Distributed Logic Corp. on Thursday reported a $5.7-million loss and declining sales for its fiscal 1990 and said it has laid off 35% of its domestic work force.
Between November and January, the company laid off 45 people, trimming its total work force to about 160, said Thomas R. Anderson, chief financial officer. The manufacturer of computer storage products and communications components defaulted on its loan payments earlier this month, he said.
Hurt by the recession and stiff competition in the declining minicomputer business that it serves, Distributed Logic's revenue fell to $44.8 million in its fiscal year ended Oct. 31, down 13% from $51.4 million a year earlier.
"The drop in domestic sales was caused by a combination of a general softness in the marketplace and internal organizational problems," Glenn C. Salley, chairman and chief executive, said in a statement.
The $5.7-million loss contrasted with net income of $18,641 for the prior fiscal year. The company's earnings for its latest year were reduced by a one-time charge of $1.6 million in the fourth quarter for costs related to the restructuring of the company's domestic operations.
The restructuring included the 45 layoffs, elimination of several products and a revamping of the firm's distribution network. The company eliminated the position of John Wilson, the company's domestic president, and reassigned him to another job.
The company attributed its poor performance in large part to a lack of working capital and liquidity resulting from the heavy debt burden it assumed after acquiring three Plessey Peripheral Systems computer subsidiaries in 1987. The company has suspended debt payments to Union Bank and Plessey.
Anderson said the company is negotiating with lenders to secure more favorable financing terms. He said a previously announced $3-million private stock placement arranged with Global America Corp. in New York fell apart because Global America went out of business in January.
"They can't keep up that kind of loss for many more quarters," said Mark Matheson, analyst for the Newport Beach investment banking firm Cruttenden & Co. "If they don't turn around in six months, they should sell off some assets. The strong get stronger and the weak die."
For the fourth quarter, Distributed Logic reported a loss of $3.6 million, contrasted with a loss of $15,675 a year earlier. Revenue for the quarter was $11.4 million, down 15% from $13.5 million in the year-earlier period.
The Anaheim firm supplies data storage and communications equipment, primarily for minicomputers manufactured by Digital Equipment Corp. The minicomputer market has been in a slump in recent years, caught in a squeeze between low-cost mainframe computers and increasingly powerful personal computers.
Distributed Logic's competitors include two Orange County firms--Emulex Corp. in Costa Mesa and Micro Technology Inc. in Anaheim--and Digital Equipment itself, which has seen its minicomputer business decline sharply in the past two years.
Anderson said the company continues research and development efforts, including some joint-venture projects, and he said several product introductions are pending this quarter.
DISTRIBUTED LOGIC'S PERFORMANCE
In the fourth quarter ended Oct. 31, Distributed Logic Corp. reported a loss of $3.6 million as its revenues fell 15% to $11.4 million. The company attributed the loss in part to a $1.6 million charge for restructuring its domestic operations.
Figures are in thousands, except per-share data.
4th Qtr 4th Qtr 12 Months 12 Months 1990 1989 1990 1989 Revenue $11,458 $13,531 $44,873 $51,455 Net income (loss) (3,564) 15 (5,727) 18 Per share (loss) ($1.42) $.01 ($2.28) $.01
Source: Distributed Logic Corp.