Ultrasystems Reports Loss for Quarter, Annual Profit
Citing higher than expected start-up costs for two Northern California wood-burning power plants and $3 million in write-offs of a planned geothermal-powered refinery, Ultrasystems Inc. Monday reported a $4.4-million fourth quarter loss but a modest profit for the fiscal year ended Jan. 31.
Phillip J. Stevens, president of the Irvine-based engineering and construction company, said fiscal 1985 was a “difficult and challenging year” for the company, which specializes in building alternative energy projects and developing space and defense-related systems.
The fourth quarter loss compares with net income of $2.3 million for the fourth quarter of 1984. Revenues were ahead to $33.4 million, from $29.6 million the prior year.
For the full year, Ultrasystems earned a profit of $394,000, down dramatically from the $5.3-million profit posted during fiscal 1984. However, annual revenues reached a record $141 million, up 69% from the $83 million reported a year earlier. Ultrasystems also reported a record backlog of $243 million at year’s end, compared with the $119 million recorded at the close of fiscal 1984.
Stevens said 1985 “was marked by significant accomplishments and disappointing setbacks.” He said the company’s defense and space systems organization delivered an outstanding year, with an operating profit of $4.8 million, but the engineering and construction segment incurred an equal amount in operating losses and “fell below our expectations.”
Considered an industry pioneer for its new wood-burning electric plants, Ultrasystems attributed $2.7 million of its losses to expenses relating to construction and start-up of the company’s first two wood-burning plants. The plants, built in the Northern California towns of Burney and Westwood, burn wood chips to generate electricity sold to Pacific Gas & Electric Co. The Burney plant has been repaired and is back in service. The Westwood plant is being serviced and is expected to be operating by early May, Stevens said.
Stevens said Ultrasystems’ earnings were also affected by uncertainties in proposed federal income tax legislation and proposals to reduce or eliminate government subsidies to U.S. sugar growers. The company relies on favorable tax credits to increase the attractiveness of some of its projects to investors.
After President Reagan said in February that federal subsidies to U.S. sugar growers might be reduced or eliminated, the company decided to write off $3 million in costs associated with its planned UltraSweet refinery project, Stevens said. The company had proposed building a high-fructose corn syrup refinery in Calexico and offering it for sale to limited partners.
