4.4.2005: Meldung: Impco Technologies Inc.: Fiscal 2004 Earnings
Friday April 1, 9:34 am ET
CERRITOS, Calif., April 1 / Impco Technologies Inc. (Nasdaq: IMCO - News), today announced earnings for the fiscal year ended December 31, 2004, indicating that it reported a net loss of $14.2 million, or $0.77 per share, on revenues of $118.3 million and an operating loss of $6.3 million, as compared to a net loss of $6.9 million, revenues of a $74.7 million and an operating loss of $0.5 million for the prior fiscal year. The loss for the 2004 fiscal year includes a $6.8 million charge associated with the early retirement of Impco"s high-interest senior subordinated secured notes; net of the charge for debt retirement costs, the company would have incurred a net loss of $7.4 million and operating income of $0.5 million. The retirement of the company"s subordinated debt is expected to reduce interest costs in 2005 by approximately $4.0 million.
As a follow up to guidance previously given early in January 2005 for our fourth fiscal quarter, the company reported that revenues in that period were approximately $27.1 million in comparison to previous guidance of $27.5 to 28.5 million. Net loss for the quarter was $16.3 million in comparison to previous guidance of $8.4 million. The difference of $7.9 million includes non-cash charges of $6.7 million. These fourth quarter changes between previous guidance and actual results relate primarily to normal year-end accounting processes regarding assessments of the carrying value of certain assets, including:
* A $2.2 million reduction in the company"s deferred tax asset due to an
increase in the valuation allowance attributable to adjustments in our
forecasts for future economic performance.
* A $1.5 million impairment of goodwill and investments associated with
foreign operations where the company has made strategic decisions to
change its operations due to market conditions.
* An increase of $1.2 million in the reserve for obsolete inventory to
better reflect actual and anticipated product mix between fuel systems
and component sales.
* A $0.7 million increase in reserve for uncollectible accounts and
warranty reserves. The increase in warranty reserves relates primarily
to recent changes in product mix.
* A $0.6 million increase in reserves related to the company"s strategic
decision to change its organization and ownership structure in Mexico
to better access the market.
* A non-cash adjustment of $0.5 million associated with the pay-off of
the Bison debt which was redeemed on December 29, 2004.
* A shortfall of $0.9 million in net income from our previous fourth
quarter guidance for BRC, of which $0.6 million was caused by an
increase in BRC"s reserves for the Brazil joint venture, and
$0.3 million of which represents startup costs for a new facility for
conversion of OEM vehicles.
* Net cash-related charges of $0.7 million, of which $0.3 million
represents expenses to fund the company"s employee deferred
compensation plan and other miscellaneous charges.
Mr. Costamagna, whose family is the major shareholder of the company and who became Impco"s Chief Executive Officer on January 1, 2005, said that, "While we certainly are disappointed to report a loss for 2004 and to be late with the filing of our Annual Report on Form 10-K, we believe our new management team and the processes we are adopting ultimately will position the company to comply with our reporting obligations while allowing us to focus careful attention on the commercial and industrial aspects of our business. These steps are essential to position the company for the future. We feel this is a critical juncture in the company"s history with new management and improving internal control processes," stated Mr. Costamagna. He continued, "We believe it is absolutely necessary and in the long-term interests of our shareholders to improve our returns on investment by implementing financial processes that will allow us to assess our business and economic resources more readily from an industrial and commercial perspective. As CEO, I recognize that our shareholders increasingly expect consistency in financial performance, and one of my primary goals is to promote a corporate environment in which shareholders find our financial statements clear and understandable, and our performance attractive and predictable." Moreover, he said, "with the completion of the acquisition of the remaining 50% equity interest of B.R.C., S.r.l., we expect to report comparative improvements in financial results for the combined operations of the company in 2005."
In concluding, Mr. Costamagna continued, "When I took charge as CEO, I felt that it was absolutely necessary in the long-term interests of our shareholders to position the company to respond aggressively to potential growth in the newly revitalized alternative fuel sector. To prepare our company for growth, I believe it is crucial to build on a foundation that includes a sound financial base. In addition to a tremendous boost in investor confidence, this move will improve our ability to apply our economic resources most efficiently and to invest them most wisely for the future."
The company also disclosed that its assessment of its internal control over financial reporting had identified three material weaknesses. These material weaknesses include:
* Cycle counting of physical inventory. The key internal controls over
financial reporting related to cycle counting is to confirm the
quantities that are recorded in the inventory perpetual records since
1) the perpetual records are the source for recording inventory values
in the company"s general ledger and then correspondingly in the
financial statements, and 2) if the process and counts are accurate,
the cycle counting process replaces the necessity to physically count
the inventory at period end. Accordingly the company undertook
alternative procedures in physical counts of a substantial portion of
the inventories subsequent to December 31, 2004 and performed a roll-
* Lack of segregation of duties in one of the company"s foreign
locations. The key controls over financial reporting related to
segregation of duties is to provide for approval procedures and
accounting controls to prevent the opportunity for theft or
falsification of records. Upon detection, the company has instituted
alternative processes to provide for adequate segregation of duties in
* Lack of control over the computation of the realizable value of
deferred tax assets. The key controls over financial reporting
relating to valuation of the deferred tax assets relates to the need
for the company to maintain sufficient numbers of internal personnel,
or to maintain adequate coordination with outside advisors, to address
the adequacy of the value of the tax benefit relating to the company"s
net operating loss carry forwards. The company has instituted a
process by which management will maintain adequate staffing or will
address more carefully the responsibilities delegated to outside
As noted above in the description of the three reported material weaknesses in internal controls over financial reporting, the company has taken immediate corrective action to ensure adequate inventory cycle counting processes and has also taken corrective action to ensure adequate segregation of duties in one of its foreign locations. Further, the Company will address more carefully the responsibilities delegated to outside advisors in the future.
About Impco Technologies
Impco is a leading source of advanced alternative fuel systems technology and components for internal combustion engines. Impco products enable these engines to function using environmentally friendly gaseous fuels such as propane, natural gas and biogas. Impco products improve efficiency and performance while reducing emissions. Impco is a major supplier to original equipment manufacturers and the aftermarket in the bus and truck, industrial and power generation markets, as well as to the automotive aftermarket. Impco supports its global aftermarket through a network of more than 400 distributors and dealers, and 12 regional offices.
For further information, please contact Dale Rasmussen, Vice President, Investor Relations.