Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Sep. 30, 2018 | Oct. 31, 2018 | |
Document and Entity Information [Abstract] | ||
Entity Registrant Name | TRANSACT TECHNOLOGIES INC | |
Entity Central Index Key | 1,017,303 | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Non-accelerated Filer | |
Entity Small Business | true | |
Entity Emerging Growth Company | false | |
Entity Ex Transition Period | false | |
Entity Common Stock, Shares Outstanding | 7,391,028 | |
Document Type | 10-Q | |
Amendment Flag | false | |
Document Period End Date | Sep. 30, 2018 | |
Document Fiscal Year Focus | 2,018 | |
Document Fiscal Period Focus | Q3 |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS (unaudited) - USD ($) $ in Thousands | Sep. 30, 2018 | Dec. 31, 2017 |
Current assets: | ||
Cash and cash equivalents | $ 3,795 | $ 5,507 |
Accounts receivable, net | 11,643 | 10,948 |
Inventories, net | 13,065 | 8,875 |
Prepaid income taxes | 47 | 514 |
Other current assets | 520 | 517 |
Total current assets | 29,070 | 26,361 |
Fixed assets, net of accumulated depreciation of $20,319 and $19,752, respectively | 2,264 | 2,169 |
Goodwill | 2,621 | 2,621 |
Deferred tax assets | 2,263 | 2,308 |
Intangible assets, net of accumulated amortization of $3,454, and $3,359, respectively | 829 | 458 |
Other assets | 31 | 33 |
Total noncurrent assets | 8,008 | 7,589 |
Total assets | 37,078 | 33,950 |
Current liabilities: | ||
Accounts payable | 6,359 | 3,841 |
Accrued liabilities | 2,706 | 3,339 |
Deferred revenue | 307 | 169 |
Total current liabilities | 9,372 | 7,349 |
Deferred revenue, net of current portion | 253 | 69 |
Deferred rent, net of current portion | 260 | 271 |
Other liabilities | 228 | 247 |
Total noncurrent liabilities | 741 | 587 |
Total liabilities | 10,113 | 7,936 |
Shareholders' equity: | ||
Common stock, $0.01 par value, 20,000,000 shares authorized; 11,435,870 and 11,366,526 shares issued, respectively; 7,391,028 and 7,478,094 shares outstanding, respectively | 114 | 114 |
Additional paid-in capital | 31,841 | 31,353 |
Retained earnings | 27,219 | 24,756 |
Accumulated other comprehensive loss, net of tax | (99) | (99) |
Treasury stock, at cost, 4,044,842 and 3,888,432 shares | (32,110) | (30,110) |
Total shareholders' equity | 26,965 | 26,014 |
Total liabilities and shareholders' equity | $ 37,078 | $ 33,950 |
CONDENSED CONSOLIDATED BALANC_2
CONDENSED CONSOLIDATED BALANCE SHEETS (unaudited) (Parenthetical) - USD ($) $ in Thousands | Sep. 30, 2018 | Dec. 31, 2017 |
Assets: | ||
Fixed assets, accumulated depreciation | $ 20,319 | $ 19,752 |
Intangible assets, accumulated amortization | $ 3,454 | $ 3,359 |
Shareholders' equity: | ||
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock, shares authorized (in shares) | 20,000,000 | 20,000,000 |
Common stock, shares issued (in shares) | 11,435,870 | 11,366,526 |
Common stock, shares outstanding (in shares) | 7,391,028 | 7,478,094 |
Treasury stock (in shares) | 4,044,842 | 3,888,432 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (unaudited) - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (unaudited) [Abstract] | ||||
Net sales | $ 15,838 | $ 15,524 | $ 42,832 | $ 43,117 |
Cost of sales | 7,834 | 8,005 | 21,975 | 23,075 |
Gross profit | 8,004 | 7,519 | 20,857 | 20,042 |
Operating expenses: | ||||
Engineering, design and product development | 1,106 | 1,147 | 3,510 | 3,160 |
Selling and marketing | 1,798 | 1,895 | 5,450 | 5,601 |
General and administrative | 1,888 | 1,886 | 6,211 | 5,968 |
Operating expenses | 4,792 | 4,928 | 15,171 | 14,729 |
Operating income | 3,212 | 2,591 | 5,686 | 5,313 |
Interest and other expense: | ||||
Interest, net | (7) | (9) | (21) | (25) |
Other, net | (50) | 0 | (137) | (8) |
Interest and other expense | (57) | (9) | (158) | (33) |
Income before income taxes | 3,155 | 2,582 | 5,528 | 5,280 |
Income tax provision | 581 | 769 | 1,064 | 1,657 |
Net income | $ 2,574 | $ 1,813 | $ 4,464 | $ 3,623 |
Net income per common share: | ||||
Basic (in dollars per share) | $ 0.35 | $ 0.24 | $ 0.60 | $ 0.49 |
Diluted (in dollars per share) | $ 0.33 | $ 0.24 | $ 0.57 | $ 0.48 |
Shares used in per-share calculation: | ||||
Basic (in shares) | 7,413 | 7,408 | 7,449 | 7,404 |
Diluted (in shares) | 7,758 | 7,586 | 7,774 | 7,504 |
Dividends declared and paid per common share (in dollars per share) | $ 0.09 | $ 0.09 | $ 0.27 | $ 0.26 |
CONDENSED CONSOLIDATED STATEM_2
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (unaudited) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (unaudited) [Abstract] | ||||
Net income | $ 2,574 | $ 1,813 | $ 4,464 | $ 3,623 |
Foreign currency translation adjustment, net of tax | 11 | 3 | 0 | 10 |
Comprehensive income | $ 2,585 | $ 1,816 | $ 4,464 | $ 3,633 |
