Blaming persistent price competition from foreign manufacturers of telephone systems, San/Bar Corp. of Irvine on Tuesday reported that it lost $826,000 in the final quarter of its 1985 fiscal year.
Only an extraordinary gain from part of a $29.25-million lawsuit settlement with AT&T last year allowed the company--which recorded the worst annual operating results in its 23-year history--to post a profit of $5.5 million for the entire year.
San/Bar received $7 million of the settlement in its 1985 fiscal year but no longer can count on the remaining $22.25 million to offset future unprofitable operations.
The company said Tuesday that as a result of its continuing sales slump and operating losses, it sold the five-year, $22.25-million note from AT&T to Morgan Stanley investment bankers for $14.7 million in immediate cash.
A San/Bar spokesman said that within hours of receiving the money, the company paid off its $3.5-million bank debt. "It takes the total pressure off us," the spokesman said. "We will be ending the first quarter Sept. 30 with $10 million in cash and no bank debt."
'We Weren't in Trouble'
The spokesman said the company has cut its work force in half to 200 employees during the past year and has consolidated its telephone-manufacturing operations into a single plant in Irvine.
"We needed the cash, but we weren't in trouble," the spokesman said, adding that San/Bar officials plan to use the remaining cash to expand the company's product line and bolster sales of its more profitable products.
For the 1985 fiscal year ended June 30, the company had revenues of $17.8 million, down 34% from the $27.1 million recorded last year.
Operating results for the year show a $6.1-million loss, with funds from the lawsuit settlement enabling San/Bar to show a net profit of $5.5 million, compared to a $659,000 profit the prior year.
In the final quarter of the year, San/Bar's revenues were $2.7 million, 67% below those of the year-ago period. Operating results showed a $1.8-million loss, but with the settlement funds that was reduced to a net loss of $826,000, compared with a profit of $316,000 in the comparable period the year before.