TransAct Technologies (TACT) 10-Q 9 May 14 2014 Q1 Quarterly report Financial data

Document_And_Entity_Informatio

Document And Entity Information (USD $)	3 Months Ended
	Mar. 31, 2014	Apr. 30, 2014	Jun. 28, 2013
Document and Entity Information [Abstract]	'	'	'
Entity Registrant Name	'Transact Technologies Incorporated	'	'
Document Type	'10-Q	'	'
Current Fiscal Year End Date	'--12-31	'	'
Entity Common Stock, Shares Outstanding	'	8,329,255	'
Entity Public Float	'	'	$67,800,000
Amendment Flag	'false	'	'
Entity Central Index Key	'0001017303	'	'
Entity Current Reporting Status	'Yes	'	'
Entity Voluntary Filers	'No	'	'
Entity Filer Category	'Accelerated Filer	'	'
Entity Well-known Seasoned Issuer	'No	'	'
Document Period End Date	31-Mar-14	'	'
Document Fiscal Year Focus	'2014	'	'
Document Fiscal Period Focus	'Q1	'	'

CONDENSED_CONSOLIDATED_BALANCE

CONDENSED CONSOLIDATED BALANCE SHEETS (unaudited) (USD $)	Mar. 31, 2014	Dec. 31, 2013
In Thousands, unless otherwise specified
Current assets:	'	'
Cash and cash equivalents	$3,205	$2,936
Accounts receivable, net	12,905	13,234
Inventories	13,550	13,509
Prepaid income taxes	192	390
Deferred tax assets	1,655	1,655
Other current assets	702	497
Total current assets	32,209	32,221
Fixed assets, net	2,792	2,732
Goodwill	2,621	2,621
Deferred tax assets	920	920
Intangible assets, net of accumulated amortization of $1,940 and $1,811, respectively	1,727	1,856
Other assets	61	58
	8,121	8,187
Total assets	40,330	40,408
Liabilities and Shareholders’ Equity:	'	'
Accounts payable	4,721	4,749
Accrued liabilities	1,973	2,215
Income taxes payable	38	26
Accrued contingent consideration (Note 4)	60	60
Deferred revenue	482	300
Total current liabilities	7,274	7,350
Deferred revenue, net of current portion	88	103
Deferred rent, net of current portion	226	244
Other liabilities	207	190
	521	537
Total liabilities	7,795	7,887
Shareholders’ equity:	'	'
Common stock, $0.01 par value, 20,000,000 shares authorized; 11,116,293 and 11,106,354 shares issued, respectively; 8,329,255 and 8,319,316 shares outstanding, respectively	111	111
Additional paid-in capital	27,875	27,674
Retained earnings	27,138	27,326
Accumulated other comprehensive loss, net of tax	-62	-63
Treasury stock, at cost, 2,787,038 shares	-22,527	-22,527
Total shareholders’ equity	32,535	32,521
Total liabilities and shareholders’ equity	$40,330	$40,408

CONDENSED_CONSOLIDATED_BALANCE1

CONDENSED CONSOLIDATED BALANCE SHEETS (unaudited) (Parentheticals) (USD $)	Mar. 31, 2014	Dec. 31, 2013
In Thousands, except Share data, unless otherwise specified
Accumulated amortization (in Dollars)	$1,940	$1,811
Common stock par value (in Dollars per share)	$0.01	$0.01
Common stock, shares authorized	20,000,000	20,000,000
Common stock, shares issued	11,116,293	11,106,354
Common stock, shares outstanding	8,329,255	8,319,316