CONDENSED CONSOLIDATED STATEM_3
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited) - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2018 | Sep. 30, 2017 | |
Cash flows from operating activities: | ||
Net income | $ 4,464 | $ 3,623 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Share-based compensation expense | 524 | 484 |
Depreciation and amortization | 739 | 866 |
Deferred income taxes | 35 | (122) |
Foreign currency transaction losses | 102 | 11 |
Changes in operating assets and liabilities: | ||
Accounts receivable | (782) | (740) |
Inventories | (4,205) | 1,539 |
Prepaid income taxes | 467 | (22) |
Other current and long term assets | (2) | (435) |
Accounts payable | 2,496 | (1,943) |
Accrued liabilities and other liabilities | (341) | 355 |
Net cash provided by operating activities | 3,497 | 3,616 |
Cash flows from investing activities: | ||
Capital expenditures | (722) | (590) |
Additions to capitalized software | (466) | 0 |
Net cash used in investing activities | (1,188) | (590) |
Cash flows from financing activities: | ||
Payment of dividends on common stock | (2,001) | (1,911) |
Purchases of common stock for treasury | (2,000) | (358) |
Proceeds from stock option exercises | 229 | 294 |
Withholding taxes paid on stock issuances | (265) | (23) |
Net cash used in financing activities | (4,037) | (1,998) |
Effect of exchange rate changes on cash and cash equivalents | 16 | (6) |
(Decrease) increase in cash and cash equivalents | (1,712) | 1,022 |
Cash and cash equivalents, beginning of period | 5,507 | 2,503 |
Cash and cash equivalents, end of period | 3,795 | 3,525 |
Supplemental schedule of non-cash investing activities: | ||
Capital expenditures included in accounts payable | $ 68 | $ 168 |
Basis of presentation
Basis of presentation | 9 Months Ended |
Sep. 30, 2018 | |
Basis of presentation [Abstract] | |
Basis of presentation | 1. Basis of presentation The accompanying unaudited financial statements of TransAct Technologies Incorporated (the “Company") have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP 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, 2017 Condensed Consolidated Balance Sheet data was derived from audited financial statements, but does not include all disclosures required by U.S. GAAP. These interim financial statements should be read in conjunction with the audited financial statements for the year ended December 31, 2017 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 loss, net of tax", in the Condensed Consolidated Balance Sheets. Transaction gains and losses are included in “Other, net” in the Condensed Consolidated Statements of Income. The results of operations for the three and nine months ended September 30, 2018 are not necessarily indicative of the results to be expected for the full year. |
Inventories, net
Inventories, net | 9 Months Ended |
Sep. 30, 2018 | |
Inventories, net [Abstract] | |
Inventories, net | 2. Inventories, net The components of inventories, net are: September 30, 2018 December 31, 2017 (In thousands) Raw materials and purchased component parts $ 9,820 $ 6,322 Work-in-process 3 - Finished goods 3,242 2,553 $ 13,065 $ 8,875 |
Accrued product warranty liabil
Accrued product warranty liability | 9 Months Ended |
Sep. 30, 2018 | |
Accrued product warranty liability [Abstract] | |
Accrued product warranty liability | 3. Accrued product warranty liability We generally warrant our products for up to 24 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 nine months ended September 30, 2018 and 2017: Nine Months Ended September 30, 2018 2017 (In thousands) Balance, beginning of period $ 267 $ 267 Warranties issued 233 184 Warranty settlements (205 ) (187 ) Balance, end of period $ 295 $ 264 As of September 30, 2018, $197 thousand of the accrued product warranty liability is classified as current in "Accrued liabilities" in the Condensed Consolidated Balance Sheets and the remaining $98 thousand is classified as non-current in "Other liabilities". |
Earnings per share
Earnings per share | 9 Months Ended |
Sep. 30, 2018 | |
Earnings per share [Abstract] | |
