Thursday, Feb. 11, 2010 | 7:49 a.m.
International Game Technology said today it expects to absorb $20 million in expenses related to the closure of its operations in Japan.
The Reno company, in a regulatory filing, said it announced to employees on Monday its decision to close the Japan operations "due to ongoing difficult market conditions and changes in the company’s future core business strategy."
"The closure is part of the company’s ongoing focus on operating efficiencies in all areas of its business," IGT said in today's filing.
First quarter operations in Japan resulted in a net loss of $2.5 million in fiscal 2010 and $1.2 million in fiscal 2009, IGT said.
The net loss for all of fiscal year 2009 in Japan was $21.2 million.
First quarter revenue of only $100,000 in Japan was off from $5.7 million in 2009.
The company services pachisuro gaming parlors in Japan.
The street.com quoted J.P. Morgan analyst Joseph Greff as reporting that in 2009, IGT shipped just 3,775 machines to Japan, compared with 6,000 in 2008 and 29,800 in 2007.
"Total charges related to the closure are still developing and will depend on the culmination of certain asset sales and property lease cancellations. We currently estimate charges, including severance, of up to $20 million in the aggregate, will be recorded in the second and third quarters of fiscal 2010," the casino industry supplier said.
Despite the setback in Japan, IGT said in today's filing its looking at new slot machine sales opportunities elsewhere.
"Legislative actions and the passage of voter referendums are providing new and expanding opportunities in Illinois, Ohio, Kansas, Maryland and Pennsylvania. Development projects in Maryland, Kansas, and Pennsylvania received approval and licensing with openings anticipated over the next two years. State legislatures in Kentucky, Massachusetts, and New Hampshire continue to consider gaming as a way to provide tax revenues in support of public programs," IGT said. "Future gaming expansion is also anticipated in international markets, especially Southeast Asia and Italy. Although the extent and timing is uncertain, we believe new market opportunities will grow as the economy improves and new jurisdictions consider gaming tax revenues as a means to address budget shortfalls."