TransAct Technologies (TACT) 10-Q 18 Nov 19 2019 Q3 Quarterly report Financial data

Document and Entity Information

Document and Entity Information	9 Months Ended
	Sep. 30, 2019shares
Cover [Abstract]
Entity Registrant Name	TRANSACT TECHNOLOGIES INC
Entity Central Index Key	0001017303
Current Fiscal Year End Date	--12-31
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Shell Company	false
Entity Filer Category	Non-accelerated Filer
Entity Small Business	true
Entity Emerging Growth Company	false
Entity Common Stock, Shares Outstanding	0
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Sep. 30, 2019
Document Fiscal Year Focus	2019
Document Fiscal Period Focus	Q3
Entity Address, State or Province	CT

CONDENSED CONSOLIDATED BALANCE

CONDENSED CONSOLIDATED BALANCE SHEETS (unaudited) - USD ($) $ in Thousands	Sep. 30, 2019	Dec. 31, 2018
Current assets:
Cash and cash equivalents	$ 1,207	$ 4,691
Accounts receivable, net	8,350	8,025
Note receivable	1,006	0
Inventories, net	12,700	12,835
Prepaid income taxes	795	809
Other current assets	1,251	677
Total current assets	25,309	27,037
Fixed assets, net of accumulated depreciation of $20,660 and $20,518, respectively	2,578	2,272
Right-of-use asset, net of accumulated amortization of $211 and $0	3,055	0
Goodwill	2,621	2,621
Deferred tax assets	2,311	2,198
Intangible assets, net of accumulated amortization of $3,542, and $3,487, respectively	910	797
Other assets	31	31
Total noncurrent assets	11,506	7,919
Total assets	36,815	34,956
Current liabilities:
Accounts payable	2,698	3,483
Accrued liabilities	2,696	2,765
Operating Lease, Liability, Current	932	0
Deferred revenue	517	384
Total current liabilities	6,843	6,632
Deferred revenue, net of current portion	190	265
Lease liability	2,329	0
Deferred rent, net of current portion	0	250
Other liabilities	170	242
Total noncurrent liabilities	2,689	757
Total liabilities	9,532	7,389
Shareholders' equity:
Common stock, $0.01 par value, 20,000,000 shares authorized; 11,500,502 and 11,463,141 shares issued, respectively; 7,455,660 and 7,418,299 shares outstanding, respectively	115	115
Additional paid-in capital	32,474	32,129
Retained earnings	26,820	27,515
Accumulated other comprehensive loss, net of tax	(16)	(82)
Treasury stock, at cost, 4,044,842 shares	(32,110)	(32,110)
Total shareholders' equity	27,283	27,567
Total liabilities and shareholders' equity	$ 36,815	$ 34,956

CONDENSED CONSOLIDATED BALANC_2

CONDENSED CONSOLIDATED BALANCE SHEETS (unaudited) (Parenthetical) - USD ($) $ in Thousands	Sep. 30, 2019	Dec. 31, 2018
Assets:
Fixed assets, accumulated depreciation	$ 21,007	$ 20,518
Intangible assets, accumulated amortization	$ 3,677	$ 3,487
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)	11,515,090	11,463,141
Common stock, shares outstanding (in shares)	7,470,248	7,418,299
Treasury stock (in shares)	4,044,842	4,044,842

CONDENSED CONSOLIDATED STATEMEN

CONDENSED CONSOLIDATED STATEMENTS OF INCOME (unaudited) - USD ($) shares in Thousands, $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (unaudited) [Abstract]
Net sales	$ 11,686	$ 15,838	$ 34,586	$ 42,832
Cost of sales	6,140	7,834	17,250	21,975
Gross profit	5,546	8,004	17,336	20,857
Operating expenses:
Engineering, design and product development	1,048	1,106	3,328	3,510
Selling and marketing	1,947	1,798	5,890	5,450
General and administrative	2,239	1,888	6,720	6,211
Operating expenses	5,234	4,792	15,938	15,171
Operating income	312	3,212	1,398	5,686
Interest and other income (expense):
Interest, net	0	(7)	(13)	(21)
Other, net	(71)	(50)	(123)	(137)
Interest and other income (expense)	(71)	(57)	(136)	(158)
Income before income taxes	241	3,155	1,262	5,528
Income tax provision	(143)	581	(54)	1,064
Net income	$ 384	$ 2,574	$ 1,316	$ 4,464
Net income per common share:
Basic (in dollars per share)	$ 0.05	$ 0.35	$ 0.18	$ 0.60
Diluted (in dollars per share)	$ 0.05	$ 0.33	$ 0.17	$ 0.57
Shares used in per-share calculation:
Basic (in shares)	7,470	7,413	7,464	7,449
Diluted (in shares)	7,753	7,758	7,658	7,774
Dividends declared and paid per common share (in dollars per share)	$ 0.09	$ 0.09	$ 0.27	$ 0.27