Earnings per share | 4. 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 September 30, Nine Months Ended September 30, 2018 2017 2018 2017 (In thousands, except per share data) Net income $ 2,574 $ 1,813 $ 4,464 $ 3,623 Shares: Basic: Weighted average common shares outstanding 7,413 7,408 7,449 7,404 Add: Dilutive effect of outstanding options and restricted stock units as determined by the treasury stock method 345 178 325 100 Diluted: Weighted average common and common equivalent shares outstanding 7,758 7,586 7,774 7,504 Net income per common share: Basic $ 0.35 $ 0.24 $ 0.60 $ 0.49 Diluted $ 0.33 $ 0.24 $ 0.57 $ 0.48 The computation of diluted earnings per share excludes the effect of the potential exercise of stock awards, including stock options and restricted stock units, when the average market price of the common stock is lower than the exercise price of the related stock award during the period. These outstanding stock awards are not included in the computation of diluted earnings per share because the effect would be anti-dilutive. For the three months ended September 30, 2018 and 2017, there were 147 thousand and 382 thousand, respectively, of potentially dilutive shares consisting of stock awards that were excluded from the calculation of earnings per diluted share. For the nine months ended September 30, 2018 and 2017, there were 149 thousand and 404 thousand, respectively, of potentially dilutive shares consisting of stock awards that were excluded from the calculation of earnings per diluted share. |
Shareholders' equity
Shareholders' equity | 9 Months Ended |
Sep. 30, 2018 | |
Shareholders' equity [Abstract] | |
Shareholders' equity | 5. Shareholders’ equity Changes in shareholders’ equity for the nine months ended September 30, 2018 were as follows (in thousands): Balance at December 31, 2017 $ 26,014 Net income 4,464 Share-based compensation expense 524 Issuance of shares from exercise of stock options 229 Relinquishment of stock awards upon exercise and fully vested deferred stock units (265 ) Purchase of common stock for treasury (2,001 ) Dividends declared and paid on common stock (2,000 ) Balance at September 30, 2018 $ 26,965 For the three months ended September 30, 2018, our Board of Directors declared a quarterly cash dividend of $0.09 per share, totaling $665 thousand, which was paid on September 14, 2018 to common shareholders of record at the close of business on August 20, 2018. For the three months ended September 30, 2017, dividends declared and paid totaled $661 thousand, or $0.09 per share. For the nine months ended September 30, 2018 and 2017, dividends declared and paid totaled $2.0 million, or $0.27 per share, and $1.9 million, or $0.26 per share, respectively. |
Income taxes
Income taxes | 9 Months Ended |
Sep. 30, 2018 | |
Income taxes [Abstract] | |
Income taxes | 6. Income taxes We recorded an income tax provision for the third quarter of 2018 of $581 thousand at an effective tax rate of 18.4%, compared to an income tax provision during the third quarter of 2017 of $769 thousand at an effective tax rate of 29.8%. For the nine months ended September 30, 2018, we recorded an income tax provision of $1.06 million at an effective tax rate of 19.2%, compared to an income tax provision during the nine months ended September 30, 2017 of $1.66 million at an effective tax rate of 31.4%. We expect our annual effective tax rate for 2018 to be between 19% and 20%. The effective tax rate for the three and nine months ended September 30, 2018 was lower than the effective tax rate for the three and nine months ended September 30, 2017 due to the passage of the Tax Cuts and Jobs Act (the "Tax Reform Act") enacted on December 22, 2017. The legislation significantly changes U.S. tax law by, among other things, lowering corporate income tax rates, implementing a territorial tax system and imposing a one-time repatriation tax on undistributed foreign earnings. The Tax Reform Act reduced the U.S. corporate income tax rate from a maximum of 35% to a flat 21% rate effective January 1, 2018 and, as a result, reduced our statutory U.S. corporate income tax rate from 34% to 21%. On December 22, 2017, the Securities and Exchange Commission ("SEC") staff issued Staff Accounting Bulletin No. 118 ("SAB 118") to address the application of U.S. GAAP in situations where a registrant does not have the necessary information available, prepared, or analyzed in reasonable detail to complete the accounting for certain income tax effects of the Tax Reform Act. SAB 118 provides a measurement period, not to exceed one year from the enactment of the Tax Reform Act. In accordance with SAB 118, the Company has recognized provisional tax impacts related to the revaluation of deferred tax assets and liabilities and included these amounts in its consolidated financial statements for the year ended December 31, 2017, and no changes were made to these provisional amounts during the quarter ended September 30, 2018. The ultimate impact may differ from these provisional amounts, possibly materially, due to, among other things, additional analysis, changes in interpretations and assumptions, additional regulatory guidance from Treasury, the Internal Revenue Service and State Governments, and actions the Company