CONDENSED_CONSOLIDATED_STATEME

CONDENSED CONSOLIDATED STATEMENTS OF INCOME (unaudited) (USD $)	3 Months Ended
Share data in Thousands, except Per Share data, unless otherwise specified	Mar. 31, 2014	Mar. 31, 2013
Net sales	$13,619,000	$15,057,000
Cost of sales	7,893,000	8,624,000
Gross profit	5,726,000	6,433,000
Operating expenses:	'	'
Engineering, design and product development	1,230,000	1,012,000
Selling and marketing	1,965,000	1,786,000
General and administrative	1,888,000	2,034,000
Legal fees associated with lawsuit (Note 8)	12,000	199,000
	5,095,000	5,031,000
Operating income	631,000	1,402,000
Interest and other (expense) income:	'	'
Interest, net	-14,000	-1,000
Other, net	-8,000	37,000
	-22,000	36,000
Income before income taxes	609,000	1,438,000
Income tax provision	215,000	278,000
Net income	$394,000	$1,160,000
Net income per common share:	'	'
Basic (in Dollars per share)	$0.05	$0.13
Diluted (in Dollars per share)	$0.05	$0.13
Shares used in per-share calculation:	'	'
Basic (in Shares)	8,373	8,717
Diluted (in Shares)	8,553	8,809
Dividends declared and paid per common share: (in Dollars per share)	$0.07	$0.06

CONDENSED_CONSOLIDATED_STATEME1

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (unaudited) (USD $)	3 Months Ended
In Thousands, unless otherwise specified	Mar. 31, 2014	Mar. 31, 2013
Net income	$394	$1,160
Foreign currency translation adjustment, net of tax	1	-28
Comprehensive income	$395	$1,132

CONDENSED_CONSOLIDATED_STATEME2

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited) (USD $)	3 Months Ended
	Mar. 31, 2014	Mar. 31, 2013
Cash flows from operating activities:	'	'
Net income	$394,000	$1,160,000
Adjustments to reconcile net income to net cash provided by operating activities:	'	'
Share-based compensation expense	145,000	134,000
Incremental tax benefits from stock options exercised	'	-3,000
Depreciation and amortization	360,000	454,000
Foreign currency transaction (gains) losses	8,000	-37,000
Changes in operating assets and liabilities:	'	'
Accounts receivable	329,000	5,133,000
Inventories	-41,000	-900,000
Prepaid income taxes	198,000	'
Other current and long term assets	-212,000	-282,000
Accounts payable	-27,000	-2,398,000
Accrued liabilities and other liabilities	-10,000	-942,000
Net cash provided by operating activities	1,144,000	2,319,000
Cash flows from investing activities:	'	'
Capital expenditures	-288,000	-226,000
Additions to capitalized software	'	-42,000
Net cash used in investing activities	-288,000	-268,000
Cash flows from financing activities:	'	'
Proceeds from stock option exercises	56,000	80,000
Payment of dividends on common stock	-582,000	-519,000
Purchases of common stock for treasury	'	-692,000
Incremental tax benefits from stock options exercised	'	3,000
Net cash used in financing activities	-582,000	-1,128,000
Effect of exchange rate changes on cash and cash equivalents	-5,000	-11,000
Increase in cash and cash equivalents	269,000	912,000
Cash and cash equivalents, beginning of period	2,936,000	7,537,000
Cash and cash equivalents, end of period	$3,205,000	$8,449,000

1_Basis_of_presentation

1. Basis of presentation	3 Months Ended
	Mar. 31, 2014
Disclosure Text Block [Abstract]	'
Business Description and Basis of Presentation [Text Block]	'
	1. Basis of presentation
	The accompanying unaudited financial statements of TransAct Technologies Incorporated have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information.  Accordingly, they do not include all of the information and footnotes required by accounting principles generally accepted in the United States of America to be included in full year financial statements.  In the opinion of management, all adjustments considered necessary for a fair statement of the results for the periods presented have been included and are of a normal recurring nature.  The December 31, 2013 Condensed Consolidated Balance Sheet data was derived from audited financial statements, but does not include all disclosures required by accounting principles generally accepted in the United States of America.  These interim financial statements should be read in conjunction with the audited financial statements for the year ended December 31, 2013 included in our Annual Report on Form 10-K.
	The financial position and results of operations of our U.K. subsidiary are measured using local currency as the functional currency.  Assets and liabilities of such subsidiary have been translated at the end of period exchange rates, and related revenues and expenses have been translated at the weighted average exchange rates with the resulting translation gain or loss recorded in accumulated other comprehensive income (loss) in the Condensed Consolidated Balance Sheets.  Transaction gains and losses are included in other income in the Condensed Consolidated Statements of Income.
	The results of operations for the three months ended March 31, 2014 are not necessarily indicative of the results to be expected for the full year.

