WPT Enterprises, Inc. Reports Fourth Quarter and Full Year Fiscal 2007 Financial Results

Business Wire, March 6, 2008

LOS ANGELES -- WPT Enterprises, Inc. (NASDAQ:WPTE) today announced financial results for the fourth quarter and year ended December 30, 2007. Business highlights for the quarter and through the date of this release included the delivery of seven episodes of Season VI of the World Poker Tour[R] (WPT) television series; continued progress in the development of the WPT China National Traktor Poker Tour[TM]; execution of an agreement with Cryptologic to launch the Full Casino by June of this year, develop Spanish and German language sites, and extend the master agreement by one year; and the recent launch of ClubWPT, an innovative subscription-based online poker club targeted to the estimated 60 million poker players in the United States.

Financial Results. Revenues decreased 14% in the fourth quarter of 2007 to $5.1 million, compared to $5.9 million in the same period in 2006. The decrease was primarily due to the delivery of five episodes of Season VI of the WPT in the fourth quarter of 2007 versus the delivery of nine episodes in the fourth quarter of 2006, which was comprised of four episodes of Season V of the WPT and five episodes of Season I of the Professional Poker Tour[R] (PPT) television series. The decrease in revenue in the fourth quarter of 2007 was also partially due to the economic terms of the agreement with GSN. The lower revenues were partially offset by increased sponsorship fees of approximately $1.6 million due primarily to international television sponsorship revenues that did not exist in the same period of 2006.

Cost of revenues decreased to $1.6 million in the fourth quarter of 2007 from $2.0 million in the fourth quarter of 2006, due primarily to the delivery of fewer television episodes, as mentioned above. Selling, general and administrative expenses increased to $5.8 million in the fourth quarter of 2007, compared to $4.6 million in the fourth quarter of 2006. The increase was primarily due to launching Season I of the WPT China National Traktor Poker Tour, as well as higher costs associated with preparing for the launch of ClubWPT.com. The Company reported a net loss for the quarter of $1.8 million, or $0.09 per fully-diluted share, compared to a net loss of $1.1 million, or $0.05 per fully-diluted share, in the 2006 period.

For the year ended December 30, 2007, revenues were $21.7 million, compared to $29.3 million in the year ended December 31, 2006. The decrease was primarily a result of the delivery of seventeen episodes of Season V and five episodes of Season VI of the WPT television series in 2007 (22 total episodes) versus the delivery of sixteen episodes of Season IV, five episodes of Season V of the WPT and twenty-four episodes of Season I of the PPT television series in 2006 (45 total episodes). Although there was an increase in international television distribution agreements, international television licensing revenues decreased to $2.3 million in 2007 from $3.0 million in 2006 as a result of lower television licensing fees per territory. The decreased international television licensing revenues were offset by higher event hosting and sponsorship revenues of $4.8 million in 2007, compared to $2.6 million in 2006, due primarily to international television sponsorship revenues that did not exist in the prior year. Online gaming revenues decreased to $1.2 million in 2007 from $3.2 million in 2006, due primarily to lower levels of player activity versus the prior year, as well as the termination of operations on the Wagerworks network while the Company transitioned its online gaming operations to Cryptologic. The Company's net loss for the year ended December 30, 2007, was $9.6 million, or $0.47 per fully-diluted share, compared to net earnings of $7.8 million, or $0.38 per fully-diluted share, in the prior fiscal year. The primary reasons for the decrease in earnings year-over-year were the decrease in revenues in 2007, a $2.3 million charge associated with the write-off of online gaming software and other assets in 2007, a $10.2 million realized gain (pre-tax) on the sale of PokerTek common stock in the 2006 period, and increased selling, general and administrative expenses (SG&A) of $4.1 million in 2007. The SG&A increase is due to developing the online gaming site prior to entering into an agreement with Cryptologic, launching the WPT China National Traktor Poker Tour and expanding the non-gaming aspects of WorldPokerTour.com, as well as launching ClubWPT.com.

At December 30, 2007, the Company had no debt, and total cash, cash equivalents and investments in marketable securities of approximately $31.0 million, which included $7.8 million of auction rate securities (ARS). The Company currently holds approximately $12.4 million of ARS. Historically, these types of ARS investments have been liquid with interest rates resetting every 7 to 35 days by an auction process. As a result of the recent liquidity issues experienced in the global credit and capital markets, in February and March 2008, auctions for ARS investments held by the Company failed. The ARS continue to pay interest in accordance with the terms of the underlying security; however, liquidity will be limited until there is a successful auction or until such time as other markets for these ARS investments develop. The Company holds ARS with underlying collateral of student loans that had AAA or Aaa ratings at the time of purchase and maintain these ratings through the date of this release. The majority of these ARS are guaranteed under the Federal Family Education Loan Program (FFELP). The Company believes that the credit quality of these assets has not been impacted; therefore, no impairment charges have been recorded to date. The Company will continue to monitor the credit quality of these investments to determine if impairment charges are required. The Company does not believe that the lack of liquidity relating to ARS will have an impact on its ability to fund its operations during the next twelve months.