may take as a result of the Tax Reform Act, but the enactment of this legislation did not result in a material adjustment for the nine months ended September 30, 2018. While the Tax Reform Act provides for a territorial tax system, beginning in 2018, it includes two new U.S. tax base erosion provisions, the global intangible low-taxed income ("GILTI") provisions and the base-erosion and anti-abuse tax ("BEAT") provisions. The GILTI provisions require the Company to include in its U.S. income tax return foreign subsidiary earnings in excess of an allowable return on the foreign subsidiary's tangible assets. The BEAT provisions in the Tax Reform Act eliminate the deduction of certain base-erosion payments made to related foreign corporations, and impose a minimum tax if greater than regular income tax. The Company has not recorded any impacts of GILTI or BEAT in its consolidated financial statements for the quarter ended September 30, 2018. We are subject to U.S. federal income tax, as well as income tax in certain state and foreign jurisdictions. We have substantially concluded all U.S. federal income tax, state and local, and foreign tax regulatory examination matters through 2014. However, our federal tax returns for the years 2015 through 2017 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. As of September 30, 2018, we had $76 thousand of total gross unrecognized tax benefits that, if recognized, would favorably affect the effective income tax rate in any future periods. During the third quarter of 2018, we recognized $28 thousand of previously unrecognized tax benefits as the statute of limitations on the use of our 2014 R&D credits expired during the third quarter of 2018. We recognize interest and penalties related to uncertain tax positions in the income tax provision reported as "Deferred tax assets" in the Condensed Consolidated Balance Sheet. As of September 30, 2018, we have $14 thousand of accrued interest and penalties related to uncertain tax positions. The Company maintains a valuation allowance against certain deferred tax assets where realization is not certain. |
Accounting pronouncements
Accounting pronouncements | 9 Months Ended |
Sep. 30, 2018 | |
Accounting pronouncements [Abstract] | |
Accounting pronouncements | 7. Accounting pronouncements The following accounting pronouncements will be adopted in future reporting periods: In February 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2016-02, Leases (Topic 842 Leases The following accounting pronouncements were adopted during 2018: 1) Revenue recognition: ASU No. 2014-09, "Revenue from Contracts with Customers” and its related amendments (collectively, ASC 606) are effective for reporting periods beginning after December 15, 2017, and interim periods therein. This ASU is intended to clarify the principles for recognizing revenue by removing inconsistencies in revenue requirements; providing a more robust framework for addressing revenue issues; improving comparability of revenue recognition practices across entities, industries, jurisdictions and capital markets; and providing more useful information to users of financial statements through improved revenue disclosure requirements. Entities have the option of using either a full retrospective approach or modified retrospective approach to adopt the amended guidance. We adopted ASC 606 effective January 1, 2018 and elected the modified retrospective approach. The results for periods before 2018 were not adjusted for the new standard and no cumulative effective for the change in accounting was recognized through retained earnings at the date of adoption. Periods prior to January 1, 2018 The Company’s revenue recognition method prior to the adoption of ASC 606 can be found under Note 2. Summary of significant accounting policies within the “Notes to Consolidated Financial Statements” in the Annual Report on Form 10-K for the fiscal year ended December 31, 2017. Periods commencing January 1, 2018 In accordance with ASC 606, a performance obligation is a promise in a contract with a customer to transfer a distinct good or service to the customer. Some of our contracts with customers contain a single performance obligation, while other contracts contain multiple performance obligations (most commonly when contracts include product and extended warranties). A contract's transaction price is allocated to each distinct performance obligation and recognized as revenue when, or as, the performance obligation is satisfied. When there are multiple performance obligations within a contract, we allocate the transaction price to each performance obligation based on its standalone selling price. The transaction price is