Ladish ( LDSH), a maker of jet engine components, said its independent auditor Deloitte & Touche quit in a dispute over the way the company values its net operating loss carryforwards.

The dispute was over the company's practice of not recognizing as an asset the deferred tax benefit from net operating losses incurred in the early 1990s. According to the company, the asset's value would depend upon Ladish's ability to generate enough taxable income before the operating losses expire under the Internal Revenue Code.

"Because our business is cyclical, we have felt that leaving this asset off our balance sheet and recognizing the tax benefits as utilized on an annual basis was the conservative approach," said Wayne E. Larsen, Ladish's chief financial officer.

The company is in talks with prospective new auditors and hasn't determined if it needs to restate its earnings. If it did, Ladish said, it wouldn't affect its actual tax liability or cash flow. The company estimated that a restatement could increase 2001 net income by 15 cents a share and reduce net income in the first six months of 2002 by 2 cents a share.

"We will have better information once our new auditors have looked at the issue and determined, with the audit committee of the board, what if any restatements are necessary," Ladish said, adding that it expected the audit committee would follow the recommendation of the new auditing firm.

The company's shares were down nearly 15% at $8.26.