US company Hill International has announced that it intends to restate prior period financial statements following a determination that the Company's previous accounting treatment of the accounts receivable (the "Libya Receivable") from the Libyan Organization for Development of Administrative Centres ("ODAC") was no longer appropriate as of and for the year ended December 31, 2012.
As a result, all prior communications issued by the company as well as other prior statements made by or on behalf of the company relating to the periods under review for restatement (collectively, the "Non-Reliance Periods") should not be relied upon.
The decision of Hill's Audit Committee to restate these financial statements is in connection with a review (the "Staff Review") by the staff of the Securities and Exchange Commission (the "SEC") of our Annual Report on Form 10-K for the year ended December 31, 2014, Quarterly Report on Form 10-Q for the quarter ended March 31, 2015 and Definitive Proxy Statement filed April 30, 2015 and subsequent communications between the Staff and the Company relating to the Staff Review. As a result of the Staff Review, the company, under the direction of its Audit Committee, re-evaluated its historical and current practices with respect to analyzing the collectability of accounts receivable in accordance with U.S. generally accepted accounting principles ("GAAP").
The company has included significant disclosures in prior periodic reports filed with the SEC regarding the status of the Libya Receivable, including regarding the political situation in Libya, the amounts of payments, the company's continued dialogue with representatives of ODAC, the circumstances under which the company would evaluate its options to pursue legal claims and/or assess the carrying amount of the Libya Receivable, and the risks regarding its collectability.
Under the restatement, Hill will reserve the entire net Libya Receivable of $48.1 million, consisting of a gross amount of $59.9 million net of $11.8 million in subconsultant and other contingent expenses then owed, in the year ended December 31, 2012, and adjust subsequent annual and quarterly results as required by GAAP. The adjustment related to the Libya Receivable will result in non-cash financial statement adjustments and will have no impact on the company's current or previously reported cash position, investing or financing cash flows, or net operating loss carryforward.