EECO Stops Dividend Payments, Cites Need of Cash for Expansion

EECO Inc. has suspended dividend payments to company stockholders for the first time since 1974, saying it needs the cash for business expansion.

The Santa Ana company said Tuesday that the move is necessary because of its rapid growth during the past 18 months. Specifically, the firm said it needs extra cash for expansion of its personal computer keyboard business and new product development.

EECO manufactures computer keyboards and switch products; airline passenger entertainment and service systems; hotel computers and computerized videotape editing systems.

“The board deliberated quite a while over this, but decided it is in the shareholders’ best interest to suspend payments at this time,” said Seymour A. Schlosser, chief financial officer.

“Most growth companies don’t even pay dividends,” Schlosser added, “so EECO was unusual for having paid a dividend.”

Last week, EECO reported a disappointing second-quarter loss of $161,000, compared with earnings of $820,000 in the year-earlier period. Revenue rose 2% to $20.8 million for the quarter.

The company said it hopes to reinstate the dividend “as soon as justified by higher earnings and improved cash position.”