AKRON, Ohio – Myers Industries announced a revision of its previously released financial results for its fourth quarter and year ended Dec. 31, 2014, as a result of completing an investigation into possible fraud at its Brazilian operations.
The revision as compared to the company’s earnings release issued on Feb. 25 reflects adjustments which led to an increase in cost of sales of $2.4 million and an increase in selling, general and administrative expenses of $0.1 million for both the fourth quarter and full year of 2014. The total adjustments reduced income from continuing operations by $2.5 million, net income from continuing operations by $2.3 million and earnings per diluted share from continuing operations by 7 cents for both the fourth quarter and full year of 2014. The company stated there were no changes to results from discontinued operations. Therefore, net income and earnings per diluted share also changed by $2.3 million and 7 cents, respectively, for both the fourth quarter and full year of 2014. Previously reported financial results for prior periods were not affected by the adjustments.
As a result of the adjustments, Myers Industries previously announced that cash flow provided by continuing operations was reduced by $0.3 million to $51.8 million for the year ended Dec. 31, 2014.
Myers announced that an investigation into the company’s Brazilian operations determined certain accounts were not properly reconciled and amounts were not substantiated by people responsible in the Brazilian location who knew, or should have known, they were not proper. As a result of this investigation, the company says it has identified deficiencies in both the design and operating effectiveness of the company’s internal control over financial reporting, which when aggregated, represent two material weaknesses in internal control over the inventory process at the Brazilian operations and the financial statement close process at the Brazilian operations as of Dec. 31, 2014.
The company says it has taken preliminary steps to address the underlying causes of the process deficiencies at the Brazilian operations, and plans to enhance its finance personnel at its Brazilian operations with accounting and internal control knowledge. Myers said it also will provide training to implement and perform additional controls over the preparation and review of account reconciliations and approval of manual journal entries. The company plans to develop revised policies and procedures associated with the preparation and retention of supporting documentation for account reconciliations as well as the review and approval of manual journal entries prior to posting to the general ledger. The company also will implement additional controls to enhance monitoring and oversight of the financial function at its Brazilian operations.
