Myers Industries Inc. adjusted downward its earnings for the fourth quarter of 2014 after completing an investigation into accounting problems at its Brazilian operations.
The Akron, Ohio-based plastics manufacturer announced March 31 that 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.
As a result of the revisions, Myers lost $8.7 million, or 27 cents per share, on $623.7 million in revenue for the year.
Myers said in a news release that the revision to the financial results “is primarily related to adjustments that were recorded as a result of the investigation of the company's Brazilian operations that determined certain accounts were not properly reconciled and amounts were not substantiated by people responsible in the Brazilian location that knew or should have known they were not proper.”
As a result of the investigation, “management 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,” Myers said in the release.
In a filing with the Securities and Exchange Commission, Myers said it has “taken preliminary steps to address the underlying causes of the deficiencies” at the Brazilian operations.
“We plan to enhance our complement of resources at our Brazilian operations with accounting and internal control knowledge through additional hiring and training to implement and perform additional controls over the preparation and review of account reconciliations and approval of manual journal entries,” the company said in the 10-K filing with the SEC.
It concluded, “We plan to remediate all of the control deficiencies underlying these material weaknesses during 2015. We will continue to monitor the effectiveness of these and other processes, procedures and controls at our Brazilian operations and will make any further changes management determines appropriate.”
Myers Industries on March 17 told the SEC that it would not be able to file its annual report in a timely manner, citing possible fraud at the Brazilian operations.