Mikohn slices deck, bets on comeback

Mar 25, 2003 5:51 AM

The shakeups keep coming at Mikohn Gaming Corp., where executive longevity is about as secure as the sagging stock prices.

The latest departure came Friday, when the company announced the retirement of David J. Thompson from the board of directors. The 58-year-old Thompson, whose salary was pegged at $608,000 in 2001, was not available for comment and terms of his retirement package were not disclosed.

When asked for details, spokeswoman Sharon Walters responded, "The [news] release pretty much says it all." The release was two sentences long.

A week earlier, the Las Vegas game maker reported more sluggish earnings for the fourth quarter, blaming part of the lackluster results on ongoing "restructuring." Some $4.8 million of those $28 million charges were attributed to severance agreements.

That same week, Mikohn announced the retirement of two other directors, Dennis Garcia and Bruce Peterson. Garcia, who earned $302,000 in 2001, remains with the company in his current role as a member of Mikohn’s sales management team. Like Thompson’s, both retirements were effective immediately.

Peter Boynton, chairman of the audit committee, will assume Thompson’s role as chairman, subject to confirmation at Mikohn’s annual meeting set for May 13.

Amidst the departures, the company reported a net loss of $37.9 million, or $2.95 per share in 2002, compared with a net loss of $9.7 million, or $0.83 per share in 2001.

Mikohn’s shares closed at $3.20 per share last week, well off the 52-week high of $7.20 and $2.80 below the consensus estimate for the year.

Nevertheless, CFO John Garner, who took over last year for Don Stevens, remains upbeat.

"Our restructuring initiatives and cost reduction strategies implemented in the third quarter were the impetus for our improved fourth quarter results and will continue to benefit us in the future.

"We are pleased with our cash position of approximately $16.3 million at Dec. 31, 2002. We expect to see benefits from our slot machine and table game service outsourcing agreement with Aristocrat in the second half of 2003, and anticipate additional cost savings on a full-year basis of approximately $2 million."

Russ McMeekin, whom Thompson hired as president and CEO last summer to launch Mikohn’s cost-cutting campaign, called the last half of 2002 "both exciting and rewarding."

"Our revised business model, which emphasizes leveraging our unique intellectual property, has set the stage for continued operational and financial improvements,’’ he said.

"Rather than expending our valuable financial and technical resources on the procurement, maintenance and handling of slot machines, we are now able to focus our efforts and talent on exciting new game content."