CCT Reports Quarterly Loss of $4.9 Million
Owing to a $4.5-million provision for previously announced overcharges to the federal government, Computer & Communications Technology Corp. reported a $4.9-million loss for the fourth quarter ended Dec. 31. The loss brought CCT’s fiscal year net loss to $27.4 million on sales of $67 million.
The quarterly loss, which came on sales of $14.8 million, is the latest aftershock from CCT’s admission last June that its Santa Clara-based Zeta Laboratories subsidiary had overcharged the federal government on defense contracts involving microwave communications equipment.
As far as the impact on shareholders is concerned, the Zeta matter has not been resolved. CCT could still be liable for interest payments and penalties on the overcharges, Chairman E.T. Bahre said Tuesday. The federal government is still reviewing the Zeta case, he added.
“We have completed our report (on the Zeta overcharges) and made the disclosures. It’s in the hands of the government now,” Bahre said.
The Zeta overcharges forced CCT to rescind its $39-million sale of Zeta to Los Angeles-based Whittaker Corp., completed in March, 1986. The reversal of the sale gains, combined with $14 million in asset write-downs after CCT discontinued its thin-film media operation, led to a $22.6-million net loss for the two quarters ended June 30.
Shareholder Files Suit
CCT then said the rescission could have a “substantial” adverse impact on CCT beyond that of the reversals of the gains.
In August, a Honolulu shareholder filed suit against the company and its directors alleging that management withheld “materially adverse” information from investors before a 1985 public offering in which CCT sold off 14% of Zeta’s stock to the public. Bahre denied the charges.
Of the $4.5-million provision made in the fourth quarter, about $2.7 million covers what CCT believes is the total amount overcharged and which it is prepared to reimburse to the government. The remainder of the provision covers CCT’s investigation costs, Bahre said.
