WPT Enterprises, Inc. Announces Third Quarter 2005 Financial Results

WPT Enterprises, Inc. Announces Third Quarter 2005 Financial Results

LOS ANGELES, Nov. 8 /PRNewswire-FirstCall/ -- WPT Enterprises, Inc. (NASDAQ:WPTE) today announced results for the three months ended October 2, 2005. Business highlights for the quarter included strong product licensing revenues, continued expansion of the international distribution of our television show, and the commencement of operations of our online gaming site, www.WPTonline.com.

Revenues for the third quarter of 2005 were $2.1 million, compared to $3.0 million in the 2004 period, a 28.5% decrease. The net loss for the quarter was $1.6 million or a loss per fully diluted share of $0.08, compared to a net loss of $0.5 million, or $0.03 per fully diluted share, in the 2004 period.

"The third quarter represented continued progress for the World Poker Tour brand," said Steve Lipscomb, President and CEO of WPT Enterprises. "We began to deliver Season Four of our highly successful television show and we saw very strong product licensing revenues. Additionally we further expanded international distribution of our show and commenced operations of our online gaming business. As we look ahead to 2006, we are confident in our ability to continue to execute our strategic plan successfully."

Domestic television license revenues were $0.4 million in the third quarter of 2005, a decrease from $2.4 million in the third quarter of 2004. The decline was due to the delivery of only one Season Four episode during the third quarter of 2005 compared to six episodes of Season Two delivered during the comparable prior year period. Product licensing revenues were $0.9 million in the third quarter of 2005 compared to $0.2 million in the third quarter of 2004 due to an increase in the number of licensees of the World Poker Tour brand and continued growth from our existing licensees. International television licensing revenues increased to $0.4 million in the third quarter of 2005 from $0.3 million in the third quarter of 2004. The increase was attributable to additional distribution agreements in place for 2005.

Cost of revenues decreased to $0.6 million in the third quarter of 2005 from $1.9 million in the third quarter of 2004 primarily due to costs associated with the delivery of fewer episodes of the World Poker Tour television show. Production costs of approximately $0.2 million attributable to the premiere season of the Professional Poker Tour(TM) (PPT) were expensed during the quarter in accordance with WPTE's policy to expense production costs if a firm commitment or an executed distribution agreement is not in place. Additionally, cost of revenues in the third quarter of 2005 included approximately $0.2 million of non-cash compensation benefits related to consultant stock option awards compared to $0.3 million of non-cash compensation expense related to consultant stock options in the comparable prior year period.

Overall gross margins were 73.6% in the third quarter of 2005 compared to 34.7% in the third quarter of 2004. The higher gross margins in the third quarter of 2005 primarily result from the reduction of delivery of television episodes in the quarter, and increased product licensing revenues. Selling and administrative expenses increased to $3.3 million in the third quarter of 2005 compared to $1.5 million in the third quarter of 2004. This increase is primarily due to marketing and operating costs associated with the Company's new internet gaming venture, WPTonline.com, as well as additional headcount costs, product licensing commissions, and legal and independent accountants' fees incurred during the 2005 period associated with business development, increased product licensing revenues and, growth and regulatory compliance costs related to being a reporting public company.

At October 2, 2005, WPTE had no debt, and cash, cash equivalents and short-term investments totaling $30.5 million.

Revenues in the fourth quarter of 2005 are forecast to range from $4.5 - $5.0 million. This is attributable to an expected decrease in WPT episodes delivered from eight in the fourth quarter of 2004 to four in the fourth quarter of 2005. The remaining 16 episodes of Season Four are expected to be delivered during the first and second quarters of 2006. Additionally, WPTE does not expect to realize revenues associated with the PPT in the fourth quarter of 2005 as it does not expect to have a distribution agreement in place. The Company also expects to continue to increase its sales and marketing expenses related to WPTonline.com in the fourth quarter of 2005.

About WPT Enterprises, Inc.

WPT Enterprises, Inc. (NASDAQ:WPTE) creates internationally branded entertainment and consumer products driven by the development, production, and marketing of televised programming based on gaming themes. WPTE developed and owns the World Poker Tour(R), a television show based on a series of high-stakes poker tournaments that airs in the United States on the Travel Channel and in more than 120 territories globally. WPT Enterprises 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. For show information, tools for improving poker play, and other WPT news, fans may log on to www.worldpokertour.com. The company is also engaged in the sale of corporate sponsorships. WPT Enterprises, Inc. is a majority owned subsidiary of Lakes Entertainment, Inc., a publicly-held company. Photos and media information can be found online at: www.worldpokertour.com. (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 uncertainty of the regulatory environment for online gaming, which may affect our ability to pursue our online gaming business fully or cause our activities to be found to be in violation of applicable United States or foreign regulations; 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.

