18.

RESTATEMENT OF CONSOLIDATED FINANCIAL STATEMENTS:

Subsequent to the issuance of our consolidated financial statements for the year ended December 31, 2010, the Company determined that errors were included in the previously issued consolidated financial statements as described below. As a result, we have restated our consolidated financial statements as of December 31, 2010, and for the years ended December 31, 2010 and 2009 to correct the errors described below.

The following tables present the summary impacts of the restatement adjustments, net of tax, on the Company's previously reported consolidated retained earnings at January 1, 2009 and consolidated net loss for the years ended December 31, 2010 and 2009 (in thousands):


Retained earnings at December 31, 2008—As previously reported	$	149,205
Depreciation		(9,430	)
Equipment Disposals		(1,268	)
Other		(1,515	)

Retained earnings at January 1, 2009—As restated	$	136,992


	For the Years Ended December 31,
	2010			2009
Net loss—As previously reported	$	(1,434	)	$	(7,277	)
Depreciation		(2,366	)		(2,062	)
Other		(1,640	)		(1,736	)

Net loss—As restated	$	(5,440	)	$	(11,075	)

The restatement corrects the following errors:

Depreciation

•

The Company's historical method of systematically and rationally allocating equipment depreciation using the units of production depreciation methodology (the "Units of Production Method") requires an estimate of future tons of production over the remaining useful lives of equipment. The estimates of future tons of production over the remaining useful lives of equipment were not properly re-evaluated subsequent to the initial assumptions utilized in the adoption, in 2006, of the Units of Production Method. To appropriately apply the Units of Production Method, the Company should have periodically re-evaluated the assumptions underlying our application of the Units of Production Method and changed the assumptions underlying the accounting estimate beginning January 1, 2009. The effects of correcting this error are a net increase in depreciation expense and a net decrease in loss on disposal, both of which are included in cost of sales, and a net increase in accumulated depreciation.

•

The Company also corrected its estimate of the remaining lives of non-operating equipment depreciated using the straight-line method of depreciation. The effects of correcting this error are a net decrease in depreciation expense, which is primarily reflected in selling, general and administrative expense, and a net decrease in accumulated depreciation.

•

Historical salvage value estimates used to systematically and rationally allocate property and equipment depreciation were incorrect as they did not sufficiently consider the estimated disposal value at the end of the property and equipment's useful life. The effects of correcting this error are a decrease in the January 1, 2009 retained earnings balance and an increase in depreciation expense, both of which are reflected in cost of sales and selling, general and administrative expense, and an increase in accumulated depreciation.

Equipment Disposals

•

The Company discovered that certain assets were no longer at its premises but were not recorded in the period of disposal prior to 2009. The adjustments required to correct these errors have resulted in a decrease in the January 1, 2009 retained earnings balance.

Other Errors

•

A contractual arrangement entered into with Lucid Energy LLC ("Lucid Energy") during 2008 was incorrectly accounted for as notes receivable within Other Assets. The contractual arrangement with Lucid Energy represented an interest in a variable interest entity which should have resulted in the entity being consolidated during 2009 and subsequently deconsolidated following the retrospective adoption of the FASB authoritative guidance which changed the method of identifying the primary beneficiary. The adoption of this guidance did not have a material impact on the Company's consolidated financial statements. Upon deconsolidation, the Company's investment in the entity should have been recorded as research and development expense within selling, general and administrative expense. The adjustments required to correct these errors have resulted in an increase in selling, general, and administrative expense, a decrease in interest income, and a decrease in other assets.

•

Certain equipment leases historically accounted for as operating leases should have been recorded as capital leases. The correction of this error increases depreciation expense and decreases rental expense, both of which are included in cost of sales, and increases interest expense in each period. The correction of this error also increased property and equipment, net, and capital lease obligations.

