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Technology Stocks : VALENCE TECHNOLOGY (VLNC)
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To: Tom Genna who started this subject2/19/2002 5:10:58 PM
From: Larry Brubaker   of 27311
 
Regarding asset write downs.

Today's 10-Q dispells the myth that the $31.9 million write-down of assets consisted of writing off the value of old manufacturing equipment. Here is what the 10-Q says...

"As a result the Company evaluated the ongoing value of the property, plant and equipment in its Northern Ireland manufacturing facility and the intellectual property acquired in the Telcordia transaction in December 2000. The Company determined that assets with a carrying amount of approximately $53.2 million were impaired and wrote them down by approximately $31.9 million to their fair value. Fair value was based on estimated future cash flows to be generated by these assets, discounted at the Company's market rate of interest. "

The $53.2 million of assets that were written down to $21 million represented substantially ALL of VLNC's property, plant, and equipment AND intellectual property (the combined carrrying value of these was @$56 million on Sept. 30, and they depreciated these assets another $2.4 million in the December quarter before the impairment charge). Thus, the write-down of asset value was against substantially ALL of their assets. And thus, they are saying that they expect to generate future discounted cash flows of approximately $21 million from substantially ALL of the assets they held on September 30.

I wonder how all this reconciles with the CEO's statement (when asked about the write-downs) that things in NI "have never been better?"
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