determined based on the consideration to which the Company will be entitled in exchange for transferring services to the customer. To the extent the transaction price includes variable consideration, such as price protection, reserves for returns and other allowances, the Company estimates the amount of variable consideration that should be included in the transaction price utilizing either the “expected value” method or the “most likely amount” method depending on the nature of the variable consideration. Variable consideration is included in the transaction price if, in the Company’s judgment, it is probable that a significant future reversal of cumulative revenue under the contract will not occur. For a majority of our revenue, which consists of printers, terminals, consumables, and replacement parts, the Company recognizes revenue as of a point of time. The transaction price is recognized upon shipment of the order when control of the goods is transferred to the customer and at the time the performance obligation is fulfilled. We also sell a software solution, EPICENTRAL™, that enables casino operators to create promotional coupons and marketing messages and to print them in real-time at the slot machine. EPICENTRAL TM Performance obligations are satisfied over time if the customer receives the benefits as we perform work, if the customer controls the asset as it is being produced, or if the product being produced for the customer has no alternative use and we have a contractual right to payment. For our separately priced extended warranty, technical support for our restaurant solution terminals and maintenance agreements (including free one-year maintenance received by the customers upon completion of EPICENTRAL™ installation) revenue is recognized over time as the customer receives the benefit. The transaction price from the maintenance services is recognized ratably over time, using output methods, as control of the services is transferred to the customer. For extended warranties, the transaction price is recognized ratably over the warranty period, using output methods, as control of the services is transferred to the customer. In the cases where there is more than one performance obligation in a customer arrangement, the Company typically uses the “standalone selling price” method to determine the transaction price to allocate to each performance obligation. The Company sells the performance obligations separately and has established standalone selling prices for its products and services. In the case of an overall price discount, the discount is applied to each performance obligation proportionately based on standalone selling price. To determine the standalone selling price for initial EPICENTRAL™ installations, the Company uses the adjusted market assessment approach. Disaggregation of revenue The following table disaggregates our revenue by market-type, as we believe it best depicts how the nature, amount, timing and uncertainty of our revenue and cash flows are affected by economic factors. Sales and usage-based taxes are excluded from revenues. Nine Months Ended September 30, 2018 United States International Total (In thousands) Restaurant solutions $ 3,295 $ 327 $ 3,622 POS Automation and Banking 5,765 136 5,901 Casino and Gaming 14,084 7,190 21,274 Lottery 1,724 47 1,771 Printrex 833 229 1,062 TransAct Services Group 8,494 708 9,202 Total net sales $ 34,195 $ 8,637 $ 42,832 Changes in accounting policies and financial statement impact of adopting ASC 606 Except for the changes below, we have consistently applied the accounting policies to all periods presented in the consolidated financial statements. As noted above, we adopted ASC 606 using the modified retrospective approach which allows the Company to record any changes using the cumulative effect. The adoption of the ASC 606 did not require the Company to record an adjustment to retained earnings at January 1, 2018 and did not have an impact on the consolidated income statement during the first nine months of 2018, basic or diluted earnings per share, consolidated statement of cash flows or consolidated balance sheet at September 30, 2018. Costs to Obtain a Contract – Contract balances Our contract liabilities consist of customer pre-payments and deferred revenue. Customer prepayments are reported as “Accrued Liabilities” in current liabilities in the Condensed Consolidated Balance Sheets and represent customer payments made in advance of performance obligations in instances where credit has not been extended and is recognized as revenue when the performance obligation is complete. Deferred revenue is reported separately in current liabilities and non-current liabilities