IMPCO Technologies Announces Fiscal 2004 Earnings
April 01 2005 - 10:34AM
PR Newswire (US)
IMPCO Technologies Announces Fiscal 2004 Earnings CERRITOS, Calif.,
April 1 /PRNewswire-FirstCall/ -- IMPCO Technologies Inc.
(NASDAQ:IMCO), 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- back reconciliation. * 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 this location. * 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 advisors. 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. Attached to this release are unaudited
copies of IMPCO's condensed, consolidated balance sheet and income
statement as of and for the fiscal year ended December 31, 2004.
Earnings Conference Call IMPCO will host a conference call to
discuss its unaudited financial results for fiscal 2004 on Monday,
April 4, 2005 at 8:00 a.m. P.S.T. (11:00 a.m. E.S.T.). All
shareholders and other interested parties are invited to dial into
the call, which may be accessed by calling (706) 679-3125. In order
to ensure participation, please dial in a few minutes prior to the
scheduled time. A recording of the call will be available for 24
hours and can be accessed by calling (800) 642-1687 or (706)
645-9291, reference code # 5246202 Cautionary Statement about
Forward Looking Information The financial data presented in this
release are unaudited and based upon currently available
information. Although management believes them to be accurate,
there can be no assurance that the information presented herein
will not change. Except for historical information, the statements,
expectations and assumptions contained in the foregoing press
release are forward-looking statements. Forward-looking statements
in this release include, but are not limited to, management's
expectations regarding consolidated revenues in the current and
future periods; the likelihood that expected closing conditions
will be satisfied and the BRC acquisition will be consummated as
and when expected; the company's ability to realize upon existing
plans and mitigate the effects of known and unknown risks to future
operations; and the ability accurately to estimate the value of
intangible assets. Such statements are subject to a number of risks
and uncertainties, and actual results could differ materially from
those discussed in any forward-looking statement. Factors that
could cause actual results to differ materially from such
forward-looking statements include, among other factors, the
reaction of the securities markets to changes in management and
business strategy; our ability effectively to integrate our
management team as the transition continues; the combined company's
ability to meet OEM specifications; the success of our recently
announced programs with strategic partners; factors that impact
growth in international markets; and the level and success of the
company's development programs with OEMs. Readers also should
consider the risk factors set forth from time to time in the
company's SEC reports, including but not limited to those contained
in the section entitled "Management's Discussion & Analysis of
Financial Condition and Results of Operation - Risk Factors" in its
annual report on Form 10-K for the fiscal year ended December 31,
2003. The company does not undertake to update or revise any of its
forward-looking statements even if experience or future changes
show that the indicated results or events will not be realized.
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. Phone:
+1-206-315-8242 Fax: +1-206-315-8301 IMPCO TECHNOLOGIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS Year Ended December
31, 2003 and 2004 (In thousands except per share data) Year Ended
December 31, 2003 2004 (Unaudited) Revenue $74,740 $118,292 Costs
and expenses: Cost of revenue 51,780 91,554 Research and
development expense 3,803 4,634 Selling, general and administrative
expense 19,638 20,331 Impairment loss of goodwill 1,328 Loss on
extinguishment of debt 6,752 Total costs and expenses 75,221
124,599 Operating Income (481) (6,307) Interest expense, net 4,039
5,509 Loss from operations before income taxes (4,520) (11,816)
Equity share in income of unconsolidated affiliates 1,107 (943)
Income tax expense 668 2,325 Loss from operations before minority
interest (6,295) (13,198) Minority interest in income of
consolidated subsidiaries 605 1,051 Net Loss $(6,900) $(14,249) Net
income per share: Basic net income $(0.41) $(0.77) Diluted net
income $(0.41) $(0.77) Number of shares used in per share
calculation: Basic 16,643 18,608 Diluted 16,643 18,608 IMPCO
TECHNOLOGIES, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (In
thousands except share data) December 31, December 31, 2003 2004
(Unaudited) ASSETS Current assets $44,129 $43,977 Non-current
assets 57,007 55,980 $101,136 $99,957 LIABILITIES AND STOCKHOLDERS'
EQUITY Current Liabilities 21,990 28,847 Non-current liabilities
22,017 24,469 Shareholders Equity 57,129 46,641 $101,136 $99,957
DATASOURCE: IMPCO CONTACT: Dale Rasmussen, Vice President, Investor
Relations of IMPCO, +1-206-315-8242, or fax, +1-206-315-8301
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