Citing the Northridge earthquake, Kenfil Inc., a Van Nuys-based software distributor, reported a loss of $7.1 million in its fiscal third quarter on a 42% decline in sales compared with a year earlier.
The big loss for the quarter ended March 31 contrasted with a profit of $815,000 in the same period a year earlier. Sales in the latest quarter declined sharply, to $27.7 million from $47.5 million.
Kenfil, which recently agreed to be acquired by AmeriQuest Technologies Inc. of Irvine, said its loss included $2.8 million in earthquake damage to inventory, office equipment and other related costs. Kenfil said that the quake also forced the company to halt business for two weeks and that cash-flow shortages caused the company to sell certain inventory below costs.
As a result, Kenfil said that as of March 31 the company fell out of compliance with certain covenants under its senior credit line and senior subordinated note. Kenfil said its senior credit line expired April 30, but has been extended through May 31. A Kenfil spokesman said it was unlikely the covenant violations would affect Kenfil's recent agreement to be acquired by AmeriQuest in an all-stock deal.
With the latest quarterly loss, Kenfil posted a loss of $6.9 million for the nine months ended March 31, versus a profit of $1.7 million a year earlier. Sales for the latest nine-month period dropped 9%, to $124.2 million from $137.2 million a year earlier.