Fuel Systems Solutions, Inc. (FSYS)

[Democritus_of_Abdera]

Re Delayed Q2 Reporting...

It was reported this morning that FSYS "expects to delay the announcement of its financial results for the second quarter of 2014 beyond its typical announcement date and that it also may file a notification of late filing (Form 12b-25) to extend the time to file its Quarterly Report on Form 10-Q for that period. The delay is expected to be necessary for management to complete its analysis of whether the Company may be required to record a goodwill and long-lived asset impairment charge for the second quarter of 2014 and, if required, to determine the amount of any such non-cash charge." (http://finance.yahoo.com/news/fuel-systems-solutions-inc-expects-103000943.html)

I'm wondering if this delay is related to today's events concerning Argentina's bond default...which could lead to a serious currency devaluation.

FSYS assembles products in Beccar, Argentina, as well as at other sites outside of Argentina.

After a long legal battle with hedge funds that rejected Argentina's debt restructuring following its 2002 default, Latin America's third-biggest economy failed to strike a deal in time to meet a midnight deadline for a coupon payment on exchange bonds.... As dire as it is, the situation is a far cry from the mayhem following the country's economic crash in 2001-2001 when the economy collapsed around a bankrupt government. Millions of Argentines lost their jobs. This time the government is solvent. How much pain the default inflicts on Argentina, which is already in recession, will depend on how swiftly the government can extricate itself from its obligations.... U.S. ratings agency Standard & Poor's on Wednesday downgraded the country's long- and short-term foreign currency credit rating to "selective default". The default rating will remain until Argentina makes its overdue June 30 coupon payment on its discount bonds maturing in 2033, the agency said.

http://www.reuters.com/article/2014/07/31/us-argentina-debt-idUSKBN0G00DX20140731

Per the 2014Q10 FSYS had about $48M goodwill on its books ($41M for the Automotive division and $8M for the Industrial division).

They warned in their discussion of Quantitative and Qualitative disclosures about market risk that they are " exposed to significant volatility from countries that could devalue their currencies, such as Argentina. In countries outside of the United States, we generally generate revenues and incur operating expenses denominated in local currencies. These revenue and expenses are translated using the average rates during the period in which they are recognized and are impacted by changes in currency exchange rates. We monitor this risk and attempt to minimize the exposure to our net results through the management of cash disbursements in local currencies."

Note that per the 8K filled 3/14/2014, operating loss for the fourth quarter of 2013 totaled $3.2 million, or 3.4% of revenue, compared to operating loss of $20.8 million, or 21.2% of revenue in the fourth quarter of 2012, which included a non-cash goodwill and asset impairment charge of $22.0 million.