CONDENSED CONSOLIDATED STATEM_2

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (unaudited) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (unaudited) [Abstract]
Net income	$ 384	$ 2,574	$ 1,316	$ 4,464
Foreign currency translation adjustment, net of tax	(33)	11	66	0
Comprehensive income	$ 351	$ 2,585	$ 1,382	$ 4,464

CONDENSED CONSOLIDATED STATEM_3

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited) - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018
Cash flows from operating activities:
Net income	$ 1,316	$ 4,464
Adjustments to reconcile net income to net cash provided by operating activities:
Share-based compensation expense	559	524
Depreciation and amortization	747	739
Deferred income taxes	(104)	35
Foreign currency transaction gains	153	102
Changes in operating assets and liabilities:
Accounts receivable	(367)	(782)
Inventories	82	(4,205)
Prepaid income taxes	11	467
Other current and long term assets	(576)	(2)
Accounts payable	(853)	2,496
Accrued liabilities and other liabilities	(120)	(341)
Net cash provided by operating activities	848	3,497
Cash flows from investing activities:
Capital expenditures	(796)	(722)
Additions to capitalized software	(304)	(466)
Issuance of note receivable	(1,000)	0
Net cash used in investing activities	(2,100)	(1,188)
Cash flows from financing activities:
Payment of dividends on common stock	(2,011)	(2,001)
Purchases of common stock for treasury	0	(2,000)
Proceeds from stock option exercises	0	229
Withholding taxes paid on stock issuances	(214)	(265)
Net cash used in financing activities	(2,225)	(4,037)
Effect of exchange rate changes on cash and cash equivalents	(7)	16
Decrease in cash and cash equivalents	(3,484)	(1,712)
Cash and cash equivalents, beginning of period	4,691	5,507
Cash and cash equivalents, end of period	1,207	3,795
Supplemental schedule of non-cash investing activities:
Capital expenditures included in accounts payable	$ 91	$ 68