2_Inventories

2. Inventories	3 Months Ended
	Mar. 31, 2014
Inventory Disclosure [Abstract]	'
Inventory Disclosure [Text Block]	'
	2. Inventories
	The components of inventories are:
		March 31,		December 31,
		2014		2013
		(In thousands)
	Raw materials and purchased component parts	$	7,652	$	7,263
	Work-in-process		2		31
	Finished goods		5,896		6,215
		$	13,550	$	13,509

3_Accrued_product_warranty_lia

3. Accrued product warranty liability	3 Months Ended
	Mar. 31, 2014
Product Warranties Disclosures [Abstract]	'
Product Warranty Disclosure [Text Block]	'
	3. Accrued product warranty liability
	We generally warrant our products for up to 36 months and record the estimated cost of such product warranties at the time the sale is recorded. Estimated warranty costs are based upon actual past experience of product repairs and the related estimated cost of labor and material to make the necessary repairs.
	The following table summarizes the activity recorded in the accrued product warranty liability during the three months ended March 31, 2014:
		(In thousands)
	Balance, beginning of period	$	366
	Warranties issued		92
	Warranty settlements		-68
	Balance, end of period	$	390
	Approximately 291,000 of the accrued product warranty liability is classified as current in Accrued liabilities at March 31, 2014 in the Condensed Balance Sheets.  The remaining $99,000 of the accrued product warranty liability is classified as long-term in Other liabilities.

4_Accrued_contingent_considera

4. Accrued contingent consideration	3 Months Ended
	Mar. 31, 2014
Business Combinations [Abstract]	'
Business Combination Disclosure [Text Block]	'
	4. Accrued contingent consideration
	In connection with the acquisition of substantially all of the assets of Printrex, Inc. (“Printrex”) on August 19, 2011, we entered into a contingent consideration arrangement for 30% of the gross profit for a three-year period related to certain new products under development, less certain other adjustments, beginning on January 1, 2012 which was the earlier of (1) January 1, 2012 or (2) the date of first commercial introduction of the new products under development.  The undiscounted fair value related to the contingent liability could range from approximately $0 to $200,000.  The fair value of the contingent consideration arrangement was $60,000 at March 31, 2014 and December 31, 2013, which was estimated by applying the income approach.  That measure is based on significant inputs that are not observable in the market, which fair value measurement guidance refers to as Level 3 inputs. During the first three months of 2014, the fair value of the contingent consideration remained unchanged. No payments were made under the arrangement during the three months ended March 31, 2014 as the underlying conditions of the contingent consideration arrangement were not satisfied. Refer to Note 3, Business acquisitions, of the Company’s Consolidated Financial Statements included in the Company’s 2013 Annual Report on Form 10-K for the year ended December 31, 2013 for additional information regarding this contingent consideration arrangement.

5_Earnings_per_share

5. Earnings per share	3 Months Ended
	Mar. 31, 2014
Earnings Per Share [Abstract]	'
Earnings Per Share [Text Block]	'
	5. Earnings per share
	The following table sets forth the reconciliation of basic weighted average shares outstanding and diluted weighted average shares outstanding:
		Three months ended
		March 31,
		2014		2013
		(In thousands, except per share data)
	Net income	$	394	$	1,160
	Shares:
	Basic:  Weighted average common shares outstanding		8,373		8,717
	Add:  Dilutive effect of outstanding options as determined by the treasury stock method		180		92
	Diluted:  Weighted average common and common equivalent shares outstanding		8,553		8,809
	Net income per common share:
	Basic	$	0.05	$	0.13
	Diluted	$	0.05	$	0.13
	For the three months ended March 31, 2014 and 2013, there were 174,000 and 666,125, respectively, potentially dilutive shares consisting of stock options that were excluded from the calculation of earnings per diluted share because the effect would have been anti-dilutive.

