EXHIBIT 99.6
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
We have audited in accordance with auditing standards generally accepted in the
United States, the consolidated financial statements included in Mikohn Gaming
Corporation's Form 10-K/A incorporated by reference in this S-4/A, and have
issued our report thereon dated March 22, 2001 (except as discussed in Notes 10
and 13 as to which the date is March 27, 2001 and Note 20 as to which the date
is April 5, 2001). Our audit was made for the purpose of forming an opinion on
those statements taken as a whole. The condensed consolidating financial
statements as of December 31, 2000 and for the year then ended are the
responsibility of the Company's management and are presented for purposes of
complying with Securities and Exchange Commission Rule 3-10 of Regulation S-X.
These condensed consolidating financial statements have been subjected to the
auditing procedures applied in our audit of the basic financial statements and,
in our opinion, are fairly stated in all material respects in relation to the
basic financial statements taken as a whole.
ARTHUR ANDERSEN LLP
December 12, 2001
(only as it relates to the condensed
consolidating financial statements as of
and for the year ended December 31, 2000)
INDEPENDENT AUDITORS' REPORT
Mikohn Gaming Corporation:
We have audited the consolidated balance sheet of Mikohn Gaming Corporation and
Subsidiaries (the "Company") as of December 31, 1999, and the related
consolidated statements of operations, comprehensive income (loss), changes in
stockholders' equity and cash flows for each of the two years in the period
ended December 31, 1999 (incorporated by reference in Amendment No. 1 to
Registration Statement No. 333-69980 on Form S-4). These financial statements
are the responsibility of the Company's management. Our responsibility is to
express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of the Company as of
December 31, 1999, and the results of its operations and its cash flows for each
of the two years in the period ended December 31, 1999 in conformity with
accounting principles generally accepted in the United States of America.
Our audits were conducted for the purpose of forming an opinion on the basic
consolidated financial statements taken as a whole. The consolidating condensed
financial statements as of December 31, 1999 and for each of the two years in
the period then ended included in Exhibit 99.6 to Amendment No. 1 to
Registration Statement No. 333-69980 on Form S-4 are presented for the purpose
of additional analysis of the basic consolidated financial statements rather
than to present the financial position, results of operations, and cash flows of
the individual companies, and are not a required part of the basic consolidated
financial statements. These consolidating condensed financial statements are
the responsibility of the Company's management. Such supplemental consolidating
information as of December 31, 1999 and for each of the two years in the period
then ended has been subjected to the auditing procedures applied in our audit of
the basic consolidated financial statements and, in our opinion, is fairly
stated in all material respects when considered in relation to the basic
consolidated financial statements of the Company taken as a whole.
DELOITTE & TOUCHE LLP
Las Vegas, Nevada
February 26, 2000
(December 12, 2001 as to the consolidating
condensed financial statements)
CONDENSED CONSOLIDATING FINANCIAL STATEMENTS
The Company's domestic subsidiaries are 100% owned and have provided
full and unconditional guarantees on a joint and several basis on the payment of
the Senior Secured Notes. The financial statements for the guarantor
subsidiaries follow:
MIKOHN GAMING CORPORATION
CONDENSED CONSOLIDATING BALANCE SHEETS
(Amounts in thousands) DECEMBER 31, 2000
--------------------------------------------------------------------------------------
NON-
GUARANTOR GUARANTOR
PARENT SUBSIDIARIES SUBSIDIARIES ELIMINATIONS CONSOLIDATED
--------- ------------ ------------ ------------ ------------
ASSETS
