XML 50 R8.htm IDEA: XBRL DOCUMENT
v2.4.0.8

Note 2. Summary of Significant Accounting Policies | 12 Months Ended
--- | ---
Dec. 29, 2013
Accounting Policies [Abstract] |
Significant Accounting Policies [Text Block] | 2. Summary of Significant Accounting Policies Use of Estimates Preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates that affect the reported amounts of assets and liabilities and disclosures at the date of the financial statements and the reported amounts of net earnings during the reporting periods. Actual results could differ from those estimates. Significant estimates that are particularly susceptible to change materially within the next year relate to fair value measurements, income tax liabilities and deferred income tax asset valuation allowances. Year End The Company has a 52- or 53-week accounting period ending on the Sunday closest to December 31 of each year. The Company’s fiscal years for the periods shown on the accompanying consolidated statements of operations ended on December 29, 2013 (“fiscal 2013”) and December 30, 2012 (“fiscal 2012”). Basis of Presentation The accompanying consolidated financial statements include the accounts of Lakes and its subsidiaries. All material intercompany accounts and transactions have been eliminated in consolidation. Investments in unconsolidated investees, which are 20% or less owned and the Company does not have the ability to significantly influence the operating or financial decisions of the entity, are accounted for under the cost method. See note 10, Investment in Rock Ohio Ventures, LLC and note 11, Investment in Dania Entertainment Holdings, LLC. Acquisition Accounting On August 3, 2012, Lakes acquired the assets of Rocky Gap for $6.8 million paid with cash on hand. Lakes completed its valuation procedures during fiscal 2012, and the resulting fair value of the acquired assets and assumed liabilities was recorded based upon the valuation of the business enterprise and Rocky Gap's tangible and intangible assets. Enterprise value allocation methodology requires management to make assumptions and apply judgment to estimate the fair value of acquired assets and assumed liabilities. If estimates or assumptions used to complete the enterprise valuation and estimates of the fair value of the acquired assets and assumed liabilities significantly differed from assumptions made, the resulting difference could materially affect the fair value of net assets. The calculation of the fair value of the tangible assets, including the building, site improvements, and furniture, fixtures and equipment, utilized the cost approach, which was based on replacement cost of the assets. The calculation of the fair value of the identified intangible assets was determined using cash flow models following the income approach. The calculation of the fair value of the advance bookings was determined using an excess earnings method, which is an application of the income approach and computes the present value of cash flows attributable to the associated future income stream. The determination of the fair value of memberships utilized the income approach and included projections of membership revenue, estimates of operating expenses associated with the memberships and a charge for the contributory assets. The net present value of the membership income was then calculated using a selected discount rate. As a result of the business combination and fair value analysis, Lakes recorded $0.2 million for advance bookings and $0.4 million for memberships. Goodwill or a gain from a bargain purchase was not recorded as the fair value of the acquired assets and assumed liabilities approximated the purchase price. The application of the acquisition method of accounting guidance had the following effects on Lakes’ consolidated financial statements:
| ● | Lakes measured the fair value of identifiable assets and liabilities in accordance with required valuation recognition and measurement provisions; the application of such provisions resulted in recording the fair value of the assets acquired of $7.0 million and the fair value of the liabilities assumed of $0.2 million in the Company’s consolidated balance sheet as of August 3, 2012. In total, the assets of Rocky Gap acquired represented approximately 6% of the Company’s consolidated total assets as of December 30, 2012.
| ● | Lakes has reported the operating results of Rocky Gap in its consolidated statements of operations and cash flows for the period from August 3, 2012 through December 30, 2012. During this period, Lakes recorded $3.2 million in revenue and $(0.8) million in net loss from Rocky Gap’s operations.