and consists of our extended warranty contracts, technical support for our restaurant solution terminals, EPICENTRAL™ maintenance contracts and testing service contracts, and is recognized as revenue as (or when) we perform under the contract. The increase in current and non-current deferred revenue is due to the sale of extended warranties and technical support for our restaurant solution terminals. We do not have any contract asset balances as of September 30, 2018 or December 31, 2017. In the first nine months of 2018, we recognized revenue of $587 thousand related to our contract liabilities at January 1, 2018. Total contract liabilities consist of the following: September 30, 2018 January 1, 2018 (In thousands) Customer pre-payments $ 92 $ 79 Deferred revenue, current 307 169 Deferred revenue, non-current 253 69 Total contract liabilities $ 652 $ 317 Remaining performance obligations Remaining performance obligations represent the transaction price of firm orders for which a good or service has not been delivered to our customer. As of September 30, 2018, the aggregate amount of the transaction price allocated to remaining performance obligations was $6.0 million. The Company expects to recognize revenue on $5.5 million of our remaining performance obligations within the next 12 months, $0.4 million within the next 24 months and the balance of these remaining performance obligations recognized within the next 36 months. 1) Stock compensation: In May 2017, the FASB issued ASU No. 2017-09, "Compensation-Stock Compensation: Scope of modification accounting". ASU 2017-09 provides guidance about which changes to the terms or conditions of a share-based payment award require an entity to apply modification accounting in Topic 718. ASU No. 2017-09 is effective for fiscal years beginning after December 15, 2017. The amendments are applied prospectively to an award modified on or after the adoption date. We adopted this guidance in the first quarter of 2018 and the adoption has not resulted in a change to our financial statements. Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations |
Inventories, net (Tables)
Inventories, net (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Inventories, net [Abstract] | |
Inventories, net | The components of inventories, net are: September 30, 2018 December 31, 2017 (In thousands) Raw materials and purchased component parts $ 9,820 $ 6,322 Work-in-process 3 - Finished goods 3,242 2,553 $ 13,065 $ 8,875 |
Accrued product warranty liab_2
Accrued product warranty liability (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Accrued product warranty liability [Abstract] | |
Product warranty liability | The following table summarizes the activity recorded in the accrued product warranty liability during the nine months ended September 30, 2018 and 2017: Nine Months Ended September 30, 2018 2017 (In thousands) Balance, beginning of period $ 267 $ 267 Warranties issued 233 184 Warranty settlements (205 ) (187 ) Balance, end of period $ 295 $ 264 |
Earnings per share (Tables)
Earnings per share (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Earnings per share [Abstract] | |
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 September 30, Nine Months Ended September 30, 2018 2017 2018 2017 (In thousands, except per share data) Net income $ 2,574 $ 1,813 $ 4,464 $ 3,623 Shares: Basic: Weighted average common shares outstanding 7,413 7,408 7,449 7,404 Add: Dilutive effect of outstanding options and restricted stock units as determined by the treasury stock method 345 178 325 100 Diluted: Weighted average common and common equivalent shares outstanding 7,758 7,586 7,774 7,504 Net income per common share: Basic $ 0.35 $ 0.24 $ 0.60 $ 0.49 Diluted $ 0.33 $ 0.24 $ 0.57 $ 0.48 |
Shareholders' equity (Tables)
Shareholders' equity (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Shareholders' equity [Abstract] | |
Changes in shareholders' equity | Changes in shareholders’ equity for the nine months ended September 30, 2018 were as follows (in thousands): Balance at December 31, 2017 $ 26,014 Net income 4,464 Share-based compensation expense 524 Issuance of shares from exercise of stock options 229 Relinquishment of stock awards upon exercise and fully vested deferred stock units (265 ) Purchase of common stock for treasury (2,001 ) Dividends declared and paid on common stock (2,000 ) Balance at September 30, 2018 $ 26,965 |
Accounting pronouncements (Tabl
Accounting pronouncements (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Accounting pronouncements [Abstract] | |
