Kaypro Posts $6.2-Million Loss; Write-Down Blamed

Kaypro Corp. on Monday reported a net loss of $6.2 million for the third quarter ended May 31, which the company said resulted from a revaluation of inventory and a subsequent $9.8-million write-down.

Sales for the quarter totaled $16.7 million, down 48% from the same period the year before. Earnings in the third quarter last year were $3.2 million. For the nine months, the Solana Beach, Calif.-based computer maker reported a loss of $6 million, compared to earnings the year before of $10 million. Sales dropped 38% to $97.3 million.

Comparisons between this year and last are skewed, company officials cautioned, because of various adjustments--including write-downs for missing inventory--at the end of fiscal 1984 that substantially reduced Kaypro’s gross operating margins.

In the past, Kaypro only estimated gross profit margins because it did not take quarterly inventories. But that has changed, and the company is now “reconciling (inventory) quarterly,” according to Controller Robert Gorsky.

Without the $9.8-million pretax write-down, the company’s third-quarter loss would have been $800,000, Gorsky said.

Despite the slump in the computer industry, Kaypro is in a “very strong position,” he maintained.

Short-term bank borrowing has been reduced to $3 million from $13 million in the past nine months, and the company had less than $1 million in long-term debt as of May 31. Current assets totaled $39 million and current liabilities were $13 million at the end of May, he said.

Kaypro intends to be “conservative about evaluating our inventory” in the future, Gorsky said, adding that, “at this point, we believe the reserves and write-downs are adequate and (we) don’t see any more in fiscal 1985.”