CMS Reports ’91 Loss of $8.5 Million, 31% Drop in Sales

IRVINE —  Citing an “extremely competitive” disk-drive market, CMS Enhancements Inc. said Monday that it lost $8.5 million last year as sales plunged 31% to $130 million.

The company, which makes and distributes computer products, said the loss of $2.89 a share for the year ended June 30 contrasts with a net income of $405,195, or 13 cents a share, and sales of $187 million for the previous year.

CMS also reported a sharp fourth-quarter loss of $7.3 million, or $2.52 a share, contrasted with a loss of $1.7 million, or 55 cents a share, the year before. Revenue fell 5% to $31.9 million from $33.6 million.

Jim Farooquee, CMS chief executive, said in a statement that the “disappointing” results were because of price wars in the disk-drive market, which is flooded. Farooquee also cited expenses at the company’s Singapore manufacturing plant.

CMS announced that, as a result of the price erosion and excess inventory of obsolete products, it would take a one-time charge of $5 million against fourth-quarter earnings.

The loss was also caused in part by expenses incurred during its transition from a supplier of disk drives and other storage devices to a distributor of computers made by South Korean computer giant TriGem Corp.

The venture, formally launched in April, cost CMS about $1 million during the fourth quarter.

Frederick Judd, chief financial officer, said the company obtained a $10-million line of credit in June from Foothill Capital, a bank in Los Angeles. That credit agreement replaced a $25-million line of credit the company’s former lenders decided to discontinue in December.

Judd said that the company has used $5.5 million of the $10-million credit line and that the company believes that it has sufficient credit for its working capital needs.