Resdel Reports $8-Million Fourth-Quarter Loss, Says 130 Are Laid Off
Resdel Industries, reeling from a whopping $8-million fourth-quarter loss, disclosed Wednesday that it has laid off 130 people, or more than a third of its work force.
The layoffs, which included the termination or reassignment of 10 officers and top managers, occurred during the past 60 days, said Bruce Rossiter, chief financial officer of the Newport Beach electronics company.
About 100 people were laid off at the company’s Sanbar subsidiary in Irvine and another 30 were laid off at the firm’s Resdel Engineering unit in Arcadia.
The company now employs about 200 people, Rossiter said. He declined to identify the officers or managers affected by the shake-up.
Rossiter said, however, that one of the officers who left was Sidney E. Wing, a Resdel vice president, who resigned in early August to pursue a possible leveraged buyout of Resdel Engineering. The company had announced Wing’s resignation last month. Rossiter said he believed that Wing, who has since been named president of Chatsworth-based Datametrix, has dropped his plans to purchase the Resdel unit.
Resdel, which had said last June that it expected a substantial loss for its fiscal 1988 year, reported Tuesday that it lost $8.3 million for the year ended June 30. Most of that loss occurred in the fourth quarter.
Revenue rose 31% to $22.5 million in 1988. But revenue declined 9% to $4 million during the fourth quarter.
“The crucible of the last quarter . . . has been one of the company’s most challenging,” Resdel Chairman Charles W. Missler said in a statement. Missler said the layoffs and other cost-cutting measures were made to correct “serious operating problems” at the firm.
“They realize they have a rope around their neck, and they’re trying to keep the horse steady,” said Russell Diehl, a Newport Beach investment banker.
Resdel’s financial problems are attributable, in part, to an unsuccessful program to expand its business through acquisition. The Sanbar unit--a maker of telephone switching cards and digital microwave equipment that Resdel acquired in September, 1987--lost $2.2 million in the fourth quarter.
“We’ve been in an expansion mode for a year and a half,” Rossiter said. “When it became apparent we should be in a rehabilitation mode, we cut back on lots of activities we were in.
“We feel very confident that we’ve identified the problems and have a good corps of management and employees working on future growth,” Rossiter said. “We’re receiving a high level of support from our banks and vendors, and that support would not be there if people thought we weren’t going to make it.”
A month ago, Resdel announced that it planned to sell nearly 46% of Sanbar to a Colorado investment company for $1.2 million in cash. The Phoenix Group International, based in Colorado Springs, Colo., is headed by Missler. The sale has not been completed.
Additionally, the company said last July that it is considering several proposals for the purchase of it largest subsidiary, Resdel Engineering, which makes military microwave and digital equipment.
Resdel blamed about half of its $8-million fourth-quarter loss on “revision in estimates of costs and profits” on some defense contracts at Resdel Engineering. Rossiter said some of the losses perhaps should have been recorded in earlier quarters. He declined to elaborate.
Resdel also said that it had to write off a $1.3-million gain recorded in the second quarter for the sale of a Sanbar telephone repair business in Texas.