•

Certain costs capitalized upon the relocation of machinery and equipment to our Bossier City facility in 2008 and 2009 should have been expensed. The effects of correcting these errors include a reduction in retained earnings of $0.7 million as of December 31, 2008. The effects of correcting these errors also include an increase in cost of sales of $1.6 million for the year ended December 31, 2009, a reduction in machinery and equipment of $2.8 million as of December 31, 2010, and the related tax effects.

•

Certain previously identified immaterial errors were corrected as part of the restatement.

The nature of the restatement adjustments and the impact on the Company's previously reported consolidated statement of operations for the year ended December 31, 2010 are shown in the following table (in thousands, except per share data):


	As Previously Reported			Restatement Adjustments						As Restated
	As Previously Reported			Depreciation			Other			As Restated
Year Ended December 31, 2010
Net sales	$	386,750		$	—		$	—		$	386,750
Cost of sales		353,752			3,889			(579	)		357,062

Gross profit		32,998			(3,889	)		579			29,688
Selling, general and administrative		27,994			(41	)		1,140			29,093

Operating income		5,004			(3,848	)		(561	)		595
Other income		(413	)		—			—			(413	)
Interest income		(943	)		—			97			(846	)
Interest expense		7,934			—			1,008			8,942

Loss before income taxes		(1,574	)		(3,848	)		(1,666	)		(7,088	)
Benefit from income taxes		(140	)		(1,482	)		(26	)		(1,648	)

Net loss	$	(1,434	)	$	(2,366	)	$	(1,640	)	$	(5,440	)

Basic loss per share	$	(0.15	)							$	(0.59	)

Diluted loss per share	$	(0.15	)							$	(0.59	)

The nature of the restatement adjustments and the impact on the Company's previously reported consolidated statement of operations for the year ended December 31, 2009 are shown in the following table (in thousands, except per share data):


	As Previously Reported			Restatement Adjustments						As Restated
	As Previously Reported			Depreciation			Other			As Restated
Year Ended December 31, 2009
Net sales	$	278,654		$	—		$	—		$	278,654
Cost of sales		266,968			3,293			1,709			271,970

Gross profit		11,686			(3,293	)		(1,709	)		6,684
Selling, general and administrative		20,095			(54	)		959			21,000

Operating loss		(8,409	)		(3,239	)		(2,668	)		(14,316	)
Other income		(1,905	)		—			—			(1,905	)
Interest income		(754	)		—			41			(713	)
Interest expense		5,057			—			59			5,116

Loss before income taxes		(10,807	)		(3,239	)		(2,768	)		(16,814	)
Benefit from income taxes		(3,530	)		(1,177	)		(1,032	)		(5,739	)

Net loss	$	(7,277	)	$	(2,062	)	$	(1,736	)	$	(11,075	)

Basic loss per share	$	(0.79	)							$	(1.20	)

Diluted loss per share	$	(0.79	)							$	(1.20	)

The following table presents the impact of the restatement adjustments on the Company's previously reported consolidated balance sheet at December 31, 2010 (in thousands):


	As Previously Reported			Restatement Adjustments						As Restated
As of December 31, 2010	As Previously Reported			Depreciation			Other			As Restated
Assets
Current assets:
Cash and cash equivalents	$	51		$	—		$	—		$	51
Trade and other receivables, net		66,474			—			—			66,474
Costs and estimated earnings in excess of billings on uncompleted contracts		45,533			—			—			45,533
Inventories		80,887			—			—			80,887
Refundable income taxes		15,299			—			(200	)		15,099
Deferred income taxes		6,293			—			—			6,293
Prepaid expenses and other		2,163			—			—			2,163

Total current assets		216,700			—			(200	)		216,500
Property and equipment, net		171,766			(24,214	)		6,722			154,274
Goodwill		21,451			—			—			21,451
Other assets		25,288			(243	)		(2,387	)		22,658

