Annual report pursuant to section 13 and 15(d)

CHANGE IN ACCOUNTING PRINCIPLE FOR INVESTMENT IN AMAK

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CHANGE IN ACCOUNTING PRINCIPLE FOR INVESTMENT IN AMAK
 12 Months Ended
Dec. 31, 2012
CHANGE IN ACCOUNTING PRINCIPLE FOR INVESTMENT IN AMAK [Abstract]  
CHANGE IN ACCOUNTING PRINCIPLE FOR INVESTMENT IN AMAK
NOTE 2 – CHANGE IN ACCOUNTING PRINCIPLE FOR INVESTMENT IN AMAK

As discussed in Note 9, 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.