CONDENSED CONSOLIDATED STATEM_4

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY (unaudited) - USD ($) $ in Thousands	Common Stock [Member]	Additional Paid-in Capital [Member]	Retained Earnings [Member]	Treasury Stock [Member]	Accumulated Other Comprehensive Income [Member]	Total
Beginning balance at Dec. 31, 2017	$ 114	$ 31,353	$ 24,756	$ (30,110)	$ (99)	$ 26,014
Ending balance at Jun. 30, 2018	114	31,533	25,310	(32,110)	(110)	$ 24,737
Supplemental share information
Dividends declared and paid per common share (in dollars per share)						$ 0.27
Beginning balance at Dec. 31, 2017	114	31,353	24,756	(30,110)	(99)	$ 26,014
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Share-based compensation expense		524
Issuance of shares from exercise of stock options		229
Relinquishment of stock options and deferred stock units to pay withholding taxes		(265)
Net income			4,464			4,464
Dividends declared and paid on common stock			(2,001)
Purchase of treasury stock				(2,000)
Foreign currency translation adjustment, net of tax					0	0
Ending balance at Sep. 30, 2018		31,841	27,219	(32,110)	(99)	$ 26,965
Supplemental share information
Issuance of shares from stock awards (in shares)						88,388
Relinquishment of stock awards to pay withholding taxes (in shares)						19,044
Purchase of treasury stock (in shares)						156,410
Dividends declared and paid per common share (in dollars per share)						$ 0.27
Beginning balance at Jun. 30, 2018	114	31,533	25,310	(32,110)	(110)	$ 24,737
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Share-based compensation expense		187
Issuance of shares from exercise of stock options		121
Relinquishment of stock options and deferred stock units to pay withholding taxes		0
Net income			2,574			2,574
Dividends declared and paid on common stock			(665)
Purchase of treasury stock				0
Foreign currency translation adjustment, net of tax					11	11
Ending balance at Sep. 30, 2018		31,841	27,219	(32,110)	(99)	$ 26,965
Supplemental share information
Issuance of shares from stock awards (in shares)						13,250
Relinquishment of stock awards to pay withholding taxes (in shares)						0
Purchase of treasury stock (in shares)						0
Dividends declared and paid per common share (in dollars per share)						$ 0.09
Beginning balance at Dec. 31, 2018	115	32,129	27,515	(32,110)	(82)	$ 27,567
Ending balance at Jun. 30, 2019	115	32,301	27,108	(32,110)	17	$ 27,431
Supplemental share information
Dividends declared and paid per common share (in dollars per share)						$ 0.27
Beginning balance at Dec. 31, 2018	115	32,129	27,515	(32,110)	(82)	$ 27,567
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Share-based compensation expense		559
Issuance of shares from exercise of stock options		0
Relinquishment of stock options and deferred stock units to pay withholding taxes		(214)
Net income			1,316			1,316
Dividends declared and paid on common stock			(2,011)
Purchase of treasury stock				0
Foreign currency translation adjustment, net of tax					66	66
Ending balance at Sep. 30, 2019		32,474	26,820	(32,110)	(16)	$ 27,283
Supplemental share information
Issuance of shares from stock awards (in shares)						73,398
Relinquishment of stock awards to pay withholding taxes (in shares)						21,449
Purchase of treasury stock (in shares)						0
Dividends declared and paid per common share (in dollars per share)						$ 0.27
Beginning balance at Jun. 30, 2019	$ 115	32,301	27,108	(32,110)	17	$ 27,431
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Share-based compensation expense		173
Issuance of shares from exercise of stock options		0
Relinquishment of stock options and deferred stock units to pay withholding taxes		0
Net income			384			384
Dividends declared and paid on common stock			(672)
Purchase of treasury stock				0
Foreign currency translation adjustment, net of tax					(33)	(33)
Ending balance at Sep. 30, 2019		$ 32,474	$ 26,820	$ (32,110)	$ (16)	$ 27,283
Supplemental share information
Issuance of shares from stock awards (in shares)						500
Relinquishment of stock awards to pay withholding taxes (in shares)						0
Purchase of treasury stock (in shares)						0
Dividends declared and paid per common share (in dollars per share)						$ 0.09

Basis of presentation

Basis of presentation	9 Months Ended
	Sep. 30, 2019
Basis of presentation [Abstract]
Basis of presentation	1. Basis of presentation The accompanying unaudited financial statements of TransAct Technologies Incorporated (“TransAct”, the “Company”, “we”, “us”, or “our”) 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, 2018 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, 2018 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 exchange rate as of the date the transaction was recognized, with the resulting translation gain or loss recorded in “Accumulated other comprehensive income (loss), net of tax”, in the Condensed Consolidated Balance Sheets and Condensed Consolidated Statements of Changes in Shareholders’ Equity. 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, 2019 are not necessarily indicative of the results to be expected for the full year.