Disaggregation of revenue | Disaggregation of revenue The following table disaggregates our revenue by market-type, as we believe it best depicts how the nature, amount, timing and uncertainty of our revenue and cash flows are affected by economic factors. Sales and usage-based taxes are excluded from revenues. Nine Months Ended September 30, 2018 United States International Total (In thousands) Restaurant solutions $ 3,295 $ 327 $ 3,622 POS Automation and Banking 5,765 136 5,901 Casino and Gaming 14,084 7,190 21,274 Lottery 1,724 47 1,771 Printrex 833 229 1,062 TransAct Services Group 8,494 708 9,202 Total net sales $ 34,195 $ 8,637 $ 42,832 |
Contract liabilities | Contract balances Our contract liabilities consist of customer pre-payments and deferred revenue. Customer prepayments are reported as “Accrued Liabilities” in current liabilities in the Condensed Consolidated Balance Sheets and represent customer payments made in advance of performance obligations in instances where credit has not been extended and is recognized as revenue when the performance obligation is complete. Deferred revenue is reported separately in current liabilities and non-current liabilities and consists of our extended warranty contracts, technical support for our restaurant solution terminals, EPICENTRAL™ maintenance contracts and testing service contracts, and is recognized as revenue as (or when) we perform under the contract. The increase in current and non-current deferred revenue is due to the sale of extended warranties and technical support for our restaurant solution terminals. We do not have any contract asset balances as of September 30, 2018 or December 31, 2017. In the first nine months of 2018, we recognized revenue of $587 thousand related to our contract liabilities at January 1, 2018. Total contract liabilities consist of the following: September 30, 2018 January 1, 2018 (In thousands) Customer pre-payments $ 92 $ 79 Deferred revenue, current 307 169 Deferred revenue, non-current 253 69 Total contract liabilities $ 652 $ 317 |
Inventories, net (Details)
Inventories, net (Details) - USD ($) $ in Thousands | Sep. 30, 2018 | Dec. 31, 2017 |
Inventories, net [Abstract] | ||
Raw materials and purchased component parts | $ 9,820 | $ 6,322 |
Work-in-process | 3 | 0 |
Finished goods | 3,242 | 2,553 |
Inventories, net | $ 13,065 | $ 8,875 |
Accrued product warranty liab_3
Accrued product warranty liability (Details) - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2018 | Sep. 30, 2017 | |
Accrued product warranty liability [Roll Forward] | ||
Balance, beginning of period | $ 267 | $ 267 |
Warranties issued | 233 | 184 |
Warranty settlements | (205) | (187) |
Balance, end of period | 295 | $ 264 |
Accrued product warranty liability, current | 197 | |
Accrued product warranty liability, non-current | $ 98 | |
Maximum [Member] | ||
Warranty [Abstract] | ||
Product warranty period | 24 months |
Earnings per share (Details)
Earnings per share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Earnings per share [Abstract] | ||||
Net income | $ 2,574 | $ 1,813 | $ 4,464 | $ 3,623 |
Shares [Abstract] | ||||
Basic: Weighted average common shares outstanding (in shares) | 7,413 | 7,408 | 7,449 | 7,404 |
Add: Dilutive effect of outstanding options and restricted stock units as determined by the treasury stock method (in shares) | 345 | 178 | 325 | 100 |
Diluted: Weighted average common and common equivalent shares outstanding (in shares) | 7,758 | 7,586 | 7,774 | 7,504 |
Net income per common share [Abstract] | ||||
Basic (in dollars per share) | $ 0.35 | $ 0.24 | $ 0.60 | $ 0.49 |
Diluted (in dollars per share) | $ 0.33 | $ 0.24 | $ 0.57 | $ 0.48 |
Stock Awards [Member] | ||||
Earnings per share [Abstract] | ||||
Anti-dilutive securities excluded from computation of earnings per dilutive share (in shares) | 147 | 382 | 149 | 404 |
Shareholders' equity (Details)
Shareholders' equity (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||
Beginning balance | $ 26,014 | |||
Net income | $ 2,574 | $ 1,813 | 4,464 | $ 3,623 |
Share-based compensation expense | 524 | |||
Issuance of shares from exercise of stock options | 229 | |||
Relinquishment of stock awards upon exercise and fully vested deferred stock units | (265) | |||
Foreign currency translation adjustment | 11 | $ 3 | 0 | $ 10 |
Purchase of common stock for treasury | (2,000) | |||
Dividends declared and paid on common stock | (2,001) | |||
Ending balance | $ 26,965 | $ 26,965 | ||
Dividends [Abstract] | ||||
Dividends declared and paid per common share (in dollars per share) | $ 0.09 | $ 0.09 | $ 0.27 | $ 0.26 |
Dividends paid date | Sep. 14, 2018 | |||
Dividends record date | Aug. 20, 2018 | |||
Payment of dividend on common stock | $ 665 | $ 661 | $ 2,001 | $ 1,911 |
Income taxes (Details)
