25 Laid Off by ITS in Wake of Losses; Acquisition Scrapped
In a bid to trim costs in the aftermath of big financial losses this year, International Totalizator Systems announced Wednesday that it is laying off 25 employees, an 18% reduction in work force at the company’s Carlsbad plant and corporate headquarters. The job cuts will save ITS about $1.6 million in annual overhead, the company said.
Among those losing their jobs was chief financial officer Joel Graff who was laid off last week after seven years with the company. Graff’s job has been assumed for the time being by controller Kenneth Hoitt. Those losing their jobs were mostly “middle management” employees, a spokesman said, and did not include sales, service or manufacturing employees.
International Totalizator, which makes race track totalizator and lottery systems, also said it has scrapped a plan announced in August to acquire the assets of CTSI International, a Commack, N.Y.-based manufacturer of airline ticket printers.
The acquisition, which was to have gained International Totalizator entry into the airline ticketing business, was called off after several of “seven or eight” key CTSI executives balked at moving from the East Coast to ITS’s Carlsbad facilities, CTSI general manager Gerald Schoenberg said in an interview Wednesday.
“The employment situation is good on Long Island and no benefit was offered to move,” Schoenberg said. “ITS posted a significant loss for its last quarter. You may draw your own inference from that.” CTSI’s annual sales are in the “$3-million range,” he said.
Contacted at his home, Graff said the layoffs were “sudden and unexpected” but were not triggered, as far as he knows, by any particular event or loss of business at ITS.
“It was the intent of the company to lower costs and, unfortunately, I was a part of that,” Graff said.
For the six months ended June 30, ITS posted a loss of $1.25 million on revenue of $10.4 million, contrasted with a profit of $1 million on revenue of $13.4 million over the same six months a year previous.
In a filing with the Securities and Exchange Commission, the company attributed the current year’s losses in part to problems with ITS’s contract to install a lottery system in New South Wales, Australia.
In an interview, ITS Chairman James Walters said a dispute has developed between ITS and the Australian government on whether the lottery system is performing at levels specified by the contract. Because of the dispute, the Australians have withheld payment to ITS, Walters said.
Walters denied, however, that the New South Wales problem was directly responsible for the recent reduction in ITS’s work force. “The layoffs were a measure that the company had been reviewing for some time,” Walters said.
In February, ITS sold $5 million worth of convertible debentures, or bonds that are convertible to ITS stock.
