Quarterly report pursuant to sections 13 or 15(d)

BASIS OF PRESENTATION

 v2.3.0.11
BASIS OF PRESENTATION
6 Months Ended
Jun. 30, 2011
BASIS OF PRESENTATION [Abstract]  
BASIS OF PRESENTATION
1. BASIS OF PRESENTATION

The accompanying interim consolidated financial statements and footnotes thereto are unaudited.  In the opinion of the management of Arabian American Development Company (the “Company”), these statements include all adjustments, which are of a normal recurring nature, necessary to present a fair statement of the Company's results of operations, financial position and cash flows for the periods presented.  Unless the context requires otherwise, references to “we,” “us,” “our,” and the “Company” are intended to mean consolidated Arabian American Development Company and its subsidiaries.

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (GAAP) requires management to make estimates and assumptions that affect the amounts of assets, liabilities, revenue, costs, expenses, and gains and losses not affecting retained earnings that are reported in the Consolidated Financial Statements and accompanying disclosures.  Actual results may be different.  See the Company's 2010 Annual Report on Form 10-K for a discussion of the Company's critical accounting estimates.

Interim results are not necessarily indicative of results for a full year.  The information in this Form 10-Q should be read in conjunction with the Company's 2010 Annual Report on Form 10-K.

These consolidated financial statements include the accounts of the Company and its wholly-owned subsidiary, Texas Oil & Chemical Company II, Inc. (the “Petrochemical Company” or “TOCCO”), which owns all of the capital stock of South Hampton Resources, Inc., (“South Hampton”).  South Hampton owns all of the capital stock of Gulf State Pipe Line Company, Inc. (“Gulf State”). The Company owns 100% of the capital stock of South Hampton Resources International, SL (“SHRI”) located in Spain and approximately 55% of the capital stock of a Nevada mining company, Pioche-Ely Valley Mines, Inc. (“Pioche”).  The consolidated financial statements include the financial position, results of operations, and cash flows of Pioche.  Pioche does not conduct any substantial business activity.

We operate in one segment and all revenue originates from United States' sources and all long-lived assets owned are located in the United States.

The Company also owns a 41% interest in Al Masane Al Kobra Mining Company (“AMAK”), a Saudi Arabian closed joint stock company which owns and is developing mining assets in Saudi Arabia.  The Company accounts for its investment under the cost method of accounting.  Under the cost method, earnings will be recognized only to the extent of distributions received.  In July 2011 a new partner, Arab Mining Company (“ARMICO”), acquired a 10% interest in AMAK by investing $37.3 million which will provide AMAK the necessary funding to begin production in early 2012. This investment reduced the Company's ownership interest in AMAK to 37%.