LOS ANGELES, May 4 /PRNewswire-FirstCall/ -- WPT Enterprises, Inc.
(NASDAQ:WPTE) today announced financial results for the first
quarter ended April 2, 2006. Business highlights for the quarter
included delivery of six episodes of Season IV of the World Poker
Tour(R) (WPT) television series, one episode of Season I of the
Professional Poker Tour(TM) (PPT) television series, continued
expansion of the WPT television show internationally, and further
contribution from the Company's online gaming division,
WPTonline.com. Financial Results. Revenues for the first quarter of
2006 were $6.5 million, compared to $4.1 million in the same period
in 2005, a 57% increase. The increase was primarily a result of the
delivery in the first quarter of six episodes of Season IV of the
WPT television series versus the delivery of five episodes of
Season III in the same period in 2005, and the delivery of one
episode of Season I of the PPT television series in the first
quarter versus no episodes of the PPT delivered in the same period
in 2005. The Company reported net earnings for the quarter of $3.6
million, or $0.17 per fully diluted share, compared to a net loss
of $1.6 million, or $0.08 per share (without dilution), in the 2005
period. Net earnings in the first quarter of 2006 includes a
realized pre-tax capital gain of $5.7 million associated with the
sale of a portion of the Company's PokerTek investment, and
reflects $1.6 million in share-based compensation expense
recognized in accordance with Statement of Financial Accounting
Standards No. 123 (SFAS No.123R) adopted in the first quarter. "We
are pleased with the progress we made in the first quarter. We
continue to aggressively build the World Poker Tour brand, and
during the quarter delivered the first episode of our new show, the
Professional Poker Tour, an extension of WPT poker branded
entertainment," said Steve Lipscomb, President and CEO of WPT
Enterprises. "In addition, we delivered six episodes of Season IV
of the World Poker Tour, which continues to be well received. We
also further strengthened the international distribution of our
show, and are now licensed to broadcast in more than 150 countries
and territories. Our online gaming business is moving forward,
albeit a bit more slowly than we had hoped as we address some
technology issues, but we are pleased with the progress we are
making in improving the website's technology platform. We are
excited about WPTE's prospects in 2006, and are confident in our
ability to continue to successfully execute our strategic plan."
Domestic television license revenues were $3.0 million in the first
quarter of 2006, an increase from $2.0 million in the first quarter
of 2005. The increase was due to the delivery of more television
episodes during the quarter compared to the prior year period.
International television licensing revenues increased to $0.9
million in the first quarter of 2006 from $0.4 million in the first
quarter of 2005. The increase was due to having a greater number of
international television distribution agreements in place during
the quarter than in the prior year. Product licensing revenues
decreased to $0.7 million in the first quarter of 2006 compared to
$1.1 million in the first quarter of 2005. The decrease was due, in
part, to lower license revenues from our lottery game partner, MDI,
which were partially offset by increased mobile gaming sales from
Hands-On Mobile (formerly Mforma). Online gaming, the Company's
newest division, generated revenues of $0.9 million in the first
quarter of 2006 compared to $0.7 million in the fourth quarter of
2005. Cost of revenues decreased to $2.4 million in the first
quarter of 2006 from $3.2 million in the first quarter of 2005. The
decrease was primarily due to lower recognized PPT production
costs, as the Company began capitalizing these costs in the first
quarter of 2006 versus previously expensing them. During the
quarter, cost of revenues associated with the PPT was $0.1 million
compared to $1.4 million in the prior year quarter. Cost of
revenues associated with the WPT series was $1.6 million in the
first quarter of 2006 compared to $1.5 million in the first quarter
of 2005. Additionally, cost of revenues in the first quarter of
2006 included approximately $0.2 million of non-cash compensation
expenses related to consultant stock options compared to $0.4
million in the first quarter of 2005, due primarily to changes in
the Company's stock price. Overall gross margins were 63% in the
first quarter of 2006 compared to 22% in the first quarter of 2005.
