Ultrasystems to Take Subsidiary Public

Ultrasystems Inc. said Wednesday that it plans to take its Defense and Space Systems subsidiary public in an initial offering expected to raise more than $10 million for the Irvine-based engineering and construction firm.

Phillip Stevens, Ultrasystems’ president, said the company plans to file a preliminary prospectus with the Securities and Exchange Commission next week. The offering--1.2 million shares of Ultrasystems Defense and Space Systems Inc.--will take place in October or November, he said.

Ultrasystems, which recently moved to the American Stock Exchange from the over-the-counter market, is seeking an AMEX listing for the new issue, Stevens said, and will continue to hold at least 80% of the shares of Ultrasystems Defense and Space Systems.

The subsidiary, which specializes in defense-related software development and systems engineering, employs approximately 560 people and is expected to generate more than $60 million in revenues this year. Stevens declined to disclose the unit’s net earnings.

As previously reported, Ultrasystems posted net earnings of $7.1 million on $152.6 million in revenues for its 1986 fiscal year ended Jan. 31. On Monday, the company reported net earnings of $3.5 million on $78.2 million in revenues for its fiscal 1987 first half, ended July 31.

Proceeds of the offering will be used in part to pay for new acquisitions, Stevens said. While Ultrasystems is not negotiating with potential merger partners now, the company will have more than $20 million in cash after the offering, he said.

Dean Witter Reynolds Inc., which earlier this year co-managed Ultrasystems’ $30-million debenture offering, will be the lead underwriter in the upcoming stock offering.