Revenue

Revenue	9 Months Ended
	Sep. 30, 2019
Revenue [Abstract]
Revenue	2. Revenue We account for revenue in accordance with ASC Topic 606: Revenue from Contracts with Customers. 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. Three Months Ended Three Months Ended September 30, 2019 September 30, 2018 (In thousands) United States International Total United States International Total Restaurant Solutions $ 1,730 $ 221 $ 1,951 $ 1,326 $ 155 $ 1,481 POS automation and banking 1,494 20 1,514 1,910 23 1,933 Casino and gaming 2,849 2,225 5,074 5,733 2,534 8,267 Lottery 95 – 95 655 – 655 Printrex 213 83 296 304 147 451 TSG 2,490 266 2,756 2,739 312 3,051 Total net sales $ 8,871 $ 2,815 $ 11,686 $ 12,667 $ 3,171 $ 15,838 Nine Months Ended Nine Months Ended September 30, 2019 September 30, 2018 (In thousands) United States International Total United States International Total Restaurant Solutions $ 3,825 $ 462 $ 4,287 $ 3,609 $ 327 $ 3,936 POS automation and banking 4,392 43 4,435 5,765 136 5,901 Casino and gaming 9,765 6,423 16,188 14,084 7,190 21,274 Lottery 924 2 926 1,724 47 1,771 Printrex 740 183 923 833 229 1,062 TSG 6,947 880 7,827 8,180 708 8,888 Total net sales $ 26,593 $ 7,993 $ 34,586 $ 34,195 $ 8,637 $ 42,832 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. Customer prepayments represent customer payments made in advance of performance obligations in instances where credit has not been extended and are 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, prepaid subscription revenue for our BOHA! software, EPICENTRAL™ maintenance contracts and testing service contracts, and is recognized as revenue as (or when) we perform under the contract. We do not have any contract asset balances as of September 30, 2019 or December 31, 2018. For the first nine months of 2019, we recognized revenue of $489 thousand related to our contract liabilities at December 31, 2018. Total contract liabilities consist of the following: September 30, 2019 December 31, 2018 (In thousands) Customer pre-payments $ 69 $ 50 Deferred revenue, current 517 384 Deferred revenue, non-current 190 265 Total contract liabilities $ 776 $ 699 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, 2019, the aggregate amount of the transaction price allocated to remaining performance obligations was $4.3 million. The Company expects to recognize revenue on $4.1 million of its remaining performance obligations within the next 12 months, $0.1 million within the next 24 months and the balance of these remaining performance obligations within the next 36 months.

Inventories, net

Inventories, net	9 Months Ended
	Sep. 30, 2019
Inventories, net [Abstract]
Inventories, net	4. Inventories, net The components of inventories, net were: September 30, 2019 December 31, 2018 (In thousands) Raw materials and purchased component parts $ 6,898 $ 6,593 Work-in-process 6 29 Finished goods 5,796 6,213 $ 12,700 $ 12,835

Accrued product warranty liabil

Accrued product warranty liability	9 Months Ended
	Sep. 30, 2019
Accrued product warranty liability [Abstract]
Accrued product warranty liability	5. Accrued product warranty liability We generally provide warranties on 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, 2019 and 2018: Nine Months Ended September 30, 2019 2018 (In thousands) Balance, beginning of period $ 273 $ 267 Warranties issued 138 233 Warranty settlements (190 ) (205 ) Balance, end of period $ 221 $ 295 As of September 30, 2019, $176 thousand of the accrued product warranty liability was classified as current in "Accrued liabilities" in the Condensed Consolidated Balance Sheets and the remaining $45 thousand was classified as non-current in "Other liabilities".

Earnings per share

Earnings per share	9 Months Ended
	Sep. 30, 2019
Earnings per share [Abstract]
Earnings per share	7. 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, 2019 2018 2019 2018 (In thousands, except per share data) Net income $ 384 $ 2,574 $ 1,316 $ 4,464 Shares: Basic: Weighted average common shares outstanding 7,470 7,413 7,464 7,449 Add: Dilutive effect of outstanding options and restricted stock units as determined by the treasury stock method 283 345 194 325 Diluted: Weighted average common and common equivalent shares outstanding 7,753 7,758 7,658 7,774 Net income per common share: Basic $ 0.05 $ 0.35 $ 0.18 $ 0.60 Diluted $ 0.05 $ 0.33 $ 0.17 $ 0.57 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, as the inclusion of these stock awards in the computation of diluted earnings would be anti-dilutive. For the three months ended September 30, 2019 and 2018, there were 326 thousand and 147 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, 2019 and 2018, there were 462 thousand and 149 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, 2019
Shareholders' equity [Abstract]
Shareholders' equity	8. Shareholders’ equity For the three months ended September 30, 2019, our Board of Directors declared a quarterly cash dividend of $0.09 per share, totaling $672 thousand, which was paid on September 16, 2019 to common shareholders of record at the close of business on August 20, 2019. For the three months ended September 30, 2018, dividends declared and paid totaled $665 thousand, or $0.09 per share. Dividends declared and paid totaled $2.0 million, or $0.27 per share for both the nine months ended September 30, 2019 and 2018.

