In spite of record revenues in its 1985 fiscal year, Applied Circuit Technology Inc. in Anaheim said Thursday that it wound up in the red and will lay off 36 of its 244 employees statewide. The losses came after the company wrote down long-held inventory in the last quarter.
For fiscal 1985, ended Oct. 31, Applied Circuit had a net loss of $401,153, a sharp reduction in its restated net loss of $2.25 million in the previous fiscal year.
The company had reported a $1.47-million loss in the 1984 fiscal year, but had to restate its balance sheet to reflect a consolidated financial condition after it acquired Certel Inc. of Fremont. Certel was losing money when Applied Technology acquired it in November, 1984.
Revenues for the 1985 fiscal year soared to $18.5 million, a 72.8% increase over the previous year's sales of $10.7 million. The company's previous record annual income was $15.1 million in fiscal 1983.
For the fourth quarter, Applied Circuit had a net loss of $470,486, a nearly fourfold reduction from the previous year's last-quarter loss of $1.7 million. Revenues for the fiscal 1985 fourth quarter hit $5 million, nearly four times the $1.38 million in sales in the prior year.
"Because we were profitable in the second and third quarters of fiscal 1985, the fourth-quarter loss was clearly a disappointment," said Walter R. Menetrey, the company's president. "However, the costs of new product development had an adverse impact on fourth-quarter results, and we felt also that the fiscal year-end inventory write-down was necessary."
The write-down results from material that has been in the company's inventory for more than a year, Menetrey said. He estimated the write-down at $400,000 before taxes.
The 15% cut in the work force will take effect next month at the company's Anaheim and Fremont plants, where ACT's disk-drive test equipment for the computer industry is made. Menetrey would not say how many workers at each plant will be involved in the layoffs.
The firm's Irvine plant, where employees repair and refurbish disk drives, will not be affected by the layoffs, he said. The layoffs are part of the company's efforts to restore and maintain profitability by reducing operating costs, Menetrey said.
Last November, the work week of about two dozen employees was cut to 32 hours to reduce costs. Menetrey said Thursday that he did not know if the company will still need to have employees on a reduced work week after the layoffs.
"We're optimistic about the future, but we're not making any predictions," he said.
Menetrey said three acquisitions in the last 14 months had an impact on Applied Circuit's earnings, but he declined to explain how much of an impact they had. Besides Certel, Applied Circuit acquired Dumont Magnetic Technology Co. in Irvine in December, 1984, and is close to reaching a definitive agreement to purchase a generic drug manufacturing company, Whiteworth International Inc. of Gardena.