unfortunate that this relationship was terminated, but we had differing ideas on how to improve the performance of the casino.

We believe terminating the relationship was in the best interest of both parties. We will continue to work with the Kickapoo Tribe to resolve all the financial terms of the relationship, including repayment of the advance, payment of unpaid project costs incurred, and a sale of the land owned by Lakes to the Kickapoo Tribe, and to formally terminate the gaming operation consulting agreement, management contract, and related ancillary agreements relating to the project.

Our table games business continues to do well. We're very pleased with the Nevada Gaming Commission's approval to roll out our World Poker Tour All-In Hold 'Em game into all casinos within the state. This decision was based on the successful field trial of the table game at Bellagio. We currently have the game in approximately 15 casinos and are working hard to expand the presence of this table game in casinos across the country.

It is a very simple game to play and casino owners have seen an immediate value with the introduction of World Poker Tour All-In Hold 'Em in their facility. With that, I will turn the call back over to Tim for a brief review of our financial results.

Thank you, Lyle. Today we announced results for the fiscal year ended January 1, 2006, our 2005 year. Revenue for the year totaled $18.2 million, compared to $17.6 million for the fiscal year ended January 2, 2005. The loss from operations was $16.5 million for 2005 compared to $12.9 million for 2004.

The net loss for the year was $11.9 million; and basic and diluted losses were $0.53 per share. This compares with a net loss of $4 million and basic and diluted losses of $0.18 per share in 2004.

Revenues for both years were derived from the operations of Lakes' majority-owned subsidiary WPT Enterprises, primarily from television license fees related to the World Poker Tour television series. The increase in revenue was primarily the result of significantly higher WPTE international and product licensing revenues, offset in part by the delivery of only 18 episodes of World Poker Tour television show versus 32 episodes in the prior fiscal year, which is primarily due to timing of delivery of episodes year-over-year.

The increase in loss from operations was primarily due to increased WPTE and Lakes' selling, general, and administrative costs of $12.2 million. Also, WPTE incurred production costs of $3.6 million associated with the Professional Poker Tour, with no offsetting Professional Poker Tour revenue during 2005.

It is WPTE's policy to expense production costs if a firm commitment or an executed distribution agreement is not in place. With agreement to broadcast the Professional Poker Tour completed in January 2006, WPTE will capitalize ongoing costs incurred associated with the production of the show, and expense those costs as episodes are delivered to the Travel Channel.

The aggregate increase in net loss would have been greater in 2005 if not for a onetime impairment charge of approximately $5.8 million in 2004, related to the Nipmuc Nation Massachusetts Casino project.

The net unrealized gain on notes receivable was $5.2 million, and $3.1 million for 2000 and 2004 respectively, related to the adjustment to fair value of the Company's notes receivable from Indian Tribes.

During 2005, the net unrealized gain of $5.2 million included unrealized gains of approximately $11.4 million, which were partially offset by unrealized losses of approximately $6.2 million primarily related to the termination of the agreement with the Kickapoo Traditional Tribe of Texas.

The unrealized gains of approximately $11.4 million related primarily to increased probability of opening related to the casino projects with the Pokagon Band of Potawatomi Indians in New Buffalo, Michigan, and with the Jamul Indian Village near San Diego, California.

Selling, general, and administrative expenses were $28.6 million in 2005, compared to $16.4 million in 2004. The increase of $12.2 million was primarily due to an increase of approximately $7.4 million related to WPTE's increased marketing and operating costs associated with WPTonline.com, as well as additional headcount, legal, and audit fees incurred during the 2005 period associated with business development, growth, and regulatory compliance costs.

The remaining increase of approximately $4.8 million in 2005 is due primarily to an increase in Lakes' professional fees, as well as additional headcount-related costs and other overhead costs associated with business development.

Other income was $1.6 million in 2005, compared to $12.1 million in 2004. Other income in 2004 included an $11.3 million settlement related to a tax-sharing agreement entered into in 1998 with Grand Casinos, a subsidiary of Park Place Entertainment, which has since been renamed Harrah's.

I will now turn the call back over to the operator for questions.

(OPERATOR INSTRUCTIONS) Todd Eilers with Roth Capital Partners.

