Blaming a federal investigation of its Micronics...
Blaming a federal investigation of its Micronics subsidiary, Precision Aerotech of La Jolla reported a $1.4 million loss for the third quarter ended Dec. 31.
Last October, the Defense Department said it had launched a criminal investigation of the Brea-based Micronics unit for using a substandard manufacturing process for safety and arming mechanisms called “fuzes” which are used in Phoenix air-to-air missiles.
The allegedly substandard fuzes rendered the missiles useless, forcing the Navy to mothball 500 of the missiles costing $850,000 each, the Defense Department said.
Micronics said it had been making correctly manufactured fuzes since February 1988. Micronics officials previously blamed Navy designs for the failure of the fuzes.
In releasing its earnings figures Thursday, Precision Aerotech said the third quarter loss was partly due to “diminished margins at the Micronics subsidiary caused by disruption in operations during a continuing series of government audits.” Other factors were accounting adjustments at its Speedring Cos. unit and a chemical fire at its Coast Aerotech unit.
The loss came on third quarter revenue of $17.6 million, up from $10.2 million sales over the previous year. The increase in revenue was largely because of Precision Aerotech’s purchase of Speedring. In last year’s third quarter, Precision Aerotech posted a $94,000 profit.
For the nine months ended Dec. 31, Precision Aerotech’s losses were $3.2 million on revenue of $44.4 million, contrasted with a profit of $533,000 on sales of $26.9 million over the same three quarters the previous year.