RTI International Metals, Inc. (NYSE: RTI) announced today that it has filed a Form 12b-25 notifying the Securities and Exchange Commission (SEC) that it will be delayed in filing its financial results for the second quarter of 2013 on Form 10-Q. The delay is due to the previously announced and ongoing review related to a correction of the Company’s accounting methodology that impacts the timing of revenue recognition related to certain energy market projects. RTI’s energy market projects generate less than 10% of the Company’s consolidated net sales.
Company management and RTI’s independent registered public accounting firm, PricewaterhouseCoopers LLP (“PwC”), are in the process of evaluating the impact of the correction. The Company will complete the review and file its second quarter Form 10-Q as soon as practicable.
Following a periodic review by the Public Company Accounting Oversight Board (“PCAOB”) of the independent audit conducted by PwC of RTI’s financial statements, the Company determined that, due to the evolving nature of the energy work performed and related contractual arrangements, a portion of RTI’s energy market projects should be accounted for using the “percentage-of-completion” method. This differs from the method previously utilized by the Company on these projects, whereby project revenue and cost of sales were recognized upon completion of individual components of the projects. As a result of this correction, the Company is also evaluating whether any required reallocation of revenues and cost of sales between historical reporting periods would be deemed material, thereby requiring restatement of the applicable historical reported financial results.
The correction of the Company’s revenue recognition methodology for these contracts will have no impact on the total revenues, profitability or cash flows to be realized by the affected energy market projects. As previously disclosed in the Company’s second quarter 2013 preliminary financial results press release issued on July 30, 2013, the cumulative effect of the correction was estimated to result in an increase in net sales of approximately $18.2 million and an offsetting adjustment to cost of sales of approximately $18.6 million. Based on the results of the ongoing review, the current estimate for such a cumulative correction is an increase in net sales of approximately $15.6 million and an offsetting adjustment to cost of sales of approximately $16.1 million.