Archive Profit Tumbles 73% in 2nd Quarter

Archive Corp., a maker of data storage products that is struggling to pay off debt in a recession, reported Monday that its earnings fell 73% to $1.1 million in its second quarter, ended March 29.

The quarterly earnings compared to net income of $4 million in the 1990 second quarter. Revenues rose 79% to $93.4 million, up from $52.1 million a year earlier because of the company’s acquisition of Cipher Data Products Inc. in San Diego in April, 1990.

For the six months ended March 29, the company earned $1.9 million on revenues of $179.5 million, compared to earnings of $7.5 million on revenues of $99.1 million a year earlier.

D. Howard Lewis, chairman and chief executive, said demand for company products was hurt by the recession and the Persian Gulf War, but it has begun to recover as customers loosen up their capital expense budgets.

Interest expense on the company’s acquisition debt was $4.5 million for the quarter. The company has long-term debt of $99 million related to the acquisition. Analysts said the earnings performance was in line with their expectations.

“We have an aggressive plan to reduce our debt over the next two years and we have been able to keep our borrowings below planned levels,” Lewis said. “Nonetheless, debt service has made a significant impact on our earnings.”

The company said it has begun to shut down its Optimem operation, an unprofitable manufacturer of optical disk drives based in Mountain View that was acquired with Cipher.

Tag Merrick, vice president and general counsel, said Optimem’s Mountain View location will be shut down by July. The company had 50 people when Archive acquired it and its 30 remaining employees will be laid off.

ARCHIVE’S PERFORMANCE

In the second quarter ended March 29, Archive Corp. reported a 73% drop in earnings to $1.1 million on revenues of $93.4 million. The company said its earnings were affected by the cost of servicing debt related to the takeover last year of Cipher Data Products.

Figures are in thousands, except per-share data.

2nd Qtr 2nd Qtr 6 Months 6 Months 1991 1990 1991 1990 Revenue $93,400 $52,069 $179,506 $99,087 Net income (loss) 1,082 3,981 1,898 7,508 Per share (loss) $0.08 $0.30 $0.14 $0.55

Source: Archive Corp.