Leases

Leases	9 Months Ended
	Sep. 30, 2019
Leases [Abstract]
Leases	9. Leases ASU 2016-02, “Leases” The new standard requires lessees to apply a dual approach, classifying leases as either finance or operating leases based on the principle of whether or not the lease is effectively a financed purchase by the lessee. This classification will determine whether lease expense is recognized based on an effective interest method or on a straight-line basis over the term of the lease, respectively. A lessee is also required to record a right-of-use asset and a lease liability for all leases with a term of greater than 12 months regardless of their classification. Leases with a term of 12 months or less will be accounted for based on existing guidance for operating leases. If risks and rewards are conveyed without the transfer of control, the lease is treated as financing. If the lessor does not convey risks and rewards or control, the lease is treated as operating. We have elected certain practical expedients available under ASC 842 upon adoption. We have applied the practical expedient which allows prospective transition to ASC 842 on January 1, 2019. Under this transition practical expedient, we did not reassess lease classification, embedded leases or initial direct costs. We have applied the practical expedient for short-term leases. We have lease agreements that include lease and non-lease components, and we have not elected the practical expedients to combine these components for any of our leases. The adoption of ASC 842 had no effect on our Consolidated Statement of Income or Consolidated Statement of Cash Flows. Upon adoption of ASC 842, we recorded a $3.7 million right-of-use asset and a $3.9 million lease liability. The adoption of the new standard had no impact on retained earnings. We enter into lease agreements for the use of real estate space and certain other Right of use assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease. Lease right of use assets and liabilities are recognized at the commencement date of the lease based on the present value of lease payments over the lease term. As most of our leases do not provide an implicit rate, the Company determines its incremental borrowing rate by using the rate of interest that the Company would have to pay to borrow on a collateralized basis over a similar term, an amount equal to the lease payments in a similar economic environment. Our lease right of use assets exclude lease incentives. Our leases have remaining lease terms of one year to eight years, some of which include options to extend. The majority of our leases with options to extend provide for extensions of up to five years with the ability to terminate the lease within one year. The exercise of lease renewal options is at our sole discretion and our lease right of use assets and liabilities reflect only the options we are reasonably certain that we will exercise. Lease expense is recognized on a straight-line basis over the lease term. Operating lease expense for the three and nine months ending September 30, 2019 was $256 thousand and $764 thousand, respectively, and were included within Cost of sales, Engineering, design and product development expense, Selling and marketing expense, and General and administrative expense. Operating costs include short-term lease costs which were immaterial during the period. The following information represents supplemental disclosure for the statement of cash flows related to operating leases (in thousands): Nine Months Ended September 30, 2019 Operating cash flows from leases $ (772 ) The following summarizes additional information related to our leases as of September 30, 2019: September 30, 2019 Weighted average remaining lease term (in years) 5.1 Weighted average discount rate 3.7 % The maturity of the Company’s operating lease liabilities as of September 30, 2019 are as follows (in thousands): September 30, 2019 2019 $ 258 2020 1,039 2021 708 2022 431 2023 265 Thereafter 882 Total undiscounted lease payments 3,583 Less imputed interest (322 ) Total lease liabilities $ 3,261 Prior to the adoption of ASC 842, rental commitments on an undiscounted basis were approximately $4.3 million at December 31, 2018 under non-cancelable operating leases and were payable as follows: $1.0 million in 2019; $1.0 million in 2020; $0.7 million in 2021; $0.4 million in 2022, $0.3 million in 2023 and $0.9 million thereafter.

