TORONTO, March 10 /PRNewswire-FirstCall/ -- TSX:WPO: World Point Terminals Inc. (the "Corporation") announced today that it intends to restate its financial results for the 2004 fiscal year and the third quarter of 2004, as well as each of the first, second and third quarters of 2005. The restatement is as a result of the determination by its auditors, Deloitte & Touche LLP, to which management has consented, that the accounting for the hurricane damage to its Bahamian terminal in September 2004 as reported in the Corporation's 2004 audited financial statements, on which Deloitte & Touche LLP issued an unqualified audit opinion, was not appropriate.
During September 2004, two hurricanes caused significant damage to the onshore assets and offshore jetty at the Corporation's Bahamian terminal. The Corporation estimated the cost of repairs for which no reimbursement by insurance providers was expected (i.e., deductible amounts under the insurance policies) and recorded a US$1.5 million reserve for those costs in its unaudited financial statements included in its third quarter 2004 report to shareholders. In its audited 2004 financial statements, the damage reserve estimate was increased to US$2.0 million. The Corporation continues to expect the repairs to be completed in the summer of 2006.
In its 2005 interim financial reporting, the Corporation recorded a receivable for amounts expended for hurricane repairs that were expected to be reimbursed by insurance providers. Actual receipts from the insurance providers were applied to reduce this insurance receivable. Amounts expended for which no insurance reimbursement was expected were applied against the damage reserve established in 2004.
Deloitte & Touche LLP has determined, and management has consented, that: (1) in accordance with Canadian generally accepted accounting principles ("Canadian GAAP"), all repair costs will be capitalized or expensed. The Corporation will record an asset relating to an insurance recovery when realization of the claim is probable and only to the extent of repairs expensed; (2) insurance recoveries that will result in a gain will not be recognized until realized; (3) Canadian GAAP will not permit the Corporation to record an expense for repair work that had not been completed during 2004 and (4) even for work that was completed during 2004, although no insurance reimbursement was due on the work since it was part of the deductible, no expense should be recorded because gain is expected to be recognized in future years as insurance payments are received.
Based on the above described accounting treatment, the Corporation expects to eliminate the US$2.0 million charge previously recorded in its 2004 audited financial statements. The primary effect of this change will be an increase to net income and shareholders' equity of US$2.0 million in the restated 2004 financial statements. In addition, the unaudited interim financial statements for the first, second and third quarters of 2005 will be restated to reflect this accounting treatment. The primary effect of this change on the 2005 unaudited interim financial statements will be an increase to net income and shareholders' equity.
None of the adjustments will have any impact on the current or future business operations of the Corporation and do not affect the Corporation's cash balances or liquidity. Further, the restatements do not represent any change in the Corporation's estimates of the overall impact of the hurricanes on its financial condition.
The restated amounts reported herein by the Corporation are unaudited, preliminary in nature and therefore subject to change. The Corporation expects to issue the restated results concurrent with the issuance of its 2005 audited financial statements on or about March 30, 2006.
About World Point Terminals Inc.
World Point Terminals Inc. and its subsidiaries own and operate 21 million barrels of liquid bulk storage and terminal facilities located in North America, Europe and the Bahamas. These facilities store, blend, and transship petroleum and other liquid products as an integral part of the wholesale distribution system. Through a joint venture, the Company also operates a fleet of tugboats around Grand Bahama Island in the Bahamas.
Forward Looking Disclosures
Except for historical information, this press release contains forward- looking statements, which reflect the Corporation's current expectation regarding future events. These forward-looking statements involve risks and uncertainties, which may cause actual results to differ materially from those statements. Those risks and uncertainties include, but are not limited to, changing market conditions, and other risks detailed from time-to-time in the Corporation's ongoing filings. We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. In light of these risks, uncertainties and assumptions, the forward-looking statements in this press release might not occur.