Current assets:
Cash $ 540 $ (375) $ 297 $ - $ 462
Accounts receivable, net 11,601 7,332 2,262 21,195
Inventories, net 9,641 12,515 1,726 23,882
Other current assets 7,375 7,124 195 14,694
--------- ------------ ------------ ------------ ------------
Total current assets 29,157 26,596 4,480 60,233
Property and equipment, net 11,156 14,112 547 25,815
Intangible assets 62,817 7,009 69,826
Investments in subsidiaries 8,984 (8,584) 400
Other assets 8,921 1,551 10,472
--------- ------------ ------------ ------------ ------------
Total assets $ 121,035 $ 49,268 $ 5,027 $ (8,584) $ 166,746
========= ============ ============ ============ ============
LIABILITIES AND
STOCKHOLDERS' EQUITY
Current liabilities:
Current liabilities $ 16,702 $ 4,659 $ 1,895 $ - $ 23,256
Intercompany transactions (33,915) 30,086 3,829 -
--------- ------------ ------------ ------------ ------------
Total current liabilities (17,213) 34,745 5,724 23,256
Long-term debt 83,127 1,807 15 84,949
Other liabilities, long term 8,082 2,975 11,057
Deferred tax liability - noncurrent 17,833 446 18,279
Stockholders' equity 29,206 9,295 (712) (8,584) 29,205
--------- ------------ ------------ ------------ ------------
Total liabilities and stockholders'
equity $ 121,035 $ 49,268 $ 5,027 $ (8,584) $ 166,746
========= ============ ============ ============ ============
DECEMBER 31, 1999
--------------------------------------------------------------------------------------
NON-
GUARANTOR GUARANTOR
PARENT SUBSIDIARIES SUBSIDIARIES ELIMINATIONS CONSOLIDATED
--------- ------------ ------------ ------------ ------------
ASSETS
Current assets:
Cash $ 45 $ (545) $ 548 $ - $ 48
Accounts receivable, net 22,704 5,288 2,455 30,447
Inventories, net 10,909 13,917 1,967 26,793
Other current assets 6,438 3,054 465 9,957
--------- ------------ ------------ ------------ ------------
Total current assets 40,096 21,714 5,435 67,245
Property and equipment, net 10,051 14,662 672 25,385
Intangible assets 68,557 7,112 75,669
Investments in subsidiaries 15,391 (14,777) 614
Other assets 8,477 905 9,382
--------- ------------ ------------ ------------ ------------
Total assets $ 142,572 $ 44,393 $ 6,107 $ (14,777) $ 178,295
========= ============ ============ ============ ============
LIABILITIES AND
STOCKHOLDERS' EQUITY
Current liabilities:
Current liabilities $ 18,758 $ 3,045 $ 2,015 $ - $ 23,818
Intercompany transactions (27,590) 24,090 3,500 -
--------- ------------ ------------ ------------ ------------
Total current liabilities (8,832) 27,135 5,515 23,818
Long-term debt 83,304 2,087 26 85,417
Other liabilities, long term 6,723 6,723
Deferred tax liability - noncurrent 13,260 961 14,221
Stockholders' equity 48,117 14,210 566 (14,777) 48,116
--------- ------------ ------------ ------------ ------------
Total liabilities and stockholders'
equity $ 142,572 $ 44,393 $ 6,107 $ (14,777) $ 178,295
========= ============ ============ ============ ============
MIKOHN GAMING CORPORATION
CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS
(Amounts in thousands) TWELVE MONTHS ENDED DECEMBER 31, 2000
------------------------------------------------------------------------------------
NON-
GUARANTOR GUARANTOR
PARENT SUBSIDIARIES SUBSIDIARIES ELIMINATIONS CONSOLIDATED
----------- ------------ ------------ ------------ ------------
Revenues $ 64,353 $ 41,878 $ 8,702 $ (14,167) $ 100,766
Cost of sales 27,580 29,800 7,394 (10,110) 54,664
Selling, general and administrative
expenses 31,382 13,596 2,803 47,781
Write-off of assets and other 5,921 3,931 9,852
----------- ------------ ------------ ------------ ------------
Operating income (loss) (530) (5,449) (1,495) (4,057) (11,531)
Equity in earnings of subsidiaries (10,612) 10,612 -
Interest expense (10,105) (326) (85) (10,516)
Other income and (expense) 71 (70) (59) (58)
----------- ------------ ------------ ------------ ------------
Income (loss) before income taxes and
extraordinary item (21,176) (5,845) (1,639) 6,555 (22,105)
Income tax provision (930) 930 -
----------- ------------ ------------ ------------ ------------
