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EAI EXPECTS FOURTH QUARTER LOSS AND REPORTS NON COMPLIANCE WITH LOAN AGREEMENT AND PLAN TO SELL BUSINESS UNIT

 WEST LONG BRANCH, N.J., Dec. 18 /PRNewswire/ -- Electronic Associates, Inc. (NYSE: EA) reported that it expects to incur a loss in the fourth quarter. The net loss for the quarter is estimated to be approximately $1.0 million and will result primarily from several factors affecting the company's Contract Manufacturing business, including deferrals of shipments by customers, delays in receipt and start up of certain contracts, lower than anticipated margins and higher costs related to the integration of new surface-mount technology.
 The company also reported that it has been advised by its principal lender that it will not waive EAI's noncompliance with certain financial covenants contained in its loan agreement. EAI said the bank has not declared EAI in default, but requested additional information to evaluate the company's financial position. Meanwhile, the bank is not making additional advances to EAI under the credit facility provided in the loan agreement. The company is currently engaged in discussions with the bank to obtain additional financing and resolve all related issues.
 EAI said it is supporting ongoing operations with internally generated funds. Anticipating a strain on its resources, the company has implemented certain cost reduction measures including a reduction in work force, a hiring freeze, a decrease in employee pay levels, and other measures.
 EAI's loan agreement with the bank provides for a term loan, an additional line of credit to purchase machinery and equipment, plus a revolving credit facility, totaling approximately $7.5 million. EAI currently owes the bank approximately $5.7 million of that amount.
 As previously disclosed, the company is continuing its plan to focus its efforts on its Contract Manufacturing business. In line with this strategy, the company is pursuing the sale of its third party electronic equipment maintenance business.
 EAI is engaged in three related business lines, serving users and producers of electronic products and systems. In Contract Manufacturing, EAI provides manufacturing services for products designed and marketed by customers. In Field Service, the company offers independent maintenance of electronic equipment, with technicians across the United States and in Japan. In Product Engineering, EAI provides simulation computer products plus design and engineering services to private industry and government agencies. The company's common stock has traded on the New York Stock Exchange since 1962 under the symbol EA.
 -0- 12/18/92
 /CONTACT: Louis J. Tedeschi, 908-229-1100, ext. 655 or Paul Finkel, 201-740-0090, both of EAI/
 (EA)


CO: Electronic Associates, Inc. ST: New Jersey IN: CPR SU: ERP

LR-OS -- NY010 -- 8080 12/18/92 09:15 EST
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Publication:PR Newswire
Date:Dec 18, 1992
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