Company Contact: Todd Steele, Chief Financial Officer
323-330-9900
tsteele@worldpokertour.com

Investor Relations Contact: Andrew Greenebaum / Allyson Pooley
Integrated Corporate Relations, Inc.
310-395-2215
agreenebaum@icrinc.com / apooley@icrinc.com

Financial Tables to follow

WPT ENTERPRISES, INC.
Condensed Balance Sheets
October 2, 2005 (unaudited) and January 2, 2005

October 2, 2005 January 2, 2005
(In thousands)
Assets
Current assets:
Cash and cash equivalents $3,015 $4,525
Short-term investments 27,471 27,755
Accounts receivable, net of
allowance 1,480 1,950
Deferred television costs 1,212 917
Deferred tax assets 95 136
Inventory 51 52
Other 944 624
34,268 35,959

Property and equipment, net 1,361 703
Restricted cash 249 244
Other assets 446 207
$36,324 $37,113

Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable $83 $17
Accrued payroll and related 242 292
Other accrued expenses 1,953 1,321
Due to parent 2 16
Deferred revenue 4,764 3,280
7,044 4,926

Common stock subject to repurchase -- 618

Stockholders' equity:
Preferred stock, par value of
$0.001
Authorized 20,000 shares; none
issued and outstanding -- --
Common stock, $0.001 par value
authorized 100,000 shares;
20,158 and 19,480 shares issued
and outstanding 20 19
Additional paid-in capital 34,128 32,767
Deficit (4,787) (1,205)
Accumulated other comprehensive
loss (79) (6)
Deferred compensation (2) (6)
29,280 31,569
$36,324 $37,113

WPT ENTERPRISES, INC.
Condensed Statements of Loss
Three months ended October 2, 2005 and October 3, 2004
(unaudited)

2005 2004
(In thousands,
except per share data)
Revenues:
License fees:
Domestic television $442 $2,350
International television 395 345
Product licensing 933 159
1,770 2,854

Online gaming 170 --

Event hosting and sponsorship fees 73 92
Other 115 28
2,128 2,974

Cost of revenues 561 1,942

Gross profit 1,567 1,032
Expenses:
Selling and administrative 3,319 1,508
Depreciation 56 44
3,375 1,552

Loss from operations (1,808) (520)

Other income (expense):
Interest income 254 56
Interest expense -- (4)

Net loss ($1,554) ($468)

Net loss per common share - basic ($0.08) ($0.03)

Net loss per common share - diluted ($0.08) ($0.03)

Weighted average common shares
outstanding - basic 19,721 16,748

Dilutive effect of restricted stock -- --
Dilutive effect of stock options -- --
Weighted average common shares
outstanding - diluted 19,721 16,748

WPT ENTERPRISES, INC.
Condensed Statements of (Loss) Earnings
Nine months ended October 2, 2005 and October 3, 2004
(unaudited)

2005 2004
(In thousands,
except per share data)
Revenues:
License fees:
Domestic television $5,993 $9,545
International television 1,456 510
Product licensing 3,125 212
10,574 10,267

Online gaming 170 --

Event hosting and sponsorship fees 1,785 1,360
Other 301 205
12,830 11,832

Cost of revenues 8,125 7,059

Gross profit 4,705 4,773
Expenses:
Selling and administrative 8,908 3,473
Depreciation 113 111
9,021 3,584

Earnings (loss) from operations (4,316) 1,189

Other income (expense):
Interest income 734 56
Interest expense -- (34)

Net earnings (loss) ($3,582) $1,211

Net earnings (loss) per common share -
basic ($0.18) $0.08

Net earnings (loss) per common share -
diluted ($0.18) $0.07

Weighted average common shares
outstanding - basic 19,525 14,868

Dilutive effect of restricted stock -- 1,333
Dilutive effect of stock options -- 684
Dilutive effect of common stock
subject to repurchase -- 15
Weighted average common shares
outstanding - diluted 19,525 16,900

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Source: WPT Enterprises, Inc.

CONTACT: Todd Steele, Chief Financial Officer of WPT Enterprises, Inc.,
+1-323-330-9900, tsteele@worldpokertour.com; or Investors, Andrew Greenebaum,
agreenebaum@icrinc.com, or Allyson Pooley, apooley@icrinc.com, both of
Integrated Corporate Relations, Inc., +1-310-395-2215, for WPT Enterprises,
Inc.

Web site: http://www.worldpokertour.com/

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