Cash and Cash Equivalents Cash and cash equivalents consist of highly-liquid investments with original maturities of three months or less. Although these balances may at times exceed the federal insured deposit limit, the Company believes such risk is mitigated by the quality of the institution holding such deposit. Short-Term Investments and Concentrations of Credit Risk Short-term investments consist of commercial paper and corporate bonds which are classified as available-for-sale securities and are valued at current market value, with the resulting unrealized gains and losses, if any, excluded from earnings and reported, net of tax, as a separate component of shareholders' equity until realized. There were no net unrealized gains or losses as of December 29, 2013. All of the Company’s investments carry a rating by one or more of the nationally recognized statistical rating organizations. Any change in such rating agencies' approach to evaluating credit and assigning an opinion could negatively impact the fair value of the Company’s investments. Any impairment loss to reduce an investment's carrying amount to its fair market value is recognized in income when a decline in the fair market value of an individual security below its cost or carrying value is determined to be other than temporary. Property and Equipment Property and equipment is stated at cost less accumulated depreciation. Depreciation of property and equipment is computed using the straight-line method over the following estimated useful lives:
Building and site improvements (years) | 5 | - | 40
Furniture and equipment (years) | 3 | - | 15
Long-Term Assets Related to Indian Casino Projects Lakes had $46.2 million of long-term assets related to Indian casino projects recorded on its consolidated balance sheet as of December 30, 2012. Due to the August 2013 Debt Termination Agreement, and related Debt Payment and termination of the management agreement between Lakes and the Shingle Springs Tribe, there were no long-term assets related to Indian casino projects as of December 29, 2013. Notes Receivable When evaluating opportunities for potential Indian-owned casino development projects, Lakes has formal procedures that it follows before entering into agreements to provide financial support for the development of these projects. Lakes determines whether there is probable future economic benefit prior to recording any asset related to the Indian casino project. Lakes’ management initially evaluates several factors involving critical milestones that affect the probability of developing and operating a casino. Lakes had no development projects with Indian tribes as of December 29, 2013. Lakes accounted for its notes receivable from the tribes as in-substance structured notes. Under their terms, the notes did not become due and payable unless the projects were completed and operational, and distributable profits were available from their operations. However, in the event its development activity was terminated prior to completion, Lakes generally retained the right to collect in the event of completion by another developer. Because the stated rate of the notes receivable alone were not commensurate with the risk inherent in these projects (at least prior to commencement of operations), the estimated fair value of the notes receivable was generally less than the amount advanced. At the date of each advance, the difference between the estimated fair value of the note receivable and the actual amount advanced was recorded as an intangible asset, and the two assets were accounted for separately. Subsequent to its initial recording at estimated fair value, the note receivable portion of the advance was adjusted to its current estimated fair value at each balance sheet date until the casino opens using then current assumptions including casino opening dates, typical market discount rates, pre- and post-opening date interest rates, probabilities of the projects opening and financial models prepared by management. The notes receivable were not adjusted to a fair value estimate that exceeded the face value of the note plus accrued interest, if any. Due to uncertainties surrounding the projects, no interest income was recognized during the development period, but changes in estimated fair value of the notes receivable still held as of the balance sheet date were recorded as unrealized gains or losses in Lakes’ consolidated statement of operations. Upon opening of the casino, any difference between the then estimated fair value of the notes receivable and the amount contractually due under the notes was amortized into income using the effective interest method over the remaining term of the note. Notes receivable were stated at the amount of unpaid principal and were net of unearned discount and, if applicable, an allowance for impaired notes receivable. Lakes monitored the credit quality of notes receivable through reviews of the casino’s financial position, operating results and projected operating results that were available to Lakes in its capacity as manager of the casino. In addition, Lakes continuously monitored the economic, political, regulatory and competitive conditions that could have adversely impacted casinos’ projected operating results. Historically, notes receivable for open casinos were periodically evaluated for impairment pursuant to Accounting Standards Codification (“ASC”) 310, Receivables (“ASC 310”). Lakes considered a note receivable to be impaired when, based on current information and events, it was determined that Lakes would not be able