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Cal Amplifier Controller Understated Expenses

March 30, 2001|JOSEPH MENN | TIMES STAFF WRITER

California Amplifier Inc. said Thursday that its controller resigned after admitting he had understated expenses by as much as $2.2 million, an error likely to cut the company's previously announced fiscal 2000 profit from operations of $4.7 million to $2.5 million.

The Camarillo-based maker of satellite antennas and microwave amplifiers said it is investigating the problem, which came to light during preparations for a regular audit of results for fiscal 2001, which ended last month.

"It was a cover-up of mistakes made in record-keeping," Chief Financial Officer Michael Ferron said. "It doesn't appear that there was any profit made by any individual."

Ferron declined to name the controller, who had been in the job for four years.

Trading in the stock was halted as Nasdaq demanded more information. Before trading stopped at 9:02 a.m., shares had changed hands at $4.75, down from Wednesday's close of $5.03 and the lowest point since mid-1999.

Ferron said the expenses involved the expanded manufacturing of product lines bought in 1999 from Gardiner Communications Corp. of Garland, Texas.

"The expenses incurred were more than he had forecast, and he reduced the recorded expenses," Ferron said.

California Amplifier will delay releasing its fiscal 2001 results and expects to restate its figures for fiscal 2000, but operating margins going forward probably won't be affected, he said.

The company's earnings and stock have been on a roller-coaster ride since 1996, with shares reaching a high of $63 in July.

Diluted earnings per share from operations had been reported at 35 cents for fiscal 2000, the best in four years, and now are likely to be restated at 17 cents, the firm said.

Those results are before a pretax charge of $9.5 million, or 47 cents a share after taxes, to settle a lawsuit by shareholders who accused the company of hyping its prospects as insiders sold stock ahead of an earnings and share-price slump.

Sales in the quarter ended last month were projected to be between $26 million and $27 million, with earnings per share of 6 or 7 cents, the company said Feb. 26.

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