Northwest Pipe Co. is again reporting problems with its financial data, saying a restatement of its books will decrease its retained earnings — profits companies reinvest in themselves instead of distributing as dividends to shareholders — by up to $12 million.
In a filing with the U.S. Securities and Exchange Commission on Thursday, the Vancouver-based manufacturer of steel pipe said an initial analysis shows the company’s $149.2 million in retained earnings — as of Dec. 31, 2008 — could plummet between $10 million to $12 million.
Northwest Pipe’s latest accounting problems are due to “material errors” it made in accounting for the depreciation of its equipment, the company said. The company also disclosed other accounting problems, including acknowledging that its previous estimates of salvage values are no longer correct.
It expects to file its revised earnings with the SEC in April. Those restatements will cover a litany of quarterly and yearly financial data going back to 2008.
The company said its audit committee has not completed necessary corrections. However, the company released estimates, based on preliminary analyses, of the impacts of the adjustments on its bottom line:
• The annual loss of $7.3 million for 2009 may increase by between $2 million and $4 million.
• The annual loss of $1.4 million for 2010 may increase by between $3 million to $5 million.
• The profit of $3.6 million for the first quarter of 2011 may decrease by between $600,000 to $1.2 million.
• The profit of $5.4 million for the second quarter of 2011 may decrease by between $400,000 and $1 million.
The preliminary estimates, including the possibility of a drop of up to $12 million in the company’s retained earnings, “are subject to material change as the company completes its analyses and finalizes its restated consolidated financial statements,” according to the company’s filing with the SEC.
Northwest Pipe went through a similar rebuilding of its financial moorings in a case dating to November 2009, when it first disclosed problems with procedures it used to account for revenues. Shareholders sued the company in December 2009, accusing it of making “false and misleading” statements that inflated the company’s stock.
About a year later, after announcing it had overstated its profits by $37 million to $47 million in the course of a number of years, it issued restated financial reports going back to 2007 and more recent results.
The company has been the subject of an SEC probe. It also has previously received multiple delisting warnings from the Nasdaq stock exchange for failing to file its earnings reports in a timely manner.
A company can be delisted and continue to be profitable. However, a delisting can make it more difficult and more expensive for a company to raise capital.
Northwest Pipe manufactures large-diameter, high-pressure steel pipelines, primarily for drinking water systems.
The company’s stock, which trades as NWPX, closed up 15 cents Thursday, at $21.52 per share. Northwest Pipe’s shares have traded between $19.20 and $30.92 in the past 52 weeks.
Aaron Corvin: http://twitter.com/col_econ; http://on.fb.me/AaronCorvin; 360-735-4518; firstname.lastname@example.org.