Income taxes

Income taxes	9 Months Ended
	Sep. 30, 2019
Income taxes [Abstract]
Income taxes	10. Income taxes We recorded an income tax benefit for the third quarter of 2019 of $143 thousand at an effective tax rate of -59.3 %, compared to an income tax provision during the third quarter of 2018 of $581 thousand at an effective tax rate of 18.4%. For the nine months ended September 30, 2019, we recorded an income tax benefit of $54 thousand at an effective tax rate of -4.3%, compared to an income tax provision during the nine months ended September 30, 2018 of $1.1 million at an effective tax rate of 19.2%. The effective tax rate for the both the third quarter of 2019 and nine months ended September 30, 2019 was unusually low and a benefit as it included the foreign-derived intangible income (“FDII”) deduction under the Tax Cuts and Jobs Act (the “Tax Reform Act”) as well as near breakeven pre-tax income in the second and third quarters of 2019. The FDII deduction was not included in the effective tax rate for the third quarter of 2018 or nine months ended September 30, 2018, as the interpretive guidance for the deduction was not yet released. We are subject to U.S. federal income tax, as well as income tax in certain U.S. state and foreign jurisdictions. We have substantially concluded all U.S. federal, state and local income tax, and foreign tax regulatory examination matters through 2015. However, our federal tax returns for the years 2016 through 2018 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, 2019, we had $79 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 2019, we recognized $25 thousand of previously unrecognized tax benefits as the statute of limitations on the use of our 2015 R&D credits expired during the third quarter of 2019. We recognize interest and penalties related to uncertain tax positions in the income tax provision. As of September 30, 2019, we had $15 thousand of accrued interest and penalties related to uncertain tax positions. The Company maintains a valuation allowance against certain deferred tax assets to reduce the future income tax benefits to expected realizable amounts.. In February 2018, the FASB issued ASU 2018-02, “Income Statement-Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive income,” which provides a new standard that permits entities to make a one-time reclassification from accumulated other comprehensive loss (“AOCL”) to retained earnings for the stranded tax effects resulting from the newly enacted corporate tax rates under the Tax Reform Act. We adopted ASU 2018-02 on January 1, 2019 and elected not to reclassify the income tax effects of the Tax Reform Act from AOCL to retained earnings. We continue to release disproportionate income tax effects from AOCL based on the aggregate portfolio approach. The adoption of ASU 2018-02 did not have an impact on our Condensed Consolidated Financial Statements.

Basis of presentation (Policies

Basis of presentation (Policies)	9 Months Ended
	Sep. 30, 2019
Basis of presentation [Abstract]
Basis of accounting	The accompanying unaudited financial statements of TransAct Technologies Incorporated (“TransAct”, the “Company”, “we”, “us”, or “our”) 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, 2018 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, 2018 included in our Annual Report on Form 10-K.
Foreign currency translation	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 exchange rate as of the date the transaction was recognized, with the resulting translation gain or loss recorded in “Accumulated other comprehensive income (loss), net of tax”, in the Condensed Consolidated Balance Sheets and Condensed Consolidated Statements of Changes in Shareholders’ Equity. Transaction gains and losses are included in “Other, net” in the Condensed Consolidated Statements of Income.

Revenue (Tables)

Revenue (Tables)	9 Months Ended
	Sep. 30, 2019
Revenue [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. Three Months Ended Three Months Ended September 30, 2019 September 30, 2018 (In thousands) United States International Total United States International Total Restaurant Solutions $ 1,730 $ 221 $ 1,951 $ 1,326 $ 155 $ 1,481 POS automation and banking 1,494 20 1,514 1,910 23 1,933 Casino and gaming 2,849 2,225 5,074 5,733 2,534 8,267 Lottery 95 – 95 655 – 655 Printrex 213 83 296 304 147 451 TSG 2,490 266 2,756 2,739 312 3,051 Total net sales $ 8,871 $ 2,815 $ 11,686 $ 12,667 $ 3,171 $ 15,838 Nine Months Ended Nine Months Ended September 30, 2019 September 30, 2018 (In thousands) United States International Total United States International Total Restaurant Solutions $ 3,825 $ 462 $ 4,287 $ 3,609 $ 327 $ 3,936 POS automation and banking 4,392 43 4,435 5,765 136 5,901 Casino and gaming 9,765 6,423 16,188 14,084 7,190 21,274 Lottery 924 2 926 1,724 47 1,771 Printrex 740 183 923 833 229 1,062 TSG 6,947 880 7,827 8,180 708 8,888 Total net sales $ 26,593 $ 7,993 $ 34,586 $ 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. Customer prepayments represent customer payments made in advance of performance obligations in instances where credit has not been extended and are 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, prepaid subscription revenue for our BOHA! software, EPICENTRAL™ maintenance contracts and testing service contracts, and is recognized as revenue as (or when) we perform under the contract. We do not have any contract asset balances as of September 30, 2019 or December 31, 2018. For the first nine months of 2019, we recognized revenue of $489 thousand related to our contract liabilities at December 31, 2018. Total contract liabilities consist of the following: September 30, 2019 December 31, 2018 (In thousands) Customer pre-payments $ 69 $ 50 Deferred revenue, current 517 384 Deferred revenue, non-current 190 265 Total contract liabilities $ 776 $ 699