6_Shareholders_equity

6. Shareholders' equity	3 Months Ended
	Mar. 31, 2014
Stockholders' Equity Note [Abstract]	'
Stockholders' Equity Note Disclosure [Text Block]	'
	6. Shareholders’ equity
	Changes in shareholders’ equity for the three months ended March 31, 2014 were as follows (in thousands):
	Balance at December 31, 2013	$	32,521
	Net income		394
	Share-based compensation expense		145
	Issuance of deferred stock units, net of relinquishments		56
	Foreign currency translation adjustment		1
	Dividends declared and paid on common stock		-582
	Balance at March 31, 2014	$	32,535
	We paid a portion of the 2013 incentive bonus for the chief executive officer and chief financial officer in the form of deferred stock units.  Such deferred stock units were granted in February 2014 and were fully vested at the time of grant.
	For the three months ended March 31, 2014, our Board of Directors declared a quarterly cash dividend of $0.07 per share, totaling approximately $582,000, which was paid in March 2014 to common shareholders of record at the close of business on February 20, 2014.

7_Income_taxes

7. Income taxes	3 Months Ended
	Mar. 31, 2014
Income Tax Disclosure [Abstract]	'
Income Tax Disclosure [Text Block]	'
	7. Income taxes
	We recorded an income tax provision for the first quarter of 2014 of $215,000 at an effective tax rate of 35.3%, compared to an income tax provision during the first quarter of 2013 of $278,000 at an effective tax rate of 19.3%.  Our effective tax rate for the first three months of 2013 was unusually low because it included the full-year benefit from the 2012 federal research and development credit (“R&D credit”) of approximately $220,000 as this credit was not renewed until January 2, 2013 as a component of the American Taxpayer Relief Act of 2012.
	We are subject to U.S. federal income tax as well as income tax of certain state and foreign jurisdictions.  We have substantially concluded all U.S. federal income tax, state and local, and foreign tax matters through 2009.  During 2008, a limited scope examination of our 2005 and 2006 federal tax returns was completed and during 2013, an examination of our 2010 federal tax return was completed.   However, our federal tax returns for the years 2010 through 2012 remain open to examination. Various state and foreign tax jurisdiction tax years remain open to examination as well, though we believe that any additional assessment would be immaterial to the Condensed Consolidated Financial Statements.  No state or foreign tax jurisdiction income tax returns are currently under examination. As of March 31, 2014, we had $108,000 of total gross unrecognized tax benefits that, if recognized, would favorably affect the effective income tax rate in any future periods.

