Fallout from a legal dispute over a Baltimore condominium project all but wiped out third-quarter profit at Rouse Co., the Columbia, Md.-based real estate and shopping center developer.
Late last year, the company settled a lawsuit filed by condominium owners at the Harper House alleging that the project's construction was faulty. Rouse agreed to pay for repairs of water leaks and other problems, according to David L. Tripp, a Rouse vice president.
The company initially set aside $1.5 million to cover the costs, Tripp said, but found that more would be needed to complete the work. To cover the added expense, the company set aside $4.5 million against third-quarter profit.
The increased repair cost was one of the major reasons for the slide in net earnings at Rouse for its third quarter of 1987, to $764,000 (0 cents per share) from $6.2 million (11 cents) in the third quarter of 1986. Tripp said the company also experienced increased depreciation costs as a result of a number of new projects.
During the quarter, Rouse's total revenue rose 7.4 percent, to $98.2 million, from $91.4 million. For the first nine months of the year, revenue totaled $277.2 million, compared with $240.8 million in the same period a year ago.
Profit for the first nine months fell to almost half, to $7.9 million (12 cents) from $15.1 million (27 cents).
Tripp said Rouse is pursuing legal action against other parties in the construction project, but he declined to elaborate.
In other earnings reports:
Industrial Training Corp. of Herndon dipped into the red in its third quarter after a drop in sales to employers of its videotape training programs.
The company reported a net loss of $133,880 (17 cents) for the three months ended Sept. 30, compared with a profit of $82,036 (10 cents) a year earlier. Sales dropped to $1.1 million from $1.7 million.
For the first nine months of the year, the company reported a loss of $236,848 (30 cents) on sales of $3.7 million, compared with earnings of $113,770 (14 cents) on sales of $4.5 million for the same period a year ago.
Griffith Consumers Co., a Cheverly distributor of oil, gasoline and other petroleum products, said losses more than doubled in its 1988 fiscal first quarter because recent acquisitions have swelled the size of the company.
The company reported a net loss of $970,234 (39 cents) in the three months ended Sept. 30, compared with a loss of $409,101 (23 cents) a year ago. At the same time, the acquisitions increased sales to $20.4 million from $3.3 million.
The company said the earnings downturn reflected expenses associated with Griffith's 10 acquisitions in fiscal 1987. The company also said that it historically shows losses in the first and fourth quarters and profits in the second and third, a result of seasonal demand for products such as heating oil.