Inventories, net (Tables)

Inventories, net (Tables)	9 Months Ended
	Sep. 30, 2019
Inventories, net [Abstract]
Inventories, net	The components of inventories, net were: September 30, 2019 December 31, 2018 (In thousands) Raw materials and purchased component parts $ 6,898 $ 6,593 Work-in-process 6 29 Finished goods 5,796 6,213 $ 12,700 $ 12,835

Accrued product warranty liab_2

Accrued product warranty liability (Tables)	9 Months Ended
	Sep. 30, 2019
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, 2019 and 2018: Nine Months Ended September 30, 2019 2018 (In thousands) Balance, beginning of period $ 273 $ 267 Warranties issued 138 233 Warranty settlements (190 ) (205 ) Balance, end of period $ 221 $ 295

Earnings per share (Tables)

Earnings per share (Tables)	9 Months Ended
	Sep. 30, 2019
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, 2019 2018 2019 2018 (In thousands, except per share data) Net income $ 384 $ 2,574 $ 1,316 $ 4,464 Shares: Basic: Weighted average common shares outstanding 7,470 7,413 7,464 7,449 Add: Dilutive effect of outstanding options and restricted stock units as determined by the treasury stock method 283 345 194 325 Diluted: Weighted average common and common equivalent shares outstanding 7,753 7,758 7,658 7,774 Net income per common share: Basic $ 0.05 $ 0.35 $ 0.18 $ 0.60 Diluted $ 0.05 $ 0.33 $ 0.17 $ 0.57

Leases (Tables)

Leases (Tables)	9 Months Ended
	Sep. 30, 2019
Leases [Abstract]
Cash Flows for Operating Leases	The following information represents supplemental disclosure for the statement of cash flows related to operating leases (in thousands): Nine Months Ended September 30, 2019 Operating cash flows from leases $ (772 )
Operating Lease Weighted Average Remaining Lease Term and Discount Rate	The following summarizes additional information related to our leases as of September 30, 2019: September 30, 2019 Weighted average remaining lease term (in years) 5.1 Weighted average discount rate 3.7 %
Maturity of Operating Lease Liabilities	The maturity of the Company’s operating lease liabilities as of September 30, 2019 are as follows (in thousands): September 30, 2019 2019 $ 258 2020 1,039 2021 708 2022 431 2023 265 Thereafter 882 Total undiscounted lease payments 3,583 Less imputed interest (322 ) Total lease liabilities $ 3,261

Revenue, Disaggregation of Reve

Revenue, Disaggregation of Revenue (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018
Disaggregation of revenue [Abstract]
Total net sales	$ 11,686	$ 15,838	$ 34,586	$ 42,832
United States [Member]
Disaggregation of revenue [Abstract]
Total net sales	8,871	12,667	26,593	34,195
International [Member]
Disaggregation of revenue [Abstract]
Total net sales	2,815	3,171	7,993	8,637
Restaurant Solutions [Member]
Disaggregation of revenue [Abstract]
Total net sales	1,951	1,481	4,287	3,936
Restaurant Solutions [Member] | United States [Member]
Disaggregation of revenue [Abstract]
Total net sales	1,730	1,326	3,825	3,609
Restaurant Solutions [Member] | International [Member]
Disaggregation of revenue [Abstract]
Total net sales	221	155	462	327
POS Automation and Banking [Member]
Disaggregation of revenue [Abstract]
Total net sales	1,514	1,933	4,435	5,901
POS Automation and Banking [Member] | United States [Member]
Disaggregation of revenue [Abstract]
Total net sales	1,494	1,910	4,392	5,765
POS Automation and Banking [Member] | International [Member]
Disaggregation of revenue [Abstract]
Total net sales	20	23	43	136
Casino and Gaming [Member]
Disaggregation of revenue [Abstract]
Total net sales	5,074	8,267	16,188	21,274
Casino and Gaming [Member] | United States [Member]
Disaggregation of revenue [Abstract]
Total net sales	2,849	5,733	9,765	14,084
Casino and Gaming [Member] | International [Member]
Disaggregation of revenue [Abstract]
Total net sales	2,225	2,534	6,423	7,190
Lottery [Member]
Disaggregation of revenue [Abstract]
Total net sales	95	655	926	1,771
Lottery [Member] | United States [Member]
Disaggregation of revenue [Abstract]
Total net sales	95	655	924	1,724
Lottery [Member] | International [Member]
Disaggregation of revenue [Abstract]
Total net sales	0	0	2	47
Printrex [Member]
Disaggregation of revenue [Abstract]
Total net sales	296	451	923	1,062
Printrex [Member] | United States [Member]
Disaggregation of revenue [Abstract]
Total net sales	213	304	740	833
Printrex [Member] | International [Member]
Disaggregation of revenue [Abstract]
Total net sales	83	147	183	229
TransAct Services Group [Member]
Disaggregation of revenue [Abstract]
Total net sales	2,756	3,051	7,827	8,888
TransAct Services Group [Member] | United States [Member]
Disaggregation of revenue [Abstract]
Total net sales	2,490	2,739	6,947	8,180
TransAct Services Group [Member] | International [Member]
Disaggregation of revenue [Abstract]
Total net sales	$ 266	$ 312	$ 880	$ 708