Domestic television licensing margins were 44% in the first quarter
compared to negative 60% in the same period of 2005, primarily due
to the expensing of PPT production costs in 2005. Increased
revenues from international television distribution and the
Company's online gaming operations helped contribute to the higher
overall gross margins in 2006. Selling and administrative expenses
increased to $5.1 million in the first quarter of 2006 compared to
$2.8 million in the first quarter of 2005. The increase was
primarily due to an additional $1.5 million of share-based
compensation expense resulting from the implementation of SFAS No.
123R, with the remaining difference due to increased headcount and
legal fees incurred during the first quarter of 2006 associated
with development, growth and regulatory compliance costs. For the
balance of 2006, excluding future stock grants, the Company expects
charges for share-based compensation under SFAS No. 123R to be
approximately $0.7 million each quarter. At April 2, 2006, the
Company had no debt, and total cash, cash equivalents and
short-term investments available of approximately $39.6 million.
Revenues for the second quarter of 2006 are expected to be in the
range of $10.5 - $11.0 million. The Company expects to deliver the
final ten episodes of Season IV of the WPT and nine episodes of
Season I of the PPT in the second quarter of 2006. Additionally,
the Company expects to deliver the first four episodes of Season V
of the WPT and the remaining fourteen episodes of Season I of the
PPT during the second half of 2006. Margins for the PPT will be
higher in 2006 than in subsequent years as certain production costs
have already been expensed. The Company expects to continue to
maintain the current level of sales and marketing expenses related
to its online gaming website, WPTonline.com, until it transitions
to an improved technology platform. PPT Business Update. On May 1,
2006, the Travel Channel (TRV) notified the Company that it had
chosen to not exercise its option for Season II and subsequent
seasons of the PPT. The PPT's first season, which includes 24 two-
hour episodes, has already been filmed and is scheduled to air on
TRV beginning in July 2006. The Company will immediately begin
discussions to find a new broadcast partner for the PPT going
forward. About WPT Enterprises, Inc. WPT Enterprises, Inc.
(NASDAQ:WPTE) is engaged in the creation of internationally branded
entertainment and consumer products driven by the development,
production, and marketing of televised programming based on gaming
themes. WPTE is the creator of the World Poker Tour(R), a
television show based on a series of high-stakes poker tournaments
that airs on the Travel Channel in the United States and more than
150 markets globally. With the WPT in its fifth season, WPTE has
launched a second series on the Travel Channel, the Professional
Poker Tour(TM), which focuses on the play of poker's leading stars.
WPTE currently licenses its brand to companies in the business of
poker equipment and instruction, apparel, publishing, electronic
and wireless entertainment, DVD/home entertainment, casino games,
and giftware. The Company is also engaged in the sale of corporate
sponsorships. In addition, WPTE's licensee, WagerWorks, Inc.,
operates a WPT-branded online gaming website, WPTonline.com, which
features an online poker room and an online casino with a broad
selection of slots and table games. Although any Internet user can
access WPTonline.com via the World Wide Web, the website does not
permit bets to be made from players in the U.S. and other
restricted jurisdictions. For show information, tools for improving
poker play, and other WPT news, fans may log on to
http://www.worldpokertour.com/. WPT Enterprises, Inc. is a majority
owned subsidiary of Lakes Entertainment, Inc. (NASDAQ: LACO).
