WPT Enterprises Reports Q1 Results

LOS ANGELES -- (PRESS RELEASE) -- WPT Enterprises, Inc. (NASDAQ: WPTE) today announced results for the first quarter ended April 3, 2005. Business highlights for the quarter included strong product licensing revenues, the Travel Channel exercising their option to broadcast the fourth season of the World Poker Tour® television show (WPT), the finalization of the Company's agreement with WagerWorks to develop a WPT-branded real-money gaming website, the signing of additional agreements that will expand distribution of the WPT to France and Italy, the announcement of Anheuser-Busch Michelob AmberBock as a sponsor for Season 3 of the WPT and the WPT's televised poker tournaments crossing the $100 million mark in prize money.

Revenues for the first quarter of 2005 were $4.1 million, equivalent to revenues for the first quarter of 2004, and reflected stronger than expected product licensing revenues. Net loss for the quarter was $1.6 million or a loss per fully diluted share of $0.08, compared to earnings of $0.8 million, or $0.05 per fully diluted share, in the 2004 period.

"Our first quarter 2005 results demonstrate the company's continued ability to execute on our strategic plan and initiatives that have been targeted to generate growth," said Steve Lipscomb, President and CEO of WPTE. "The success of the show and strength of the brand was confirmed by the Travel Channel's decision to exercise its option for the fourth season of the show. In addition, the show's strong ratings in international markets enabled us to complete distribution agreements to broadcast the show in France and Italy, two major European markets. The WPT continues to achieve worldwide recognition."

Domestic television license revenues were $2.0 million in the first quarter of 2005 compared to $3.5 million in the first quarter of 2004. The higher license revenue reported in the first quarter of 2004 reflected the delivery of nine Season 2 episodes during the period compared to five episodes of Season 3 delivered during the first quarter of 2005. The remaining eight episodes in Season 3 are expected to be delivered in the second quarter of 2005. Season 3 currently consists of 21 episodes - 16 regular events and 5 special events - while Season 2 consisted of 25 episodes including 14 regular events and 11 special events.

Additional revenues of $2.1 million in the first quarter of 2005 were derived from a combination of product licensing, international television licensing, sponsorship fees, casino host fees and merchandise sales. Additional revenues in the first quarter of 2004 were $0.6 million consisting of international television licensing, sponsorship fees, casino host fees and merchandise sales.

Cost of revenues of $3.2 million in the first quarter of 2005 were related primarily to the production of Season 3 episodes of the WPT and the production of the premiere season of the Professional Poker Tour(TM) (PPT). Approximately $1.4 million of cost of revenues in the first quarter of 2005 were related to PPT production costs as it is the company's policy to expense production costs if a firm commitment or an executed distribution agreement is not in place. First quarter 2004 cost of revenues of $2.5 million were related primarily to the production of Season 2 episodes of the World Poker Tour show. Additionally, cost of revenues in the first quarter of 2005 included approximately $0.4 million of non-cash compensation expenses related to consultant stock options compared to $0.1 million in the first quarter of 2004.

Overall gross margins were 22.3% in the first quarter of 2005 compared to 40.3% in the first quarter of 2004. The lower gross margins in the first quarter of 2005 primarily reflect the impact of PPT production costs and non-cash compensation expenses related to consultant stock options included in cost of revenues. Excluding the non-cash compensation expenses and PPT production costs expensed during the quarter, gross margin for the first quarter of 2005 was 67.3% compared to 42.6% for the corresponding period in 2004. There were no PPT production costs recognized in the first quarter of 2004.

Selling and administrative expenses were $2.8 million in the first quarter of 2005 reflecting increased headcount costs, product licensing commissions and professional service fees. Selling and administrative expenses in the first quarter of 2004 were $0.8 million, primarily consisting of headcount costs and professional service fees.

At April 3, 2005, the Company had no debt, and total cash and short-term investments available was approximately $31.6 million.

Revenue in the second quarter of 2005 is forecast to range from $5.5 - 6.0 million due to a higher number of Season 3 episodes scheduled to be delivered during the period.

"I am encouraged by the overall growth of our franchise in general as indicated by the increase in total players and prize pools in Season 3 of the WPT," said Mr. Lipscomb. "We are also excited by growth trends in the online gaming space and believe that the second quarter deployment of wptonline.com, our online gaming website, will further diversify our revenue base as well as create additional opportunities in various business segments. We continue to make progress on the strategic objectives that were set for 2005 to enhance shareholder value."