CHANGE IN ACCOUNTING PRINCIPLE FOR INVESTMENT IN AMAK |
NOTE 2 – CHANGE IN ACCOUNTING PRINCIPLE FOR INVESTMENT IN AMAK
As discussed in Note 10, in 2012 the Company determined that changes in the level of its participation in the management of AMAK now indicated that the Company had significant influence over the financial and operating policies of AMAK. Accordingly, the Company changed from the cost method of accounting for its investment in AMAK to the equity method of accounting for the investment. In accordance with ASC 323-10-35-33, the financial statements for the prior periods have been retrospectively restated to account for the investment in AMAK for all periods.
The effects of the retrospective application of the equity method of accounting to 2011 are as follows:
|
|
December 31, 2011 |
|
|
|
As Reported |
|
|
As Restated |
|
|
|
(thousands of dollars) |
|
Consolidated Balance Sheet |
|
|
|
|
|
|
Investment in AMAK |
|
$ |
30,884 |
|
|
$ |
38,105 |
|
Total assets |
|
|
110,612 |
|
|
|
117,833 |
|
Deferred income tax liability – long term |
|
|
7,016 |
|
|
|
9,394 |
|
Total liabilities |
|
|
44,374 |
|
|
|
46,751 |
|
Retained earnings |
|
|
20,187 |
|
|
|
25,030 |
|
Total Arabian American Development Company stockholders' equity |
|
|
65,949 |
|
|
|
70,793 |
|
Total equity |
|
|
66,238 |
|
|
|
71,082 |
|
Total liabilities and equity |
|
|
110,612 |
|
|
|
117,833 |
|
|
|
December 31, 2011 |
|
|
|
As Reported |
|
|
As Restated |
|
|
|
(thousands of dollars) |
|
Consolidated Statement of Income |
|
|
|
|
|
|
Equity in loss of AMAK |
|
$ |
- |
|
|
$ |
1,018 |
|
Gain from additional equity issued by AMAK |
|
|
- |
|
|
|
8,850 |
|
Income before income tax expense |
|
|
12,557 |
|
|
|
20,389 |
|
Income tax expense |
|
|
4,127 |
|
|
|
6,505 |
|
Net income |
|
|
8,430 |
|
|
|
13,884 |
|
Net income attributable to Arabian American Development Company |
|
|
8,430 |
|
|
|
13,884 |
|
Net income per common share |
|
|
|
|
|
|
|
|
Basic |
|
$ |
0.35 |
|
|
$ |
0.58 |
|
Diluted |
|
$ |
0.35 |
|
|
$ |
0.57 |
|
|
|
December 31, 2011 |
|
|
|
As Reported |
|
|
As Restated |
|
|
|
(thousands of dollars) |
|
Consolidated Statement of Stockholders' Equity |
|
|
|
|
|
|
Comprehensive income |
|
$ |
8,419 |
|
|
$ |
13,872 |
|
|
|
December 31, 2011 |
|
|
|
As Reported |
|
|
As Restated |
|
|
|
(thousands of dollars) |
|
Consolidated Statement of Cash Flows |
|
|
|
|
|
|
Operating activities |
|
|
|
|
|
|
Net income attributable to Arabian American Development Company |
|
$ |
8,430 |
|
|
$ |
13,884 |
|
Deferred income taxes |
|
|
860 |
|
|
|
3,238 |
|
Equity in loss of AMAK |
|
|
- |
|
|
|
1,018 |
|
Gain from additional equity issued by AMAK |
|
|
- |
|
|
|
(8,850 |
) |
The effects of the retrospective application of the equity method of accounting to 2010 are as follows:
|
|
December 31, 2010 |
|
|
|
As Reported |
|
|
As Restated |
|
|
|
(thousands of dollars) |
|
Consolidated Balance Sheet |
|
|
|
|
|
|
Investment in AMAK |
|
$ |
30,884 |
|
|
$ |
30,273 |
|
Total assets |
|
|
92,528 |
|
|
|
91,917 |
|
Retained earnings |
|
|
11,756 |
|
|
|
11,145 |
|
Total Arabian American Development Company stockholders' equity |
|
|
56,551 |
|
|
|
55,940 |
|
Total equity |
|
|
56,840 |
|
|
|
56,230 |
|
Total liabilities and equity |
|
|
92,528 |
|
|
|
91,917 |
|
|
|
December 31, 2010 |
|
|
|
As Reported |
|
|
As Restated |
|
|
|
(thousands of dollars) |
|
Consolidated Statement of Income |
|
|
|
|
|
|
Equity in loss of AMAK |
|
$ |
263 |
|
|
$ |
874 |
|
Income before income tax expense |
|
|
4,388 |
|
|
|
3,778 |
|
Net income |
|
|
2,686 |
|
|
|
2,075 |
|
Net income attributable to Arabian American Development Company |
|
|
2,686 |
|
|
|
2,075 |
|
Net income per common share |
|
|
|
|
|
|
|
|
Basic |
|
$ |
0.11 |
|
|
$ |
0.09 |
|
Diluted |
|
$ |
0.11 |
|
|
$ |
0.09 |
|
|
|
December 31, 2010 |
|
|
|
As Reported |
|
|
As Restated |
|
|
|
(thousands of dollars) |
|
Consolidated Statement of Stockholders' Equity |
|
|
|
|
|
|
Comprehensive income |
|
$ |
2,790 |
|
|
$ |
2,180 |
|
|
|
December 31, 2010 |
|
|
|
As Reported |
|
|
As Restated |
|
|
|
(thousands of dollars) |
|
Consolidated Statement of Cash Flows |
|
|
|
|
|
|
Operating activities |
|
|
|
|
|
|
Net income attributable to Arabian American Development Company |
|
$ |
2,686 |
|
|
$ |
2,075 |
|
Equity in loss of AMAK |
|
|
263 |
|
|
|
874 |
|
AMAK's activities through December 31, 2009, were limited to the construction of facilities to begin the commercial development of the interests. As a result, AMAK did not have significant income or loss through December 31, 2009, and the change to the equity method of accounting had no effect on the January 1, 2010, beginning balance of retained earnings.
|