8_Commitments_and_contingencie

8. Commitments and contingencies (Under Review)	3 Months Ended
	Mar. 31, 2014
Commitments and Contingencies Disclosure [Abstract]	'
Commitments and Contingencies Disclosure [Text Block]	'
	8. Commitments and contingencies
	On June 8, 2012, Avery Dennison Corporation (“AD”) filed a civil complaint against the Company and a former employee of the Company and of AD, in the Court of Common Pleas (the “Court”) in Lake County, Ohio.  The complaint alleges that this former employee and the Company misappropriated unspecified trade secrets and confidential information related to the design of our food safety terminals from AD.  The complaint requests a preliminary and permanent injunction against the Company from manufacturing and selling our Ithaca® 9700 and 9800 food safety terminals.  On July 16, 2012, the Company filed its answer, affirmative defenses and counterclaims, seeking all available damages including legal fees.  A hearing on the plaintiff's motion for preliminary injunction took place in August 2012, and in November 2012, the Court denied this request. AD filed an appeal of the Court’s ruling to the Eleventh Appellate District, which heard oral arguments on the appeal on July 16, 2013.  On July 23, 2013, AD requested that the Eleventh Appellate District enjoin the Company’s further sale and marketing of the food safety terminals, pending the appeals court's decision. On July 29, 2013, TransAct opposed this request. On October 15, 2013, the Eleventh District Court of Appeals affirmed the lower court’s decision in the Company’s favor and denied AD’s further request for an injunction pending the Court of Appeal’s decision.  On October 24, 2013, AD filed a motion seeking that the Court of Appeals reconsider its decision.  On April 16, 2014, the Court of Appeals denied AD’s motion to reconsider its decision.
	Resource Sufficiency
	On June 8, 2012, Avery Dennison Corporation (“AD”) filed a civil complaint against the Company and a former employee of the Company and of AD, in the Court of Common Pleas (the “Court”) in Lake County, Ohio.  The complaint alleges that this former employee and the Company misappropriated unspecified trade secrets and confidential information related to the design of our food safety terminals from AD.  The complaint requests a preliminary and permanent injunction against the Company from manufacturing and selling our Ithaca® 9700 and 9800 food safety terminals.  On July 16, 2012, the Company filed its answer, affirmative defenses and counterclaims, seeking all available damages including legal fees.  A hearing on the plaintiff's motion for preliminary injunction took place in August 2012, and in November 2012, the Court denied this request. AD filed an appeal of the Court’s ruling to the Eleventh Appellate District, which heard oral arguments on the appeal on July 16, 2013.  On July 23, 2013, AD requested that the Eleventh Appellate District enjoin the Company’s further sale and marketing of the food safety terminals, pending the appeals court's decision. On July 29, 2013, TransAct opposed this request. On October 15, 2013, the Eleventh District Court of Appeals affirmed the lower court’s decision in the Company’s favor and denied AD’s further request for an injunction pending the Court of Appeal’s decision.  On October 24, 2013, AD filed a motion seeking that the Court of Appeals reconsider its decision.  On April 16, 2014, the Court of Appeals denied AD’s motion to reconsider its decision.

2_Inventories_Tables

2. Inventories (Tables)	3 Months Ended
	Mar. 31, 2014
Inventory Disclosure [Abstract]	'
Schedule of Inventory, Current [Table Text Block]	'
		March 31,		December 31,
		2014		2013
		(In thousands)
	Raw materials and purchased component parts	$	7,652	$	7,263
	Work-in-process		2		31
	Finished goods		5,896		6,215
		$	13,550	$	13,509

3_Accrued_product_warranty_lia1

3. Accrued product warranty liability (Tables)	3 Months Ended
	Mar. 31, 2014
Product Warranties Disclosures [Abstract]	'
Schedule of Product Warranty Liability [Table Text Block]	'
		(In thousands)
	Balance, beginning of period	$	366
	Warranties issued		92
	Warranty settlements		-68
	Balance, end of period	$	390

5_Earnings_per_share_Tables

5. Earnings per share (Tables)	3 Months Ended
	Mar. 31, 2014
Earnings Per Share [Abstract]	'
Schedule of Earnings Per Share, Basic and Diluted [Table Text Block]	'
		Three months ended
		March 31,
		2014		2013
		(In thousands, except per share data)
	Net income	$	394	$	1,160
	Shares:
	Basic:  Weighted average common shares outstanding		8,373		8,717
	Add:  Dilutive effect of outstanding options as determined by the treasury stock method		180		92
	Diluted:  Weighted average common and common equivalent shares outstanding		8,553		8,809
	Net income per common share:
	Basic	$	0.05	$	0.13
	Diluted	$	0.05	$	0.13

6_Shareholders_equity_Tables

6. Shareholders' equity (Tables)	3 Months Ended
	Mar. 31, 2014
Stockholders' Equity Note [Abstract]	'
Schedule of Stockholders Equity [Table Text Block]	'
	Balance at December 31, 2013	$	32,521
	Net income		394
	Share-based compensation expense		145
	Issuance of deferred stock units, net of relinquishments		56
	Foreign currency translation adjustment		1
	Dividends declared and paid on common stock		-582
	Balance at March 31, 2014	$	32,535

