AAI's CEO resigns as firm suffers amid defense cuts

April 30, 1993|By Ted Shelsby | Ted Shelsby,Staff Writer

Thomas V. Murphy has resigned as president and chief executive of AAI Corp. in Cockeysville, after three shaky years at the helm of what was one of Maryland's fastest-growing companies during the defense buildup in the Reagan administration.

AAI's parent, New York-based United Industrial Corp., announced the move yesterday, after its board of directors meeting Tuesday.

"AAI has not had a good year," said Howard M. Bloch, secretary and treasurer of United, who was visiting AAI, the company's chief operating unit, yesterday. He noted a sharp drop in earnings last year at the unit, caused partly by a $23 million corporate restructuring and the disappointing performance of a commercial flight simulation company it acquired two years ago to lessen its dependence on a declining Pentagon budget.

Mr. Bloch would not elaborate on the circumstances surrounding Mr. Murphy's departure, saying only: "Generally, as chief executive of a company, there is very little beyond your control, ,, unless something is hit by lightning. We, the board, just felt that, based on the results of AAI and the restructuring charge, this was the appropriate action."

The company said yesterday, without elaborating, that Mr. Murphy had tendered his resignation earlier this year in conjunction with the company's restructuring, which is proceeding.

AAI acquired Microflite Simulation International Corp., a Binghamton, N.Y.-based maker of flight simulators used to train commercial pilots, in 1991 for about $14 million, according to Mr. Bloch.

Based on the advice of the accounting firm of Coopers & Lybrand, which United hired earlier this year to help it with a corporate restructuring of AAI, AAI is trying to sell the unprofitable Microflite unit.

Mr. Bloch called the problems at Microflite "an important factor" in Mr. Murphy's resignation, saying, "Obviously, we don't purchase companies to lose money."

United posted a 79 percent drop in fourth-quarter earnings, and profits for the year were off 32 percent. AAI represents about 80 percent of United's revenue.

Mr. Bloch said that a search was under way for a new chief executive. Although in-house people will be considered, he said, the new CEO "will most likely come from outside the company."

Lawrence J. Rytter, an AAI executive vice president, will assume the day-to-day operations until a new leader is chosen.

Mr. Murphy, 61, took over the helm of AAI in May 1990, after the death of Stuart M. Macht, who had served as president for about six months. Mr. Murphy previously was executive vice president of AAI. He came to the company in 1968 from Rockwell International Corp., where he directed its missile systems division.

AAI benefited from increased defense spending during the Reagan administration. Employment at the York Road complex grew to a high of about 3,500 in late 1987, from about 1,500 in 1979.

Like other defense contractors, AAI has been forced to lay off workers in recent years; it now employs about 1,400. Last month, it announced plans to lay off between 150 and 225 workers by midsummer.

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