Impco Technologies Inc. may be doing some things right in developing leading-edge alternative fuel systems, but after threats of being delisted from the Nasdaq, hefty losses, a change of auditors and the speedy resignation of both its chief executive and chief financial officer, investors mostly are waiting for the dust to settle.

The Cerritos-based company has seen its stock drop from nearly $8 per share in January to the $3 range last week.

“We’re long-term investors,” said Tony Tursich, portfolio manager with Portfolio 21 Mutual Fund, an environmentally-conscious investor that owns 33,000 shares of Impco. “But as it stands right now, we’re not really willing to take a significant position in the company due to the current transition.”

Impco’s first stumble occurred in March when the company announced a delay in the filing of its annual 10-K report, blaming the Sarbanes-Oxley Act and its tougher accounting standards.

The Nasdaq threatened to delist the company. But analysts did not seem worried by the delay, maintaining positive ratings on the stock.

“Sarbanes-Oxley is putting more strain on companies’ accounting systems, and for smaller companies it’s a bigger burden to comply,” Tursich said. “They just needed more time.”

Then, by April 1, the company had reported a wider-than-expected loss for 2004, despite a 58 percent increase in revenues. It also revealed some material weaknesses in its financial reporting: problems with the accounting of physical inventory, segregation of duties in a foreign division, and calculations of the value deferred tax assets. The company finally filed its 10-K and annual report on April 7, and a week later its Chief Financial Officer Nickolai Gerde resigned to return to his home state of Washington “to pursue other opportunities,” according to the company.

Impco lost $14.2 million in 2004, compared with a $6.9 million loss in 2003, as revenues rose to $118.3 million from $74.4 million.

Much of the loss, according to company executives, was derived from almost $7 million in charges taken for the retirement of debt. But the rest resulted from year-end accounting changes related to a change of auditors, Gerde said on a conference call a week prior to his departure.

According to its earnings release, the company had to write down more than $2 million in deferred taxes and $1.5 million in “impairment of goodwill” of some European investments. It also took an additional $1 million charge to increase its reserve for obsolete inventory.

In the midst of this financial hopscotch, Impco was completing its purchase of Italian company BRC, a supplier of alternative fuel products and systems for automobiles. The acquisition was completed the first week in April for 5 million shares of Impco stock and a $10 million cash payment to the brothers who run BRC, Mariano Costamagna and Pier Antonio Costamagna.

One analyst called the confluence of events “the perfect storm.” As a result of the deal, and the realization of accounting weaknesses, the company decided to take some hefty charges which will drag down earnings for the first part of the year.

Impco had purchased 50 percent of BRC in 2003, gaining a foothold in the European alternative fuel market, and announced plans to acquire the rest of the Italian company last September.

Mariano Costamagna took over as chief executive of Impco in January, replacing former Chairman and Chief Executive Robert Stemmler, who became a director but cut his ties with the company in mid-March.

“It’s almost as though BRC is taking over,” Tursich said. The Italian company is family-owned, and now the Costamagna brothers own 48 percent of Impco. Company executives could not be reached for comment.

BRC’s products are used in a number of automobile makes, including Peugeot-Citroen, Ford, Jaguar, DaimlerChrysler, Volkswagen, Fiat-Tofas, Mitsubishi and Daewoo. Impco has been designing fuel conversion products for General Motors Corp.’s alternative vehicles since 1997.

Analysts say that in an environment where energy costs are rising and there is an emphasis on reducing costs and conserving energy, companies like Impco should be able to thrive.

“This company will remain a very small position in our portfolio until it has proven that it is successful in getting through this merger-integration and getting its cost structure in line,” Tursich said.

Bank Buy


Missouri-based First Banks Inc. continued its string of California bank acquisitions, swallowing up the seven-branch International Bank of California for an undisclosed amount last week.

California represents 25 percent to 30 percent of First Banks’ $8.5 billion in assets, First Banks Chief Operating Officer Terrance McCarthy said. This is its 20th acquisition in California.

The St.Louis-based bank has 64 branches in Illinois, 44 in Missouri and 10 in Texas. It has 48 branches in California 31 of them in Southern California.

“We predominantly run along the coast,” McCarthy said. “We don’t have much east of L.A.”

One of the major attractions for IBOC, according to McCarthy, was its four branches in Alhambra, Arcadia, Artesia and Rowland Heights.

International Bank of California was owned by Metropolitan Bank and Trust Co., a privately held bank in the Philippines, and caters to a largely Filipino and Chinese-American customer base. First Banks acquired Filipino-owned banks LippoBank California in 2000 and Redwood Bancorp in 1999.