Income (loss) before extraordinary item (22,106) (4,915) (1,639) 6,555 (22,105)
Extraordinary item, net of income tax
----------- ------------ ------------ ------------ ------------
Net income (loss) $ (22,106) $ (4,915) $ (1,639) $ 6,555 $ (22,105)
=========== ============ ============ ============ ============
TWELVE MONTHS ENDED DECEMBER 31, 1999
------------------------------------------------------------------------------------
NON-
GUARANTOR GUARANTOR
PARENT SUBSIDIARIES SUBSIDIARIES ELIMINATIONS CONSOLIDATED
----------- ------------ ------------ ------------ ------------
Revenues $ 62,986 $ 37,513 $ 19,447 $ (13,062) $ 106,884
Cost of sales 28,718 22,368 13,862 (10,102) 54,846
Selling, general and administrative
expenses 26,963 9,484 5,217 302 41,966
Write-off of assets and other 1,352 1,352
----------- ------------ ------------ ------------ ------------
Operating income (loss) 7,305 4,309 368 (3,262) 8,720
Equity in earnings of subsidiaries (255) 255
Interest expense (8,659) (110) (81) (8,850)
Other income and (expense) 93 473 154 720
----------- ------------ ------------ ------------ ------------
Income (loss) before income taxes and
extraordinary item (1,516) 4,672 441 (3,007) 590
Income tax provision 2,448 (2,106) 342
Income (loss) before extraordinary item 932 2,566 441 (3,007) 932
Extraordinary item, net of income tax
----------- ------------ ------------ ------------ ------------
Net income (loss) $ 932 $ 2,566 $ 441 $ (3,007) $ 932
=========== ============ ============ ============ ============
TWELVE MONTHS ENDED DECEMBER 31, 1998
------------------------------------------------------------------------------------
NON-
GUARANTOR GUARANTOR
PARENT SUBSIDIARIES SUBSIDIARIES ELIMINATIONS CONSOLIDATED
----------- ------------ ------------ ------------ ------------
Revenues $ 51,279 $ 33,723 $ 16,542 $ (2,512) $ 99,032
Cost of sales 29,619 21,610 11,446 (2,512) 60,163
Selling, general and administrative
expenses 25,351 9,747 3,884 38,982
Write-off of assets and other 4,493 4,493
----------- ------------ ------------ ------------ ------------
Operating income (loss) (8,184) 2,366 1,212 - (4,606)
Equity in earnings of subsidiaries 1,519 (1,519) -
Interest expense (5,063) (16) (36) (5,115)
Other income and (expense) 303 98 (289) 112
----------- ------------ ------------ ------------ ------------
Income (loss) before income taxes and
extraordinary item (11,425) 2,448 887 (1,519) (9,609)
Income tax provision 5,151 (1,816) 3,335
Income (loss) before extraordinary item (6,274) 632 887 (1,519) (6,274)
Extraordinary item, net of income tax (1,752) (1,752)
----------- ------------ ------------ ------------ ------------
Net income (loss) $ (8,026) $ 632 $ 887 $ (1,519) $ (8,026)
=========== ============ ============ ============ ============
MIKOHN GAMING CORPORATION
CONDENSED CONSOLIDATING CASH FLOW STATEMENTS
(Amounts in thousands) FOR THE TWELVE MONTHS ENDED DECEMBER 31, 2000
------------------------------------------------------------------------------------
NON-
GUARANTOR GUARANTOR
PARENT SUBSIDIARIES SUBSIDIARIES ELIMINATIONS CONSOLIDATED
--------- ------------ ------------ ------------ ------------
Net cash provided by (used in) operating
activities $ (3,534) $ 6,942 $ 367 $ - $ 3,775
--------- ------------ ------------ ------------ ------------
Cash flows from investing activities:
Purchase of inventory for lease to
others (20,329) (20,329)
Proceeds from sale-leaseback
transactions 11,500 11,500
Purchase of property and
equipment (1,304) (69) (151) (1,524)
Proceeds from note receivable,
sale of subsidiary 4,418 4,418
Other investing activities 648 1,579 2,227
--------- ------------ ------------ ------------ ------------
Net cash provided by (used in)
investing activities 3,762 (7,319) (151) - (3,708)
--------- ------------ ------------ ------------ ------------
Cash flows from financing activities:
Proceeds from long-term debt 4,823 4,823
Debt issuance costs -
Principal payments on long-term
debt (5,172) (1,781) (452) (7,405)
Proceeds from issuance of
common stock and warrants 1,367 1,367
Other financing activities (751) 2,328 (15) 1,562