A couple questions here. Can you tell me what your total capital needs are for '06 in terms of corporate expense or SG&A ex-WPTE? Also what -- your development and tribal advances you're expecting to make in '06?

This is Lyle. Tim, you want to cover that?

As you know, Todd, we don't really give projections, public projections. I can certainly talk to you about the status of our development projects and expected cost of the projects. But no, we really don't forecast cash use or projected operations.

Okay, that's fine. Let's see. Can you also help me understand how to understand what is going on with your tax situation right now? It looked like you had been in '04 recording a benefit; then you recorded a reserve, I think, in the fourth quarter on your tax-deferred assets; and then started to take a small provision through the first nine months of '05; and then now, it looks like in the fourth quarter you reported a benefit of $1.2 million.

Can you tell me what happened in the fourth quarter and how best to look at this going forward, just for modeling purposes?

You know, I wish there was an easy answer for modeling purposes, but there is no usual circumstances taking place here. What happened in the fourth quarter primarily related to the write-off of the Kickapoo project in Texas. There is about a $6 million write-off; you take 30% tax on that. That gets you to that, basically, the benefit going forward that went against the provision.

Then that was offset by the ongoing Louisiana tax situation, where we continue to accrue interest on potential payments to Louisiana for taxes there. So that kind of offset the Kickapoo situation; it was then offset by the interest reserve on the Louisiana situation. That is how you get to the net provision.

Okay, so then ex-ing out something like the Kickapoo situation, going forward we should still kind of expect the Louisiana interest to kind of be the case going forward?

That's correct.

Okay. Can you talk a little bit about the Pokagon project? You gave some timing there. I am curious. Have you had a chance to reassess the scope of the project? Have you come up with a new cost for that project, or are you planning to make any other changes there?

This is Lyle. We always constantly reassess the projects, but at this point that project is pretty much locked in. The scope of the project is about 275 -- I'm sorry, about 3,000 slot machines. We may or may not build a 160 to 200-room hotel in Phase I. That depends a little bit about the ability to do the financing of it.

Okay. Can you talk a little bit about the timing maybe on when you might be able to have financing in place?

Sure, we can go to market. Three things we have to do. We just have to -- the architects right now and engineers are finalizing the plans and the bidding.

The hold-up if there is one, and I don't think you can call it a holdup, but once we get the management contract approved by the National Indian Gaming Commission, we would immediately then go to market with Bank of America on the high-yield market, raise the money, and start construction two weeks thereafter.

We expect that all to come to completion probably in -- we will be under construction sometime in the end of May.

Okay. Then is the total project cost, is that roughly $300 million? Is that correct or am I off there?

I think that is roughly correct. Tim?

That is approximately it; depending on what we do with the hotel. But that is about right.

Then, it looks like in your quarter here, you started to record some development and management fee -- or consulting fees, I'm sorry. I am assuming that is coming from your Oklahoma agreements. Can you talk to which -- was that your Trading Post with the Pawnee Nation? Can you just talk a little bit about where those fees came from.

Going forward, should we kind of expect something like that here for the next couple of quarters, or was that more of a onetime event?

This is Tim. Those are coming from two sources. One is the Trading Post with the Pawnee Nation; and the other is with the Cimarron Casino with the Iowa Nation. Those would be expected to stay in place until our management contract is approved, and then we no longer have development fees and we would be working under a management contract.

Okay, but it is a recurring revenue for you guys until you get the management agreements approved, and then I assume it will switch over to that?

That's correct, and we expect those to be approved in the second quarter.

Okay, okay. Then with regard to Vicksburg, I thought I heard you guys say that you're going to kind of put -- shelve that project or put it on hold until '07 time frame, when you are starting to generate some cash flows from some of your other tribal projects. Is that correct?

Yes, I think on hold is the right term. We think that in order to effectively fund it, we have to put up about 25% equity, and that equity is going to come out of our cash flow. So that we aren't really going to be in a position to that equity component until one or more of our Indian Casinos opens, which we expect in the middle of '07.

Okay. I don't know, you might not want to or can't talk to this, but let's say, -- I mean, if there was an event or if your stock was to rebound or appreciate meaningfully, would that maybe change your opinion on whether to proceed forward with that project, and maybe try to tap the equity markets? Or is that just indefinitely on hold?

