Quantum Technologies to Restate 2005 Annual Report on Form 10-K and 2006 Third Quarter Report on Form 10-Q
IRVINE, Calif., June 8 -- Quantum Fuel Systems Technologies Worldwide, Inc. , today announced that it will amend the Company's April 30, 2005 10-K and the January 31, 2006 10-Q to reflect the Company's revised accounting for the allocation of consideration between goodwill and customer related intangible assets in connection with the acquisition of Tecstar Automotive Group ("Tecstar"), formerly known as Starcraft Corporation.
On March 3, 2005, the Company completed its acquisition of Tecstar and preliminarily allocated the purchase price in excess of tangible net assets to goodwill in the amount of $138.1 million and to intangible assets in the amount of $5.2 million (consisting of customer related intangible of $3.1 million and intellectual property of $2.1 million). The Company recently revalued the customer related intangible asset and increased the amount to $44.6 million and decreased goodwill to $102.6 million as of April 30, 2005. A deferred tax liability arises due to temporary differences in the intangible assets base for tax and book as future amortization expense is non-deductible for tax purposes. The impact of the temporary differences on the Company's consolidated income taxes resulted in a net deferred tax liability of $6.1 million recorded in connection with the acquisition.
The revised value of the customer relationship intangible contemplates the renewal of existing contracts and other revenues and cash flows beyond the previously estimated 19 month period and extends the valuation period to 30 years, including new model year and future model year programs and other competitive and economic considerations. Based on competitive factors, changes in technology and consumer preferences and other industry considerations, the Company has established a 30 year useful life for the customer relationship intangible asset.
The impact of the corrections that would be necessary to revise the allocation for the three and twelve month periods ending April 30, 2005, and the three month periods ending July 31, 2005, October 31, 2005 and January 31, 2006, respectively, did not have a material impact on the Company's consolidated statements of operations for any of these previously reported periods individually or on a cumulative basis; however, the cumulative impact of the corrections if not made are likely to have a material impact for future periods, including the three month period ending April 30, 2006. In view of that potential impact, the Company will restate the financial statements for the most recent reporting period and include corrections in the three-month period ended January 31, 2006 to bring the earnings impact of the changes current through January 31, 2006. The amounts in the Condensed Consolidated Statement of Operations for the three and nine month periods ending January 31, 2006, as restated, are anticipated to include a reduction of $408,222 for amortization of intangibles expense and an increase in the income tax benefit of $531,483 (a total reduction in net loss of $939,705) as compared to amounts previously reported.
A summary of the anticipated effects of the restatements on the Consolidated Financial Statements is as follows:
April 30, 2005 January 31, 2006
As Previously As Previously
Reported As Restated Reported As Restated
Consolidated
Balance Sheet
Data
Intangible
assets, net $16,731,930 $58,231,930 $13,381,099 $55,289,321
Goodwill 138,004,271 102,594,699 138,130,986 102,721,414
Total assets 277,661,780 283,752,208 262,427,125 268,925,775
Deferred income
tax liabilities -- 6,090,428 -- 5,558,945
Accumulated
deficit (35,543,418) (35,543,418) (57,510,475) (56,570,770)
Total
stockholders'
equity 219,208,033 219,208,033 197,107,214 198,046,919
Total
liabilities and
stockholders'
equity 277,661,780 283,752,208 262,427,125 268,925,775
Three Months Ended Nine Months Ended
January 31, 2006 January 31, 2006
As Previously As Previously
Reported As Restated Reported As Restated
Consolidated
Statements of
Operations Data
Amortization of
intangibles $1,116,945 $708,723 $3,350,833 $2,942,611
Total costs and
expenses 46,072,936 45,664,714 167,015,227 166,607,005
Operating loss (10,068,958) (9,660,736) (20,522,228) (20,114,006)
Income tax benefit
(provision) (3,000) 528,483 (14,627) 516,856
Net loss (10,781,408) (9,841,703) (21,967,057) (21,027,352)
Net loss per share
- basic and
diluted $(0.20) $(0.19) $(0.42) $(0.40)
Nine Months Ended
January 31, 2006
As Previously
Reported As Restated
Consolidated
Statements of
Cash Flows Data
Net loss $(21,967,057) $(21,027,352)
Adjustments to
reconcile net loss
to net cash used
in operating
activities:
Depreciation and
amortization 8,254,454 7,846,232
Non-cash income
tax benefit -- (531,483)
About Quantum
Quantum is a leader in powertrain engineering, system integration, and manufacturing of packaged fuel systems and accessories for specialty vehicles and applications, including fuel cells, hybrids, alternative fuels, hydrogen refueling, new body styles, mid-cycle vehicle product enhancements, and high performance engines and drive trains for OEMs and consumers of specialty equipment parts and accessories. Quantum also designs and manufactures hybrid and fuel cell vehicles.
Quantum has product commercialization alliances with General Motors, AM General, and Sumitomo. Quantum's customer base includes General Motors, Toyota, Opel, Hyundai, Suzuki, Ford, DaimlerChrysler, Sunline, Yamaha, AeroVironment, and the U.S. Army.
More information can be found about Quantum's products and services at www.qtww.com.
Quantum is a member of the Russell 2000(R) and Russell 3000(R) indexes. Forward-Looking Statements
Statements in this document regarding future financial and operating results, future growth in customers and development programs, benefits and synergies of the merger with Tecstar, the development and commercialization of fuel cell vehicles and applications, new or expanded customer contracts, the impact of oil prices on demand for our products, the commitment of OEMs and other entities to the hydrogen economy, future opportunities for Quantum, and any other statements about the future expectations, beliefs, goals, plans, or prospects expressed by management constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Any statements that are not statements of historical fact (including but not limited to statements containing the words "will," "believes," "plans," "anticipates," "expects," "estimates," and similar expressions) should also be considered to be forward-looking statements. There are a number of important factors that could cause actual results or events to differ materially from those indicated by such forward-looking statements.
Forward-looking statements are based on the beliefs, opinions, and expectations of the Company's management as of the date of this press release, and the Company does not assume any obligation to update its forward-looking statements if those beliefs, opinions, expectations, or other circumstances should change.
For more information regarding Quantum, please contact:
Dale Rasmussen
Investor Relations
+1-206-315-8242
Email: drasmussen@qtww.com
(C)2006 Quantum Fuel Systems Technologies Worldwide, Inc.
Advanced Technology Center
17872 Cartwright Road, Irvine, CA 92614
Phone 949-399-4500 Fax 949-399-4600