Income taxes (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | Dec. 31, 2017 | |
Income taxes [Abstract] | |||||
Income tax provision | $ 581 | $ 769 | $ 1,064 | $ 1,657 | |
Effective tax rate | 18.40% | 29.80% | 19.20% | 31.40% | |
Total gross unrecognized tax benefits that would impact the effective rate | $ 76 | $ 76 | |||
Previously unrecognized tax benefit recognized | 28 | ||||
Accrued interest and penalties related to uncertain tax positions | $ 14 | $ 14 | |||
U.S. corporate income tax rate | 21.00% | 34.00% | |||
Minimum [Member] | |||||
Income taxes [Abstract] | |||||
Effective tax rate | 19.00% | ||||
Maximum [Member] | |||||
Income taxes [Abstract] | |||||
Effective tax rate | 20.00% | ||||
U.S. corporate income tax rate | 35.00% |
Accounting pronouncements, Disa
Accounting pronouncements, Disaggregation of Revenue (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Disaggregation of revenue [Abstract] | ||||
Total net sales | $ 15,838 | $ 15,524 | $ 42,832 | $ 43,117 |
United States [Member] | ||||
Disaggregation of revenue [Abstract] | ||||
Total net sales | 34,195 | |||
International [Member] | ||||
Disaggregation of revenue [Abstract] | ||||
Total net sales | 8,637 | |||
Restaurant Solutions [Member] | ||||
Disaggregation of revenue [Abstract] | ||||
Total net sales | 3,622 | |||
Restaurant Solutions [Member] | United States [Member] | ||||
Disaggregation of revenue [Abstract] | ||||
Total net sales | 3,295 | |||
Restaurant Solutions [Member] | International [Member] | ||||
Disaggregation of revenue [Abstract] | ||||
Total net sales | 327 | |||
POS Automation and Banking [Member] | ||||
Disaggregation of revenue [Abstract] | ||||
Total net sales | 5,901 | |||
POS Automation and Banking [Member] | United States [Member] | ||||
Disaggregation of revenue [Abstract] | ||||
Total net sales | 5,765 | |||
POS Automation and Banking [Member] | International [Member] | ||||
Disaggregation of revenue [Abstract] | ||||
Total net sales | 136 | |||
Casino and Gaming [Member] | ||||
Disaggregation of revenue [Abstract] | ||||
Total net sales | 21,274 | |||
Casino and Gaming [Member] | United States [Member] | ||||
Disaggregation of revenue [Abstract] | ||||
Total net sales | 14,084 | |||
Casino and Gaming [Member] | International [Member] | ||||
Disaggregation of revenue [Abstract] | ||||
Total net sales | 7,190 | |||
Lottery [Member] | ||||
Disaggregation of revenue [Abstract] | ||||
Total net sales | 1,771 | |||
Lottery [Member] | United States [Member] | ||||
Disaggregation of revenue [Abstract] | ||||
Total net sales | 1,724 | |||
Lottery [Member] | International [Member] | ||||
Disaggregation of revenue [Abstract] | ||||
Total net sales | 47 | |||
Printrex [Member] | ||||
Disaggregation of revenue [Abstract] | ||||
Total net sales | 1,062 | |||
Printrex [Member] | United States [Member] | ||||
Disaggregation of revenue [Abstract] | ||||
Total net sales | 833 | |||
Printrex [Member] | International [Member] | ||||
Disaggregation of revenue [Abstract] | ||||
Total net sales | 229 | |||
TransAct Services Group [Member] | ||||
Disaggregation of revenue [Abstract] | ||||
Total net sales | 9,202 | |||
TransAct Services Group [Member] | United States [Member] | ||||
Disaggregation of revenue [Abstract] | ||||
Total net sales | 8,494 | |||
TransAct Services Group [Member] | International [Member] | ||||
Disaggregation of revenue [Abstract] | ||||
Total net sales | $ 708 |
Accounting pronouncements, Cont
Accounting pronouncements, Contract Balances (Details) - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2018 | Dec. 31, 2017 | |
Accounting pronouncements [Abstract] | ||
Revenue recognised | $ 587 | |
Contract liabilities [Abstract] | ||
Customer pre-payments | 92 | $ 79 |
Deferred revenue, current | 307 | 169 |
Deferred revenue, non-current | 253 | 69 |
Total contract liabilities | $ 652 | $ 317 |
Accounting pronouncements, Rema
Accounting pronouncements, Remaining Performance Obligations (Details) $ in Millions | Sep. 30, 2018USD ($) |
Remaining performance obligations [Abstract] | |
Remaining performance obligations | $ 6 |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2018-10-01 | |
Remaining performance obligations [Abstract] | |
Remaining performance obligations | $ 5.5 |
Expected timing of satisfaction, period | 12 months |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2019-10-01 | |
Remaining performance obligations [Abstract] | |
Remaining performance obligations | $ 0.4 |
Expected timing of satisfaction, period | 24 months |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2021-01-01 | |
Remaining performance obligations [Abstract] | |
Remaining performance obligations | |
Expected timing of satisfaction, period | 36 months |