I would say that is a possibility.

Okay, all right, that helps. Thanks a lot, guys.

[Rashey Perik] with KBC Financial.

It's [Dave Hargraves]. First, thanks for holding the call. I appreciate that. Second, the Supreme Court ruling recently with respect to Shingle Springs, I'm wondering if you could elaborate a little bit on what that means for you in terms of exactly what the challenge is; how you're going to conduct the study; and if it's possible, if you already have some mitigation efforts in mind.

Tim, I will let you answer that one.

This is Tim. I can speak to that. I think the way we see it is good news for the project in terms of timing. The decision by the State Supreme Court not to hear the case now allows Caltrans -- now remember Caltrans is a proponent in the case -- to do the additional work that the appeals court asked for. Then they would back to the lower court judge again with their findings.

There's two different things really. One is they asked for a review of what the environmental effects if a smaller casino were to be built. The second piece has to do with the air quality impact of this particular project in relationship to all other projects of similar size in the Sacramento region.

So Caltrans basically would say, okay, Shingle Springs Casino; here is kind of the air emissions, whatever would prompt that; compare that to, say, the Thunder Valley Casino or the Cache Creek Casino. They have just asked for see how that works in relationship to other projects already in the area.

So Caltrans is actively preparing that work. They do it, obviously, because they are the ones that are in the middle of the lawsuit. We expect them to be done with that and back to the judge in about a three to four-month time frame.

If, by some chance, the study was to turn up a real damaging impact, have you already considered mitigation efforts? Or you just don't think that is going to be the finding at the end of the day?

We certainly don't think that's going to be the finding at the end of the day. This is nothing new. In fact these are two issues that we had recently received favorable rulings on.

The additional information is again regarding to the smaller casino project. Caltrans has publicly stated they really have no jurisdiction to even be able to do that, because they have no control over casinos on Indian land, obviously. In fact, the on-off ramp that is currently designed can't be designed any smaller. It's as small as it can be done. So we don't see that as a challenge at all in the approval process.

Then as far as their air quality studies, again, they have already complied with all the particular air quality standards. This is, I guess, a different look at the same standards. So again, if any mitigation comes out of that, it would have to be as a result of the judge reviewing these findings.

So he does have the authority to say, wow, this is really bad for the area and you can't do it? Or --?

I'm not going to go there, because I do not know what the judge's final authority is.

Fair enough. Do you have any similar issues lingering with Jamul right now? I know you guys have to conduct some environmental studies.

Yes, I can speak to that. Currently, under the state compact, which the Tribe has signed an agreement with the state, that compact requires the Tribe to do environmental assessment under the tribal environmental ordinances that they had previously adopted and are in place.

So again, Jamul has had two prior environmental studies, an EA and an EIS. They are now doing a third one under the tribal ordinances in compliance with the compact, at which point in time they will then issue that, again to the state, according to the compact provisions. We expect that to take another three to four months.

This new agreement that you have with Prentice, the original agreement you had with the Berman Family Trust, it sort of gave us an indication as to how long you guys were funded through. It got you through March 31. Can you tell us this agreement, how far it -- how long it funds Lakes for?

This is Lyle again. Again, there is a lot of what happens when. I would suggest that this agreement probably funds us through the August time frame.

Great.

Yes.

Did you guys have a prior relationship with Prentice at all?

I was involved just tangentially with Prentice. But several -- one of our Board members has a relationship with them, and he is the one who introduced them to us.

Just to confirm, this is pay-in-kind for up to three years, is that right?

No.

We'd be making interest payments on a regular basis.

Oh, I see. You do have to --.

That was the other loan.

Since you guys are still obviously exploring your alternatives with the World Poker stake, I am wondering if you could comment on your -- if this reflects anything about your expectations in the investment? I mean, does it show a lack of confidence on your part that you're looking at divesting the shares?

Well, not really. It is a timing issue, quite frankly. As we know, World Poker Tour has hired Thomas Weisel Company. They are going out looking for strategic alternatives. They may or may not come back with something.

Obviously if they were to come back with, for example, let's just say a sale of the entire company, then all of our other financing issues would go away. We would repay the Prentice and probably look very favorably at maybe starting Vicksburg earlier.

