Helionetics Suffers Loss, Sues Ex-Chief
Helionetics Inc. said Wednesday that it suffered a $5-million second-quarter loss, largely as a result of $4.4 million in write-offs of discontinued and unprofitable products and operations as the controversial high-technology firm attempts to restructure under new management.
Despite the loss, President Michael Mann said the “company anticipates profitable performance for the remainder of the year.”
The Irvine-based company also said it filed a lawsuit in Orange County Superior Court against its former chairman, Charles W. Missler, for breach of fiduciary duty while a director and officer. The suit also charges Missler with breaching his employment contract.
Helionetics, a defense contractor specializing in the design and manufacture of signal-processing devices, lasers and electro-optical systems, said it is asking for compensatory damages “believed to be greater than $2 million, and punitive damages of $5 million.” Missler could not be reached for comment Wednesday.
Missler resigned last December, reportedly after losing out in a power struggle with Bernard Katz, Helionetics’ principal shareholder. Katz resigned from the board in May, for the second time in 13 months. He said he was resigning to eliminate a possible conflict of interest because he was selling his shares in two other companies to Helionetics.
The suit also names Microcircuit Development Corp. as a defendant. It says Missler, “either personally or through trusts, controls or owns a majority of the outstanding shares of stock of Microcircuit Development.”
The complaint centers on Microcircuit Development’s acquisition of a controlling interest in Resdel Industries in November, 1984. Missler was still serving as a director and officer of Helionetics at the time.
Helionetics cited Missler and Microcircuit for “misappropriation of corporate opportunity” but did not provide details in a statement issued late Wednesday. Officials of Microcircuit Development could not be reached.
Helionetics has been attempting to restructure its diverse high-tech operations during the past eight months, ever since Mann was appointed chief executive. By May, the company had laid off 190 employees--nearly one-third of its work force--and abandoned its opulent Santa Ana headquarters for more affordable accommodations in Irvine.
Helionetics said in July that it would have a second-quarter loss but did not specify the magnitude. The second-quarter loss contrasts with net income of $556,300 for the same period last year. Revenue for the second quarter was $4.5 million, compared to $6.5 million for the same period last year.
For the first six months, Helionetics lost $4.9 million, compared to net income of $1.4 million a year earlier. Revenue fell to $10.1 million from $11.8 million a year ago.
Mann said the losses “are attributable to the previously announced restructuring of the company, including consolidation of facilities and discontinuance of unprofitable or marginal products and operations.” He said bookings for the first six months reached $26 million and its backlog is at a record level.
