HIGHLANDS RANCH, Colo., April 24, 2014 (GLOBE NEWSWIRE) -- Advanced Emissions Solutions, Inc. (Nasdaq:ADES) (the "Company") today announced that it is continuing with its extensive accounting review and at this time is unable to file its Annual Report on Form 10-K for the fiscal year ended December 31, 2013 ("Form 10-K").
As previously disclosed, the Company is reviewing its accounting practices and assessing the effectiveness of its internal controls over financial reporting. The Company has concluded that it has a material weakness related to its internal controls for recognizing revenue for its systems and equipment contracts in the Emissions Control business segment ("EC Contracts") and should have applied the cost to cost methodology to measure progress on the EC Contracts rather than labor hours. In addition, the Company has identified errors in its accruals, the most significant of which was for interest expense associated with Internal Revenue Code Section 453A interest on deferred taxes related to installment gains ("IRC 453A Interest"). The Company has identified significant deficiencies in its controls over financial reporting that may result in additional material weaknesses. As a result, the Company today filed a Current Report on Form 8-K disclosing various matters including that the financial statements for the quarters ended March 31, 2013, June 30, 2013 and September 30, 2013 ("2013 Restatement Periods") should no longer be relied upon and should be restated.
The Company believes that the result of the restatement of the 2013 Restatement Periods will be a reduction of revenues of approximately $10.8 million (with a corresponding increase in backlog) and an increase in the loss before income taxes of approximately $2.3 million from those amounts previously reported. The increase in the reported loss before income taxes primarily consists of the deferred recognition of the revenue and associated margin under the EC Contracts and the accrual of additional IRC 453A Interest. Other issues may be identified and additional impacts may occur as a result of continuing the review.