Advanced Emissions Solutions Files Form 8-K Announcing Restatement and
Provides Update on Accounting Review and Business Segments
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.
Based on the range of adjustments to date and the items noted above, the
Company has made a determination to have the previously issued financial
statements for the years ended December 31, 2012 and 2011 re-audited (the
"Re-Audit").At this time, the Company cannot make a determination whether
such financial statements contain any material errors or require any material
adjustments.If the Re-Audit identifies additional errors or deficiencies
requiring material adjustments to such previously issued financial statements,
the Company will make the appropriate adjustments, disclosures and
filings.Any adjustments to the 2012 or 2011 financial statements may impact
the 2013 Restatement Periods.
The Company has taken and is taking a number of steps to enhance its staff and
structure to meet the needs of its growing business. These include the
appointment of Rachel A. Smith to Chief Accounting Officer and working to
complete the hiring of a Corporate Controller. In addition, the Company has
engaged FTI Consulting, Inc. to assist with its internal accounting review
relating to the Re-Audit and finalizing the Form 10-K.With the enhancement of
staffing and structure and implementation of various accounting efforts, the
Company hopes to complete the Re-Audit and file the Form 10-K in or around the
fall of 2014.
Dr. Michael D. Durham, President and CEO of the Company commented, "The
executive team, including the newly appointed Chief Accounting Officer, and
the financial and accounting teams continue to work diligently to complete the
accounting review and address the identified internal control weakness and
deficiencies.We are taking a number of steps to enhance our staff and
structure to meet the needs of a growing company.FTI Consulting will assist
with the accounting review process and implementation of changes so we will
have the necessary resources to support the Company's future needs.We will be
providing updates regarding timing and any potential impact of the Re-Audit as
we are able."
BUSINESS SEGMENT UPDATE
Emissions Control ("EC")
The Company has won more than $15 million in new EC awards in 2014 to date.
The majority of these awards are for equipment to meet upcoming EPA deadlines.
Refined Coal ("RC")
Clean Coal Solutions, LLC ("CCS"), a joint venture among our subsidiary
ADA-ES, Inc., an affiliate of NexGen Resources Corporation, and an affiliate
of The Goldman Sachs Group, Inc., currently has 14 RC facilities that have
begun full-time operations and are located at coal plants that have
historically burned more than 41 million tons of coal per year collectively.
The 14th RC facility is the second to use M-45-PC™ RC technology developed for
use on pulverized coal ("PC") boilers.9 of the 14 RC facilities are fully or
partially leased or sold to four different RC investors.During the first
quarter of 2014, a total of 8.3 million tons of RC were produced, of which 2.3
million tons were produced at RC facilities that generated tax credits for the
benefit of the members of CCS.
The Company is continuing to work on its program supporting the development of
our re-generable solid-sorbent technology to capture carbon dioxide from
coal-fired power plants and industrial sources. Construction and installation
of the 1 megawatt (MW) Pilot Plant located at Southern Company's Plant Miller
is now complete and testing is scheduled for the second half of 2014.
About Advanced Emissions Solutions, Inc.
Advanced Emissions Solutions, Inc. (Nasdaq:ADES) serves as the holding entity
for a family of companies that provide emissions solutions to customers in the
power generation and other industries.
ADA-ES, Inc. ("ADA") supplies Activated Carbon Injection systems("ACI") for
mercury control, Dry Sorbent Injection systems("DSI") for acid gases, and
technology services and other offerings in support of our customers' emissions
compliance strategies.ADA's M-ProveTM technology, which reduces emissions of
mercury and other metals from PRB coal, is applied directly to coal at power
plants, or offered through a licensing agreement with Arch Coal for
application at their mines.In addition, we are developing technologies to
advance cleaner energy, including CO2 emissions control technologies through
projects funded by the U.S. Department of Energy ("DOE") and industry
Clean Coal Solutions, LLC ("CCS"), is a 42.5% owned joint venture by ADA that
provides ADA's patented Refined Coal ("RC") CyClean™ technology to enhance
combustion of and reduce emissions of NOx and mercury from coals in cyclone
boilers and ADA's patent pending M-45™ and M-45-PC™ technologies for
Circulating Fluidized Boilers and Pulverized Coal boilers respectively.
Advanced Emissions Solutions consolidates the results of CCS in its financial
BCSI, LLC is a custom designer and fabricator of engineered emissions control
technologies, bulk material handling equipment, bulk storage systems,
water/waste water treatment equipment, and custom components.BCSI supplies
Dry Sorbent Injection ("DSI") for acid gas control using its technologically
advanced cool, dry conditioned conveying air systems.BCSI's technical
solutions serve a wide range of industrial clients including; coal fired
utilities, water treatment, wastewater, cement kilns, food processing and
industrial boilers. BCSI employs engineers and trade professionals at a
190,000+sq. ft. fabrication and office facility located in McKeesport, PA.
This press release contains forward-looking statements within the meaning of
Section 21E of the Securities Exchange Act of 1934, which provides a "safe
harbor" for such statements in certain circumstances. The forward-looking
statements include statements or expectations regarding the impact of the
restatement on the Company's financial results, results and impact of the
Company's assessment of the effectiveness of its internal controls over
financial reporting and review of its accounting practices, timing, results
and impact of the re-audit, the Company's ability to file its Annual Report on
Form 10-K for 2013 within the expected timeframe and related matters.These
statements are based on current expectations, estimates, projections, beliefs
and assumptions of the Company's management. Such statements involve
significant risks and uncertainties. Actual events or results could differ
materially from those discussed in the forward-looking statements as a result
of various factors, including but not limited to, the Company's restatement,
re-audit and assessment and review could take longer than anticipated, result
in different impacts on its financial statements than those estimated above,
or result in the conclusion that the Company has additional material
weaknesses in its internal controls over financial reporting or that it needs
to restate additional previously issued financial statements and other factors
discussed in greater detail in the Company's filings with the Securities and
Exchange Commission ("SEC"). You are cautioned not to place undue reliance on
such statements and to consult the Company's SEC filings for additional risks
and uncertainties that may apply to the Company's business and the ownership
of its securities. The Company's forward-looking statements are presented as
of the date made, and the Company disclaims any duty to update such statements
unless required by law to do so.
CONTACT: Graham Mattison
Vice President, Investor Relations
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