--------- ------------ ------------ ------------ ------------
Net cash provided by (used in)
financing activities 267 547 (467) - 347
--------- ------------ ------------ ------------ ------------
Increase (decrease) in cash and
cash equivalents 495 170 (251) 414
Cash and cash equivalents, beginning of
period 45 (545) 548 48
--------- ------------ ------------ ------------ ------------
Cash and cash equivalents, end of
period $ 540 $ (375) $ 297 $ - $ 462
========= ============ ============ ============ ============
FOR THE TWELVE MONTHS ENDED DECEMBER 31, 1999
------------------------------------------------------------------------------------
NON-
GUARANTOR GUARANTOR
PARENT SUBSIDIARIES SUBSIDIARIES ELIMINATIONS CONSOLIDATED
--------- ------------ ------------ ------------ ------------
Net cash provided by (used in) operating
activities $ 2,055 $ 5,073 $ 20 $ - $ 7,148
--------- ------------ ------------ ------------ ------------
Cash flows from investing activities:
Purchase of inventory for lease to
others (360) (5,444) (5,804)
Proceeds from sale-leaseback
transactions -
Purchase of property and
equipment (2,808) (362) (3,170)
Proceeds from note receivable,
sale of subsidiary 471 471
Other investing activities (1,819) 597 (485) (1,707)
--------- ------------ ------------ ------------ ------------
Net cash provided by (used in)
investing activities (4,516) (4,847) (847) - (10,210)
--------- ------------ ------------ ------------ ------------
Cash flows from financing activities:
Proceeds from long-term debt 4,280 1,792 6,072
Debt issuance costs -
Principal payments on long-term
debt (4,838) (2,007) (342) (7,187)
Proceeds from issuance of
common stock and warrants 493 493
Other financing activities -
--------- ------------ ------------ ------------ ------------
Net cash provided by (used in)
financing activities (65) (215) (342) - (622)
--------- ------------ ------------ ------------ ------------
Increase (decrease) in cash and
cash equivalents (2,526) 11 (1,169) (3,684)
Cash and cash equivalents, beginning of
period 2,571 (556) 1,717 3,732
--------- ------------ ------------ ------------ ------------
Cash and cash equivalents, end of
period $ 45 $ (545) $ 548 $ - $ 48
========= ============ ============ ============ ============
FOR THE TWELVE MONTHS ENDED DECEMBER 31, 1998
-------------------------------------------------------------------------------------
NON-
GUARANTOR GUARANTOR
PARENT SUBSIDIARIES SUBSIDIARIES ELIMINATIONS CONSOLIDATED
--------- ------------ ------------ ------------ ------------
Net cash provided by (used in) operating
activities $ (16,862) $ 8,372 $ 98 $ - $ (8,392)
--------- ------------ ------------ ------------ ------------
Cash flows from investing activities:
Purchase of business of business
operations (35,897) (3,250) (39,147)
Purchase of inventory for lease to
others (5,630) (5,630)
Proceeds from sale-leaseback
transactions
Purchase of property and
equipment (2,349) (2,311) (506) (5,166)
Proceeds from note receivable,
sale of subsidiary
Other investing activities (1,384) (90) (507) (1,981)
--------- ------------ ------------ ------------ ------------
Net cash provided by (used in)
investing activities (39,630) (11,281) (1,013) - (51,924)
--------- ------------ ------------ ------------ ------------
Cash flows from financing activities:
Proceeds from long-term debt 53,610 2,161 1,279 57,050
Debt issuance costs
Principal payments on long-term
debt (92) (34) (147) (273)
Proceeds from issuance of
common stock and warrants 2,375 2,375
Other financing activities
--------- ------------ ------------ ------------ ------------
Net cash provided by (used in)
financing activities 55,893 2,127 1,132 - 59,152
--------- ------------ ------------ ------------ ------------
Increase (decrease) in cash and
cash equivalents (599) (782) 217 (1,164)
Cash and cash equivalents, beginning of
period 3,170 226 1,500 4,896
--------- ------------ ------------ ------------ ------------
Cash and cash equivalents, end of
period $ 2,571 $ (556) $ 1,717 $ - $ 3,732
========= ============ ============ ============ ============