Myers Industries Inc. of Akron, Ohio, disclosed it is unable to file its form 10-K with the Securities and Exchange Commission by the required date “without unreasonable effort or expense,” in part due to the discovery of “possibly fraudulent activities” at its Brazilian operations.
In a filing on Monday, March 16, Myers, a plastics manufacturer, said it has “experienced a delay in completing the financial statements to be included in its annual report on Form 10-K for the year ended December 31, 2014.”
The inability to file Form 10-K on a timely basis “is a result of time needed to address certain accounting matters,” according to the filing. Myers said it has “recently uncovered what appear to be errors in the accounting for inventory and possibly fraudulent activities at its Brazilian operations.”
Myers produces bulk containers and totes in Brazil. In 2012, it purchased material handling firm Plasticos Novel SA to expand its business there.
The company “is reviewing this matter in order to determine the effect of these errors on the Company's results of operations and, if so, the extent of such effect,” Myers said in the filing. Because these errors were uncovered “very recently,” Myers said it is in the midst of “an ongoing investigation which is not complete and prohibits the company from filing prior to March 16,” the required date.
Although the review is continuing, Myers said, it “currently believes that the errors will negatively impact the Company's 2014 net income from continuing operations by approximately $1.25 to $1.75 million,” according to the filing.
However, Myers said, the review “is ongoing, and there can be no assurance that the impact may not exceed such amount.” The filing stated that the anticipated amount of the errors “will not cause the company to be out of compliance with any of its debt covenants.”
In addition, Myers said it “expects to report in the Form 10-K a material weakness in its internal control over financial reporting in connection with its financial statement close process at its Brazilian operations.”