================================================================================
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------
FORM 8-K
----------
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): March 9, 2005
----------
AMCOL INTERNATIONAL CORPORATION
(Exact name of registrant as specified in its charter)
DELAWARE 0-15661 36-0724340
State of Other Jurisdiction Commission File Number I.R.S. Employer
of Incorporation Identification Number
ONE NORTH ARLINGTON, 1500 WEST SHURE DRIVE, SUITE 500
ARLINGTON HEIGHTS, IL 60004-7803
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (847) 394-8730
NOT APPLICABLE
(Former name or former address, if changed since last report)
================================================================================
ITEM 2.02 RESULTS OF OPERATIONS AND FINANCIAL CONDITION.
On March 15, 2005, AMCOL International Corporation (sometimes referred to in
this Report as the "Company") issued a press release (i) reporting that the
Company expects to restate the financial results reported in its quarterly
report on Form 10-Q, as amended, for the quarter ended September 30, 2004 due to
an understatement of net income during such period, (ii) reporting revisions to
its financial results for the quarter and year ended December 31, 2004,
previously reported in the Company's press release, dated January 18, 2005,
(iii) indicating that the Company will report a material weakness in its
internal control over financial reporting in its Annual Report on Form 10-K
resulting from points (i) & (ii), and (iv) reporting that the Company is filing
a Form 12b-25 to report the delay in filing its Annual Report on Form 10-K. A
copy of the Company's press release is attached hereto as Exhibit 99.1 and is
hereby incorporated by reference.
ITEM 4.02 NON-RELIANCE ON PREVIOUSLY ISSUED FINANCIAL STATEMENTS OR A
RELATED AUDIT REPORT OR COMPLETED INTERIM REVIEW.
(a) In its March 15, 2005 press release, referenced in Item 2.02 above, the
Company announced that it expects to restate prior financial results.
Specifically, on March 9, 2005, the audit committee of the Company's board of
directors concluded that previously issued financial information contained in
(i) the Company's quarterly report on Form 10-Q for the period ended September
30, 2004, as originally filed on November 8, 2004 and as amended on November 9,
2004, and (ii) the Company's press release, dated January 18, 2005, titled
"AMCOL International Reports 34 Percent Increase in Fourth Quarter Diluted
Earnings Per Share From Continuing Operations Over 2003" should not be relied
upon because of errors arising from the understatement of net income during its
third quarter of 2004. The Company's audit committee and senior management
discussed the matter disclosed in this report with KPMG LLP, the Company's
independent registered public accounting firm.
In September 2004, the Company filed amended federal income tax returns for the
1999, 2000, 2001 and 2002 tax years. The amended federal tax returns seek
additional refunds for the 1999, 2000, 2001 and 2002 tax years on the basis of
changes in certain deductions and credits allowed in those years, partly carried
back to 1996 (the "Claimed Deduction and Credit Calculation Refunds"). The total
amount of refunds sought by the Company in connection with the Claimed Deduction
and Credit Calculation Refunds is $5.2 million.
Previously, the management of the Company did not recognize any net income in
connection with the filing of the amended federal tax returns because it
believed that any potential gain was contingent upon various factors which
precluded assessing the likelihood of a refund as probable. In connection with
the preparation of its Annual Report on Form 10-K, the management of the Company
has determined that this belief was erroneous and that that it is probable that
the Company will recover at least $4.0 million as a result of the Claimed
Deduction and Credit Calculation Refunds. Therefore, the Company is required
under U.S. generally accepted accounting principles to recognize an income tax
receivable of $4.0 million in the quarter ended September 30, 2004 as a result
of the Claimed Deduction and Credit Calculation Refunds. Because management
considers it
appropriate to record an income tax receivable, it has also determined that an
accrual should be recorded for estimated professional accounting fees of $1.2
million ($0.8 million net of taxes) associated with the Claimed Deduction and
Credit Calculation Refunds. The net effect of recording the income tax
receivable and the professional accounting fees accrual is an increase of $3.2
million in net income for the quarter ended September 30, 2004.
In addition, the Company has determined that it is necessary to make certain
adjustments correcting the deferred income tax assets and income taxes payable
by a wholly-owned Company subsidiary in the United Kingdom (the "UK Tax
Adjustments"). These adjustments include an increase in retained earnings by
$1.0 million and a reduction of the Company's income tax expense for the quarter
ended September 30, 2004 by $1.1 million, which in turn increases the Company's
net income for such period by an equal amount.
Accordingly, the Company expects to restate its financial statements for the
quarter ended September 30, 2004 to reflect the foregoing, resulting in
additional net income of $4.3 million and an increase in retained earnings of
$1.0 million. The Company will file with the Securities and Exchange Commission
an amended quarterly report on Form 10-Q/A for such period. The Company expects
to file such amended quarterly report on Form 10-Q/A no later than March 31,
2005.