2_Inventories_Details_Inventor

2. Inventories (Details) - Inventory components (USD $)	Mar. 31, 2014	Dec. 31, 2013
In Thousands, unless otherwise specified
Inventory components [Abstract]	'	'
Raw materials and purchased component parts	$7,652	$7,263
Work-in-process	2	31
Finished goods	5,896	6,215
	$13,550	$13,509

3_Accrued_product_warranty_lia2

3. Accrued product warranty liability (Details) (USD $)	Mar. 31, 2014
Product Warranties Disclosures [Abstract]	'
Product Warranty Accrual, Current	$291,000
Product Warranty Accrual, Noncurrent	$99,000

3_Accrued_product_warranty_lia3

3. Accrued product warranty liability (Details) - Warranty Activity (USD $)	3 Months Ended
In Thousands, unless otherwise specified	Mar. 31, 2014
Warranty Activity [Abstract]	'
Balance, beginning of period	$366
Warranties issued	92
Warranty settlements	-68
Balance, end of period	$390

4_Accrued_contingent_considera1

4. Accrued contingent consideration (Details) (USD $)	3 Months Ended
	Mar. 31, 2014
Business Combinations [Abstract]	'
Business Combination, Contingent Consideration Arrangements, Description	'30%
Business Combination, Contingent Consideration Arrangements, Range of Outcomes, Value, Low	$0
Business Combination, Contingent Consideration Arrangements, Range of Outcomes, Value, High	200,000
Contingent Consideration Amount	$60,000

5_Earnings_per_share_Details

5. Earnings per share (Details) (USD $)	3 Months Ended
	Mar. 31, 2014	Mar. 31, 2013
Earnings Per Share [Abstract]	'	'
Dilutive Securities, Effect on Basic Earnings Per Share, Options and Restrictive Stock Units	$174,000	$666,125

5_Earnings_per_share_Details_E

5. Earnings per share (Details) - Earnings per share reconciliation (USD $)	3 Months Ended
In Thousands, except Per Share data, unless otherwise specified	Mar. 31, 2014	Mar. 31, 2013
Earnings per share reconciliation [Abstract]	'	'
Net income (in Dollars)	$394	$1,160
Basic: Weighted average common shares outstanding	8,373	8,717
Add: Dilutive effect of outstanding options as determined by the treasury stock method	180	92
Diluted: Weighted average common and common equivalent shares outstanding	8,553	8,809
Net income per common share:	'	'
Basic (in Dollars per share)	$0.05	$0.13
Diluted (in Dollars per share)	$0.05	$0.13

6_Shareholders_equity_Details

6. Shareholders' equity (Details) (USD $)	3 Months Ended
	Mar. 31, 2014	Mar. 31, 2013
Stockholders' Equity Note [Abstract]	'	'
Common Stock, Dividends, Per Share, Declared	$0.07	$0.06
Payments of Ordinary Dividends, Common Stock	$582,000	$519,000

6_Shareholders_equity_Details_

6. Shareholders' equity (Details) - Changes in Shareholders' Equity (USD $)	3 Months Ended
In Thousands, unless otherwise specified	Mar. 31, 2014	Mar. 31, 2013
Changes in Shareholders' Equity [Abstract]	'	'
Balance at December 31, 2013	$32,521	'
Net income	394	1,160
Share-based compensation expense	145	134
Issuance of deferred stock units, net of relinquishments	56	80
Foreign currency translation adjustment	1	'
Dividends declared and paid on common stock	-582	'
Balance at March 31, 2014	$32,535	'

7_Income_taxes_Details

7. Income taxes (Details) (USD $)	3 Months Ended		12 Months Ended
	Mar. 31, 2014	Mar. 31, 2013	Dec. 31, 2013
Income Tax Disclosure [Abstract]	'	'	'
Income Tax Expense (Benefit)	$215,000	$278,000	'
Effective Income Tax Rate Reconciliation, Percent	35.30%	19.30%	'
Effective Income Tax Rate Reconciliation, Tax Credit, Research, Amount	'	'	220,000
Unrecognized Tax Benefits that Would Impact Effective Tax Rate	$108,000	'	'