Total assets	$	435,205		$	(24,457	)	$	4,135		$	414,883

Liabilities and Stockholders' Equity
Current liabilities:
Current portion of long-term debt	$	5,714		$	—		$	—		$	5,714
Current portion of capital lease obligations		1,087			—			2,170			3,257
Accounts payable		28,463			—			—			28,463
Accrued liabilities		11,448			—			—			11,448
Billings in excess of costs and estimated earnings on uncompleted contracts		14,808			—			—			14,808

Total current liabilities		61,520			—			2,170			63,690
Note payable to financial institution		68,000			—			—			68,000
Long-term debt, less current portion		17,786			—			—			17,786
Capital lease obligations, less current portion		7,731			—			7,974			15,705
Deferred income taxes		25,694			(9,331	)		(1,781	)		14,582
Pension and other long-term liabilities		8,828			—			—			8,828

Total liabilities		189,559			(9,331	)		8,363			188,591
Stockholders' equity:
Preferred stock		—			—			—			—
Common stock		93			—			—			93
Additional paid-in-capital		107,578			—			—			107,578
Retained earnings		140,494			(15,126	)		(4,891	)		120,477
Accumulated other comprehensive loss		(2,519	)		—			663			(1,856	)

Total stockholders' equity		245,646			(15,126	)		(4,228	)		226,292

Total liabilities and stockholders' equity	$	435,205		$	(24,457	)	$	4,135		$	414,883


	Year ended December 31, 2010
	As Previously Reported			Restatement Adjustments			As Restated
Cash flows from operating activities:
Net loss	$	(1,434	)	$	(4,006	)	$	(5,440	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization of property and equipment		6,844			6,836			13,680
Amortization of intangible assets		119			66			185
Provision for doubtful accounts		1,358			—			1,358
Equity in earnings of unconsolidated subsidiary, net of dividends received of $600		477			—			477
Amortization of debt issuance costs		1,418			—			1,418
Deferred income taxes		11,001			(1,709	)		9,292
Loss on disposal of property and equipment		77			(744	)		(667	)
Stock-based compensation expense		797			—			797
Unrealized gain on foreign currency forward contracts		—			(431	)		(431	)
Changes in operating assets and liabilities:
Trade and other receivables, net		(28,818	)		—			(28,818	)
Costs and estimated earnings in excess of billings on uncompleted contracts, net		(2,886	)		—			(2,886	)
Inventories		(4,186	)		—			(4,186	)
Refundable income taxes		(8,270	)		200			(8,070	)
Prepaid expenses and other		(476	)		184			(292	)
Accounts payable		1,160			—			1,160
Accrued and other liabilities		648			431			1,079

Net cash used in operating activities		(22,171	)		827			(21,344	)

Cash flows from investing activities:
Additions to property and equipment		(18,597	)		—			(18,597	)
Proceeds from sale of property and equipment		19			—			19
Issuance of notes receivable		(1,690	)		1,140			(550	)
Insurance proceeds		587			—			587

Net cash used in investing activities		(19,681	)		1,140			(18,541	)

Cash flows from financing activities:
Tax witholdings related to net share settlements of restricted share awards and performance shares		(87	)		—			(87	)
Payments on long-term debt		(5,714	)		—			(5,714	)
Borrowings under note payable to financial institutions		181,375			—			181,375
Payments on note payable to financial institutions		(132,778	)		—			(132,778	)
Payments of debt issuance costs		(3,381	)		—			(3,381	)
Borrowings from capital lease obligation		2,865			—			2,865
Payments on capital lease obligations		(408	)		(1,967	)		(2,375	)

Net cash provided by financing activities		41,872			(1,967	)		39,905

Change in cash and cash equivalents		20			—			20
Cash and cash equivalents, beginning of period		31			—			31

Cash and cash equivalents, end of period	$	51		$	—		$	51

Supplemental disclosure of cash flow information:
Cash paid during the period for interest, net of amounts capitalized	$	7,368			1,008		$	8,376
Cash refunded during the period for income taxes (net of payments of $413)		(2,769	)		—			(2,769	)
Non-cash investing and financing activities:
Escrow account related to capital lease financing	$	2,726			—		$	2,726
Accrued property and equipment purchases		968			—			968
Capital lease refinancing		—			481			481