to collect all amounts due according to the terms of the note receivable agreement. Subsequent to the initial impairment evaluation, Lakes continued to monitor the note receivable for any changes in expected cash flows and recognized those changes in accordance with ASC 310. Impairment was measured based on the present value of expected future cash flows discounted at the note receivable’s effective interest rate. Interest income for impaired notes receivable were accrued on the net carrying amount of the impaired note receivable under the effective interest method with significant changes to expected cash flows reflected in the impairment charge on notes receivable. Any allowance for impaired notes receivable was established through a charge to expense. Any note receivable principal considered to be uncollectible by management was charged against the allowance for impaired notes receivable. Lakes classified principal amounts expected to be received within the next fiscal year, if any, as current portion of notes receivable from casino projects on the consolidated balance sheets. Intangible Assets Related to Indian Casino Projects Historically, intangible assets related to the acquisition of the management, development, consulting or financing contracts were periodically evaluated for impairment based on the estimated cash flows from the respective contract on an undiscounted basis. In the event the carrying value of the intangible assets, in combination with the carrying value of other assets associated with the Indian casino projects described below, exceeded the undiscounted cash flow, an impairment charge was recorded. Such an impairment charge was measured based on the difference between the fair value and carrying value of the assets. Lakes amortized the intangible assets related to the acquisition of the management, development, consulting or financing contracts under the straight-line method over the lives of the contracts commencing when the related casino opened. In addition to the intangible asset associated with the cash advances to tribes described above, these assets included actual costs incurred to acquire Lakes’ interest in the projects from third parties. Management Fees Receivable and Other Other assets have historically included deferred management fees and interest due from the Shingle Springs Tribe and amounts due from related parties that are directly related to the development and opening of Lakes’ Indian casino projects. Investments in Unconsolidated Investees Investments in an entity where the Company owns 20% or less of the voting stock of the entity and does not exercise significant influence over operating and financial policies of the entity are accounted for using the cost method. The Company has a policy in place to review its investments at least annually, to evaluate the accounting method and carrying value of its investments in unconsolidated investees. The Company's cost method investments are evaluated, on at least a quarterly basis, for potential other-than-temporary impairment, or when an event or change in circumstances has occurred that may have a significant adverse effect on the fair value of the investments. Lakes monitors the investments for impairment by considering all information available to the Company including the economic environment of the markets served by the properties; market conditions including existing and potential future competition; recent or expected changes in the regulatory environment; operational performance and financial results; known changes in the objectives of the properties’ management; known or expected changes in ownership; and any other known significant factors relating to the businesses underlying the investments. If the Company believes that the carrying value of an investment is in excess of its estimated fair value, it is the Company’s policy to record an impairment charge to adjust the carrying value to the estimated fair value, if the impairment is considered other-than-temporary. Gaming License The Company’s gaming license represents the right to conduct gaming in the State of Maryland. This intangible asset is subject to amortization as it has a definite life of 15 years. Amortization of the gaming license began on the date the gaming facility opened for public play, which was May 22, 2013. Lakes evaluates this intangible asset for impairment on at least a quarterly basis. Land Held for Development Included in land held for development is undeveloped land in California related to the Company’s previous involvement in a potential casino project with the Jamul Indian Village (“Jamul Tribe”) and undeveloped land in Oklahoma related to its previous involvement in a potential casino project with the Iowa Tribe of Oklahoma. Lakes evaluates these assets for impairment whenever events or changes in circumstances indicate that the carrying value of such assets may not be recoverable. Rewards Club Program Lakes has established a Rewards Club promotional program at Rocky Gap to encourage repeat business from frequent customers and patrons. Members earn points based on gaming activity and amounts spent on the purchase of rooms, food, beverage and resort activities. Such points can be redeemed for complimentary slot play and free goods and services at Rocky Gap’s hotel, restaurants, spa and golf course. Lakes records points redeemed for complimentary slot play as a reduction to gaming revenue and points redeemed for free goods and services as promotional allowances. The Rewards Club point accrual is included in current liabilities on Lakes’ consolidated balance sheet. Revenue Recognition and Promotional Allowances Revenue from the management, development, financing of and consulting with Indian-owned casino gaming facilities is recognized as it is earned pursuant to each respective agreement. Food, beverage, and retail revenues are recorded at the time of sale. Room revenue is recorded at the time of occupancy. Sales taxes and surcharges collected from guests and remitted to governmental authorities are presented on a net basis. Accounts receivable deemed uncollectible are charged off through a provision for uncollectible accounts. No material amounts were deemed uncollectible during fiscal 2013 and fiscal 2012. Gaming revenue, which is defined as the difference between gaming wins and losses, is recognized as wins and losses occur from gaming activities. The retail value of rooms, food and beverage, and other services furnished to guests without charge is included in gross revenues and then deducted as a promotional allowance. The estimated cost of providing such promotional allowances is included in gaming expenses. Gaming Taxes Rocky Gap is subject to gaming taxes based on gross gaming revenues and also pays an annual flat tax based on the number of table games and VLTs in operation during the year. These gaming taxes are recorded as gaming expenses in the consolidated statements of operations. Total gaming taxes were $10.7 million for the twelve months ended December 29, 2013. There were no gaming taxes for the twelve months ended December 30, 2012. Advertising Expenses The Company expenses advertising costs as incurred. Advertising expense, which is included in general and administrative expenses, was $2.0 million and $0.1 million for fiscal 2013 and fiscal 2012, respectively. Share-Based Compensation Expense Lakes has various share-based compensation programs, which provide for equity awards including stock options and restricted stock. Lakes uses the straight-line method to recognize compensation expense associated with share-based awards based on the fair value on the date of grant, net of the estimated forfeiture rate, if any. Expense is recognized over the requisite service period related to each award, which is the period between the grant date and the award’s stated vesting term. The fair value of stock options is estimated using the Black-Scholes option pricing model. All of Lakes’ stock compensation expense is recorded in selling, general and administrative expenses in the consolidated statements of operations. See note 16, Share-Based Compensation, for additional discussion. Income Taxes The determination of the Company’s income tax-related account balances requires the exercise of significant judgment by management. Accordingly, the Company determines deferred tax assets and liabilities based upon the difference between the financial statement and tax bases of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to affect taxable income. Management assesses the likelihood that deferred tax assets will be recovered from future taxable income and establishes a valuation allowance when management believes recovery is not likely. The Company records estimated penalties and interest related to income tax matters, including uncertain tax positions, if any, as a component of income tax expense. Litigation Costs The Company does not accrue for future litigation costs, if any, to be incurred in connection with outstanding litigation and other dispute matters but rather records such costs when the legal and other services are rendered. New Accounting Standards In July 2013, the FASB issued Accounting Standards Update “(ASU”) No. 2013-11, Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists. ASU 2013-11 requires entities to present an unrecognized tax benefit as a reduction of a deferred tax asset for a net operating loss (“NOL”) or tax credit carryforward whenever the NOL or tax credit carryforward would be available to reduce the additional taxable income or tax due if the tax position is disallowed. This ASU requires entities to assess whether to net the unrecognized tax benefit with a deferred tax asset as of the reporting date. ASU 2013-11 will be effective for the Company’s first quarter of 2014. Lakes does not expect the adoption of ASU 2013-11 to have an impact on its consolidated financial statements.

X
- Details
Name: | us-gaap_AccountingPoliciesAbstract
Namespace Prefix: | us-gaap_
Data Type: | xbrli:stringItemType
Balance Type: | na
Period Type: | duration

X
- Definition The entire disclosure for all significant accounting policies of the reporting entity. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 235 -SubTopic 10 -Section 50 -Paragraph 3 -URI http://asc.fasb.org/extlink&oid=6367646&loc=d3e18780-107790 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 235 -SubTopic 10 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=6367646&loc=d3e18726-107790 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 235 -SubTopic 10 -Section 50 -Paragraph 6 -URI http://asc.fasb.org/extlink&oid=6367646&loc=d3e18861-107790 Reference 4: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 235 -SubTopic 10 -Section 50 -Paragraph 2 -URI http://asc.fasb.org/extlink&oid=6367646&loc=d3e18743-107790 Reference 5: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 235 -SubTopic 10 -Section 50 -Paragraph 5 -URI http://asc.fasb.org/extlink&oid=6367646&loc=d3e18854-107790 + Details
Name: | us-gaap_SignificantAccountingPoliciesTextBlock
Namespace Prefix: | us-gaap_
Data Type: | nonnum:textBlockItemType
Balance Type: | na
Period Type: | duration