Mikohn announces layoffs, will close Las Vegas plant

Thursday, Aug. 8, 2002 | 10:48 a.m.

Two weeks after reporting disappointing financial results and receiving downgrades from two prominent debt rating agencies, Las Vegas-based slot machine manufacturer Mikohn Gaming Corp. announced plans Wednesday to lay off about 100 employees across the country and move its remaining Las Vegas manufacturing operations to a central plant in Utah.

About 60 of those employees work in Las Vegas at the company's headquarters or at a small manufacturing facility that makes interior signs for casinos and the signs' electronic components.

That plant, a small component of the company's operations, will move to the company's manufacturing hub in Hurricane, Utah, before the end of the year.

The plant was built about two years ago. Whether those employees will choose to relocate to Hurricane, about 130 miles from Las Vegas, hasn't been determined, the company said. The changes are major component of a sweeping restructuring plan to cut costs and turn around the troubled company, which has been hurt by delays in game launches and a slowdown in demand for leased machines by casino customers.

The company expects to save about $5 million to $7 million from workforce reductions, Mikohn President Russ McMeekin said.

Last month, Mikohn reported a net loss of $5.8 million for the second quarter, compared with earnings of $1.8 million for the same period last year. Moody's Investors Service this month downgraded ratings on two of the company's debt issues and placed a third on review for a possible downgrade. Standard & Poor's also downgraded the company's corporate credit and senior secured debt ratings.

Wall Street analysts have been less than impressed with the company. Mikohn has missed financial targets and offered a performance outlook that experts have criticized as overly optimistic.

McMeekin, a former wireless software company executive, joined Mikohn as president last month to fill a post that had remained empty for several years. Chief Financial Officer Don Stevens will retire Aug. 13, with a replacement yet to be named. The company's vice president of operations and its director of marketing left the company in recent weeks.

The company has not named replacements. McMeekin has indicated he is reviewing all layers of management at the company in the restructuring effort.

Mikohn employs about 700 people worldwide, with about 600 of its workforce in the United States.

Company shares fell sharply on the news Wednesday but rose about 6 percent this morning, to $1.44. Mikohn is trading near its 52-week low of $1.28. The company hit a high of around $10 in late January.