The following table presents the impact of the restatement adjustments on the Company's previously reported consolidated statement of cash flows for the year ended December 31, 2009 (in thousands). Unrealized loss on foreign currency forward contracts of $1.3 million has been reclassified within net cash provided by operating activities to conform to the current period presentation in the consolidated statements of cash flows. Tax withholdings related to net share settlement of restricted share awards and performance shares of $143,000 has been reclassified within net cash used in financing activities to conform to the current period presentation in the consolidated statements of cash flows. These reclassifications are presented in the Restatement Adjustments column and had no impact on cash flows from operations, income from operations, cash flows from investing activities, cash flows from financing activities, net income, or total assets.


	Year ended December 31, 2009
	As Previously Reported			Restatement Adjustments			As Restated
Cash flows from operating activities:
Net loss	$	(7,277	)	$	(3,798	)	$	(11,075	)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization of property and equipment		6,889			4,141			11,030
Amortization of intangible assets		119			133			252
Provision for doubtful accounts		92			—			92
Amortization of debt issuance costs		513			—			513
Deferred income taxes		(185	)		(2,209	)		(2,394	)
Loss on disposal of property and equipment		41			(389	)		(348	)
Stock-based compensation expense		765			—			765
Tax benefit from stock option plans		(53	)		—			(53	)
Unrealized loss on foreign currency forward contracts		—			1,283			1,283
Changes in operating assets and liabilities:
Trade and other receivables, net		36,942			—			36,942
Costs and estimated earnings in excess of billings on uncompleted contracts, net		19,688			—			19,688
Inventories		29,084			—			29,084
Refundable income taxes		(3,586	)		—			(3,586	)
Prepaid expenses and other		(1,420	)		42			(1,378	)
Accounts payable		(4,478	)		—			(4,478	)
Accrued and other liabilities		2,053			(1,284	)		769

Net cash provided by operating activities		79,187			(2,081	)		77,106

Cash flows from investing activities:
Additions to property and equipment		(22,692	)		1,344			(21,348	)
Proceeds from sale of property and equipment		98			—			98
Proceeds from sale and leaseback of property and equipment		6,800			(6,800	)		—
Issuance of notes receivable		(1,635	)		960			(675	)
Insurance proceeds		1,363			—			1,363

Net cash used in investing activities		(16,066	)		(4,496	)		(20,562	)

Cash flows from financing activities:
Proceeds from sale of common stock		28			143			171
Tax witholdings related to net share settlements of restricted share awards and performance shares		—			(143	)		(143	)
Payments on long-term debt		(5,714	)		—			(5,714	)
Borrowings under note payable to financial institutions		89,538			—			89,538
Payments on note payable to financial institutions		(152,200	)		—			(152,200	)
Payments of debt issuance costs		(186	)		—			(186	)
Borrowings from capital lease obligation		19,175			—			19,175
Payments on capital lease obligations		(13,821	)		6,577			(7,244	)

Net cash used in financing activities		(63,180	)		6,577			(56,603	)

Change in cash and cash equivalents		(59	)		—			(59	)
Cash and cash equivalents, beginning of period		90			—			90

Cash and cash equivalents, end of period	$	31		$	—		$	31

Supplemental disclosure of cash flow information:
Cash paid during the period for interest, net of amounts capitalized	$	4,692			59		$	4,751
Cash refunded during the period for income taxes (net of payments of $636)		(162	)		—			(162	)
Non-cash investing and financing activities:
Escrow account related to capital lease financing	$	5,591			—		$	5,591
Capital lease converted to operating lease		5,713			(5,713	)		—
Accrued property and equipment purchases		3,704			—			3,704
Capital lease refinancing		—			1,688			1,688