Photos and media information can be found online at:
http://www.worldpokertour.com/media. (WPTEF) All trademarks and
copyrights contained herein are the property of their respective
holders. The Private Securities Litigation Reform Act of 1995
provides a "safe harbor" for forward-looking statements. Certain
information included in this press release (as well as information
included in oral statements or other written statements made or to
be made by WPT Enterprises, Inc.) contains statements that are
forward-looking, such as statements relating to the expansion of
WPTE's brand licensing, the development of new television and film
projects, the development of WPTE corporate sponsors and other
business development activities, as well as statements regarding
other capital spending, financing sources and the effects of
competition. Such forward- looking information involves important
risks and uncertainties that could significantly affect anticipated
results in the future and, accordingly, such results may differ
from those expressed in any forward-looking statements made by or
on behalf of WPTE. These risks and uncertainties include, but are
not limited to, WPTE's significant dependence on the Travel Channel
as a source of revenue; the potential that our television
programming will fail to maintain a sufficient audience; difficulty
of predicting the growth of our online casino business, which is a
relatively new industry with an increasing number of market
entrants; the risk that competitors with greater financial
resources or marketplace presence might develop television
programming that would directly compete with WPTE's television
programming; the risk that WPTE may not be able to protect its
entertainment concepts, current and future brands and other
intellectual property rights; risks associated with future
expansion into new or complementary businesses; the termination or
impairment of WPTE's relationships with key licensing and strategic
partners; and WPTE's dependence on its senior management team. For
more information, review WPTE's filings with the Securities and
Exchange Commission. WPT ENTERPRISES, INC. Condensed Balance Sheets
April 2, 2006 (unaudited) and January 1, 2006 April 2, 2006 January
1, 2006 (In thousands) Assets Current assets: Cash and cash
equivalents $3,671 $1,737 Short-term investments 35,906 26,735
Accounts receivable, net of allowance of $58 and $74 2,442 3,091
Deferred television costs 1,998 1,520 Inventory 41 45 Other 533 665
44,591 33,793 Property and equipment, net 1,164 1,271 Restricted
cash 253 249 Investment 5,382 10,627 Other assets 304 320 $51,694
$46,260 Liabilities and Stockholders' Equity Current liabilities:
Accounts payable $835 $1,550 Accrued payroll and related 324 246
Other accrued expenses 1,392 941 Deferred revenue 9,400 5,150
11,951 7,887 Stockholders' equity: Preferred stock, $0.001 par
value, authorized 20,000 shares; none issued and outstanding -- --
Common stock, $0.001 par value, authorized 100,000 shares; 20,273
and 20,158 shares issued and outstanding 20 20 Additional paid-in
capital 37,138 34,113 Deficit (2,618) (6,208) Accumulated other
comprehensive income 5,203 10,449 Deferred compensation -- (1)
39,743 38,373 $51,694 $46,260 WPT ENTERPRISES, INC. Condensed
Statements of Earnings (Loss) Three Months ended April 2, 2006 and
April 3, 2005 (unaudited) 2006 2005 (In thousands, except per share
data) Revenues: License fees: Domestic television $3,045 $1,963
International television 907 419 Product licensing 713 1,079 4,665
3,461 Online gaming 911 -- Event hosting and sponsorship fees 797
543 Other 81 99 6,454 4,103 Cost of revenues 2,420 3,188 Gross
profit 4,034 915 Expenses: Selling and administrative 5,102 2,753
Depreciation 48 20 5,150 2,773 Loss from operations (1,116) (1,858)
Other income: Realized gain on sale of investment 5,675 -- Interest
income 325 256 Earnings (loss) before income taxes 4,884 (1,602)
Income taxes 1,294 -- Net earnings (loss) $3,590 ($1,602) Net
earnings (loss) per common share - basic $0.18 ($0.08) Net earnings
(loss) per common share - diluted $0.17 ($0.08) Weighted average
common shares outstanding - basic 20,017 19,058 Dilutive effect of
stock warrants 400 -- Dilutive effect of stock options 484 --
Weighted average common shares outstanding - diluted 20,901 19,058
http://www.newscom.com/cgi-bin/prnh/20050809/LATU100LOGO
http://photoarchive.ap.org/ DATASOURCE: WPT Enterprises, Inc.
CONTACT: Todd Steele, Chief Financial Officer of WPT Enterprises,
Inc., +1-323-330-9900, ; or Investor Relations, Andrew Greenebaum,
, or Allyson Pooley, , both of Integrated Corporate Relations,
Inc., +1-310-395-2215, for WPT Enterprises, Inc. Web site:
http://www.worldpokertour.com/
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