Annual report pursuant to Section 13 and 15(d)

DISCONTINUED OPERATIONS

DISCONTINUED OPERATIONS

12 Months Ended

Dec. 31, 2021

Discontinued Operations and Disposal Groups [Abstract]

On September 28, 2020, the Company completed the final closing of the previously disclosed sale of its ownership interest in AMAK (the “Share Sale”) to AMAK and certain existing shareholders of AMAK and their assignees (collectively, the “Purchasers”). The Share Sale was completed in multiple closings pursuant to a Share Sale and Purchase Agreement, dated September 22, 2019 (which we refer to herein as the “Purchase Agreement”), among the Company, AMAK, and other Purchasers and resulted in aggregate gross proceeds to the Company of Saudi Riyals (“SAR”) 265 million (approximately $70 million) (before taxes and expenses). As of December 31, 2019, the Company had a non-controlling equity interest of 33.3% in AMAK of approximately $32.9 million.

In connection with the Share Sale, the Company also recorded income from discontinued operations, net of tax, of approximately $1.5 million in the third quarter of 2020, which represents a portion of the Purchaser’s non-refundable deposit of 5% of the purchase price that was forfeited by certain Purchasers for failing to timely close the Share Sale. Other fees and expenses incurred and paid by the Company related to the transaction were approximately $4.0 million and are reflected in operating cash flows from discontinued operations for 2020.

In connection with the completion of the Share Sale, the Company filed the necessary tax returns in the Kingdom of Saudi Arabia and paid foreign taxes related to the transaction of approximately $1.3 million. These foreign taxes created a foreign tax credit which was used to offset U.S. taxes in 2020.

As previously disclosed, and as a result of the Company’s initial investment in AMAK, the Company was required to execute a limited guarantee on October 24, 2010 (the “Guarantee”) of up to 41% of a loan (the “Loan”) by the Saudi Industrial Development Fund (“SIDF”) to AMAK to fund the construction of the AMAK facilities and to provide working capital needs. The provision of personal or corporate guarantees, as applicable, by each shareholder of AMAK was a condition to SIDF providing the Loan. Pursuant to the Purchase Agreement, the Purchasers (other than AMAK) agreed, upon the completion of the Share Sale, to assume the Company’s obligation under the Guarantee (proportionately based upon such Purchaser’s percentage acquisition of ordinary shares in the Share Sale). While a formal written release of the Company from

the Guarantee was not obtained from SIDF prior to closing, the Company believes that the Purchasers’ assumption of the Company’s obligation under the Guarantee effectively eliminates the Company’s liability arising under the Guarantee.

As the sale of the Company's interest in AMAK was completed as of September 28, 2020, there is no applicable 2021 financial information to present and it is thereby omitted for comparison purposes.

Included in discontinued operations are the following:


	Years Ended December 31,
	2020		2019
	(thousands of dollars)
Saudi administration and transaction expenses	$	(2,452)	$	(187)
Equity in earnings (losses) of AMAK	702		(986)
Gain (loss) on sale of equity interest	34,926		(1,473)
Income (loss) from discontinued operations before taxes	33,176		(2,646)
Tax (expense) benefit	(6,967)		556
Income (loss) from discontinued operations, net of tax	$	26,209	$	(2,090)

AMAK’s financial statements were prepared in the functional currency of AMAK which is the SAR. In June 1986 the SAR was officially pegged to the U. S. Dollar at a fixed exchange rate of 1 USD to 3.75 SAR.

The summarized results of operations and financial position for AMAK are as follows:


Results of Operations	Nine Months Ended September 30,		Year Ended December 31,
	2020		2019
	(thousands of dollars)
Sales	$	62,633	$	78,350
Cost of sales	(55,728)		(69,620)
Gross profit	6,905		8,730
Selling, general, and administrative	(4,985)		(13,047)
Operating income (loss)	1,920		(4,317)
Other (expense) income	(346)		558
Finance and interest expense	(1,211)		(1,450)
Income (loss) before Zakat and income taxes	363		(5,209)
Zakat and income tax (expense) benefit	(490)		(1,801)
Net loss	$	(127)	$	(7,010)


Financial Position	September 30,
	2020
	(thousands of dollars)
Current assets	$	29,799
Noncurrent assets	209,814
Total assets	$	239,613

Current liabilities	$	40,919
Long term liabilities	79,122
Stockholders' equity	119,572
	$	239,613

The equity in the earnings (losses) of AMAK included in income (loss) from discontinued operations, net of tax, on the consolidated statements of operations for the years ended December 31, 2020 and 2019 is comprised of the following:


	Nine Months Ended September 30,		Year Ended December 31,
	2020		2019
	(thousands of dollars)
AMAK Net Loss	(127)		(7,010)


Company’s share of loss reported by AMAK	(308)	*	(1,996)
Amortization of difference between Company’s investment in AMAK and Company’s share of net assets of AMAK	1,010		1,010
Equity in earnings (losses) of AMAK	702		(986)
* Percentage of Ownership varies during the period.