So we certainly have that as a contingent plan, but it's not something we are relying on. We still have a great deal of confidence in the World Poker Tour. Their website has been increasing on a daily basis, and we think it's a good business.

I agree. Then finally, the gentlemen that are associated with the KAR entity, I am wondering if there has been any more developments about their license-ability. When do you expect that to be reviewed?

With NIGC, with National Indian Gaming Commission you don't expect anything. It is our understanding, talking with them, they have both been going through the comprehensive -- giving NIGC all of the information that they requested. And let me tell you, they request a lot.

But we have no indication of when it will be resolved, when they will be relicensed; or in the alternative, when they would not be.

Got you; thanks very much again.

[Roy Barry], private investor.

Gentlemen, I am probably one of the few stockholders that dates back to 1998 when the Company was formed. So I have been reading all your annual reports for quite a few years. I asked a question in August; I'm going to repeat it.

I found on the Internet that a former officer of Boyd Gaming received $5 million for stalling the Pokagon Casino through the courts for five years. To me, with an elementary law education, that sounds like restraint of trade. I would like to hear your comments.

This is Lyle Berman again. I believe on a very technical basis, he had a contract when he sold his casino to Boyd that said if Pokagon didn't open for five years he would get this bonus. I don't think it said, if you stop Pokagon from opening.

Our lawyers, I believe, have looked at it, as the Tribes have looked at it; and we don't believe there is a cause of action at this time.

Is that at this time something that is finite or is it something that we might look further, because --?

I don't think we will be looking further. I don't think you can anticipate a lawsuit on that ground. Of course, to the extent that there was a lawsuit, it would be from the Tribe. It would be on the Tribe's behalf not ours. Because even though it's been delayed and it costed us some pain and anguish, once the casino is opened, although you have a time value of money, we of course still get our full five years on the contract.

Okay, that answers that question. I don't think I have any more. I was going to ask about the Kickapoo Tribe, but basically you answered it when you said there is a future settlement. Is that correct?

That is correct.

Okay, thank you.

Todd Eilers, Roth Capital Partners.

Just had a quick follow-up on the Jamul project in San Diego. Can you talk a little bit about this action that the Tribe I guess moved some homes down there, and the state got a little upset. Can you just kind of give us an update on what is going on there?

This is Lyle again. The Tribe in preparation for the casino construction moved some of the temporary housing called trailers off the site, and also did a little improvement on a -- egress into the site on a road. The state got all up in arms saying this was starting construction. And on a very technical basis, the Tribe cannot start construction until they complete the environmental work on the site.

Interestingly, according to my information, they have to provide the studies to the state; but they don't get approval or denial on these. It is just that they have to do them.

The Tribe met with the state; and quite frankly I think the state was in error in their -- which what they thought was going on wasn't. But the Tribe did agree that they were not going to do anything else until they completed the environmental work that the compact calls for.

But again, I stress, once they submit it to the state, the state is not in a position to review it, accept it, or deny it. It is just that they have to do it. Is that pretty much correct, Tim?

I think that is the current status; that is right.

Okay, so am I correct to assume that there is really no potential for the state to say to the Tribe that you guys violated the compact and try to stop construction of that project?

We don't believe so.

Okay, thanks guys.

(OPERATOR INSTRUCTIONS) At this time there are no questions.

I would like to make a little closing. This is Lyle Berman. We want to thank you all for participating in today's call and thank you for your continued support of Lakes Entertainment.

With the SEC issues behind us, we're confident in our ability to be relisted with NASDAQ. I just want to -- we're making a commitment to you today that there will be ongoing conference calls after we file our 10-Q each quarter. We will have these calls to keep you updated.

But we also have a website, LakesEntertainment.com; and each of our projects is listed there with all of the timing of things that need to get done. We will be updating that on a current and regular basis. So if you are ever looking for the current status of a project, I suggest that you go to our website; and I think you will be impressed in what it tells you.

Also, once these projects are under construction, we will be posting pictures on a regular basis, so you can kind of see it coming out of the ground. With that, we continue to remain focused on moving forward with each casino project, with the end goal of delivering a positive shareholder return. Thank you very much.

This concludes today's fourth-quarter and 2005 fiscal-year earnings conference call. You may now disconnect.