ACCOUNTING IRREGULARITIES FOUND AT TROPICAL SHIPPING’S PARENT
Nicor Inc., the Naperville, Ill.-based parent company of the U.S./Caribbean shipping line Tropical Shipping, suffered a 36-percent drop in second-quarter net income, as it reported accounting irregularities at its affiliate Nicor Energy.
Nicor, listed on the New York Stock Exchange, said on Thursday that two factors had a negative impact on its results for the second quarter and first half of the year.
The company posted a pre-tax loss of $9.3 million for the quarter, related to its 50 percent ownership in Nicor Energy, a retail energy marketing joint venture.
Nicor also recorded negative adjustments of $1.6 million for the quarter resulting from an independent audit. The second quarter also included a $3.7 million adjustment for a revision of the joint venture’s first quarter accrued revenue and a charge of $2.6 million “related primarily to previously unrecorded liabilities.”
“The review process to date uncovered irregularities in accounting at Nicor Energy that were part of the reason for the adjustments,” the company said.
Nicor said it did not know if more adjustments would be required.
Second quarter results also included a reversal of a $2.9 million earnings estimate relating to the company’s gas distribution business in the first quarter.
Nicor reported that there have been allegations the company acted improperly in connection with a gas distribution program. The Illinois Commerce Commission and other government agencies are reviewing these allegations, and Nicor said that it would cooperate fully in the review.
The company warned that it may yet have to restate some past results or take a charge against future earnings.
Nicor’s stock closed at $38.01 on Thursday, 1 percent lower than the previous day, and down from a high of $48 in June.
The shipping arm of Nicor — Tropical Shipping — accounts for $65.2 million of the group’s $395.7-million revenue for the second quarter.
Tropical Shipping posted an increase in revenue of 20 percent in the second quarter, when compared to the $54.3-million revenue reported for the same quarter in 2001.
Containerized shipping operating income was $3.7 million in the second quarter, compared to $3.6 million a year ago.
For the six months ended June 30, shipping revenue increased to $125 million, from $113 million, and operating income was $6.9 million, the same as in 2001.
Tropical shipped higher volumes following previous acquisitions, but the company faced lower average prices and higher operating expenses relating to acquisition transition costs.
Tropical, based in Palm Beach, Fla., recently announced the takeover of assets of Tecmarine, and previously acquired the Canada/Caribbean container division of Kent Line.
The Nicor parent company posted a second-quarter net income of $17.1 million, down 36 percent from $26.7-million result in the same quarter last year.
“While our primary businesses remain solid, we are nonetheless managing through some challenging, but critical times in our retail energy marketing joint venture,” said Thomas L. Fisher, chairman, president and chief executive officer of Nicor.