The foregoing corrections are also reflected in its revised discussion of
financial results for the quarter and year ended December 31, 2004 reported in
the Company's press release dated March 15, 2005 attached hereto as Exhibit
99.1.
The discussion of the Company's revised financial results contained in this
Current Report on Form 8-K and the attached press release has been prepared by
management and represents management's preliminary assessment of the revised
results and has not been audited or reviewed by KPMG LLP. Actual revised
financial results for the quarter ended September 30, 2004 will be included in
the Company's amended quarterly report on Form 10-Q/A for such period. Audited
financial results for the year ended December 31, 2004 will be included in the
Company's Annual Report on Form 10-K.
The Company's management is in the process of assessing the effectiveness of the
Company's internal control over financial reporting. The fact that the Company
will restate its financial statements as described above is indicative of a
material weakness in the Company's internal control over financial reporting.
Accordingly, management will report a material weakness in internal control over
financial reporting as of December 31, 2004 with respect to control over
accounting for income taxes, when it completes the assessment required by
Section 404 of the Sarbanes-Oxley Act.
ITEM 8.01 OTHER EVENTS.
Adjustment of Retained Earnings
The amended federal tax returns referenced in Item 4.02 above also seek a refund
for the 2000 tax year as a result of the Company's inadvertent failure to deduct
certain state taxes paid in connection with the gain realized on the Company's
sale of its Chemdal super-absorbent polymer business in 2000 (the "Claimed State
Tax Deduction Refund"). The total amount of refunds sought by the Company in
connection with the Claimed State Tax Deduction Refund is $5.6 million.
Previously, the management of the Company did not recognize any net income in
connection with the filing of the amended federal tax returns because it
believed that any potential gain was contingent upon various factors which
precluded assessing the likelihood of a refund as probable. In connection with
the preparation of its Annual Report on Form 10-K, the management of the Company
has determined that this belief was erroneous and that it is probable that the
Company will recover $5.6 million as a result of the Claimed State Tax Deduction
Refund. Therefore, the Company is required to increase its retained earnings for
the quarter ended September 30, 2004 by $5.6 million as a result of the Claimed
State Tax Deduction Refund.
The Company will include in the restated financial statements for the quarter
ended September 30, 2004 the increase in its third quarter retained earnings
from $140.0 million to $146.6 million due to the Claimed State Tax Deduction
Refund and the UK Adjustment discussed above.
In addition, during the review and investigation of the Claimed Deduction and
Credit Calculation Refunds, UK Tax Adjustments and Claimed State Tax Deduction
Refund, the Company has determined that certain other nonmaterial adjustments,
reclassifications and revised accounting estimates are appropriate to include in
its restated financial statements for the quarter ended September 30, 2004 and
its revised discussion of financial results for the quarter and year ended
December 31, 2004.
As noted in Item 4.02 above, the discussion of the Company's revised financial
results contained in this Current Report on Form 8-K and the attached press
release has been prepared by management and represents management's preliminary
assessment of the revised results and has not been audited or reviewed by KPMG
LLP. Actual revised financial results for the quarter ended September 30, 2004
will be included in the Company's amended quarterly report on Form 10-Q/A for
such period. Audited financial results for the year ended December 31, 2004 will
be included in the Company's Annual Report on Form 10-K.
Delay in Filing Form 10-K
As a result of the time and resources being devoted by the Company's management
to the restatement of the Company's financial statements for the quarter ended
September 30, 2004, the Company has been unable to devote sufficient resources
to timely provide to KPMG LLP all materials necessary to complete the audit of
the Company's financial statements for the year ended December 31, 2004.
Although the Company is diligently working with KPMG LLP in the performance of
its audit, it recently became
clear that the Company will not be able to file its Annual Report on Form 10-K
in a timely manner. Accordingly, the Company is filing a Form 12b-25 to report
the delay in filing its Annual Report on Form 10-K, which the Company expects to
file on or prior to March 31, 2005.
ITEM 9.01 FINANCIAL STATEMENTS AND EXHIBITS
(c) Exhibits.
99.1 Press Release titled "AMCOL International (NYSE: ACO) Reports Increase in
Net Income for Third Quarter 2004 Results, Restatement of Third Quarter 2004
Financial Statements, Material Weakness in Internal Control resulting from the
restatement and Delay in Filing Annual Report on Form 10-K" dated MXarch 15,
2005.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
AMCOL INTERNATIONAL CORPORATION
Date: March 15, 2005 By: /s/ Lawrence E.Washow
-------------------------------------
Lawrence E. Washow
President and Chief Executive Officer