Revenue, Contract Balances (Det

Revenue, Contract Balances (Details) - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2019	Dec. 31, 2018
Revenue [Abstract]
Revenue recognized	$ 489
Contract liabilities [Abstract]
Customer pre-payments	69	$ 50
Deferred revenue, current	517	384
Deferred revenue, non-current	190	265
Total contract liabilities	$ 776	$ 699

Revenue, Remaining Performance

Revenue, Remaining Performance Obligations (Details) $ in Millions	Sep. 30, 2019USD ($)
Remaining performance obligations [Abstract]
Remaining performance obligations	$ 4.3
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2019-10-01
Remaining performance obligations [Abstract]
Remaining performance obligations	$ 4.1
Expected timing of satisfaction, period	12 months
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2020-10-01
Remaining performance obligations [Abstract]
Remaining performance obligations	$ 0.1
Expected timing of satisfaction, period	12 months
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2021-10-01
Remaining performance obligations [Abstract]
Remaining performance obligations
Expected timing of satisfaction, period	12 months

Inventories, net (Details)

Inventories, net (Details) - USD ($) $ in Thousands	Sep. 30, 2019	Dec. 31, 2018
Inventories, net [Abstract]
Raw materials and purchased component parts	$ 6,898	$ 6,593
Work-in-process	6	29
Finished goods	5,796	6,213
Inventories, net	$ 12,700	$ 12,835

Accrued product warranty liab_3

Accrued product warranty liability (Details) - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018
Accrued product warranty liability [Roll Forward]
Balance, beginning of period	$ 273	$ 267
Warranties issued	138	233
Warranty settlements	(190)	(205)
Balance, end of period	221	$ 295
Accrued product warranty liability, current	176
Accrued product warranty liability, non-current	$ 45
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, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018
Earnings per share [Abstract]
Net income	$ 384	$ 2,574	$ 1,316	$ 4,464
Shares [Abstract]
Basic: Weighted average common shares outstanding (in shares)	7,470	7,413	7,464	7,449
Add: Dilutive effect of outstanding options and restricted stock units as determined by the treasury stock method (in shares)	283	345	194	325
Diluted: Weighted average common and common equivalent shares outstanding (in shares)	7,753	7,758	7,658	7,774
Net income per common share [Abstract]
Basic (in dollars per share)	$ 0.05	$ 0.35	$ 0.18	$ 0.60
Diluted (in dollars per share)	$ 0.05	$ 0.33	$ 0.17	$ 0.57
Stock Awards [Member]
Earnings per share [Abstract]
Anti-dilutive securities excluded from computation of earnings per dilutive share (in shares)	326	147	462	149

Shareholders' equity (Details)

Shareholders' equity (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended				6 Months Ended		9 Months Ended
	Sep. 30, 2019	Mar. 31, 2019	Sep. 30, 2018	Mar. 31, 2018	Jun. 30, 2019	Jun. 30, 2018	Sep. 30, 2019	Sep. 30, 2018
Dividends [Abstract]
Dividends declared and paid per common share (in dollars per share)	$ 0.09	$ 0.09	$ 0.09	$ 0.09	$ 0.27	$ 0.27	$ 0.27	$ 0.27
Payment of dividend on common stock	$ 672		$ 665				$ 2,011	$ 2,001
Dividends, date paid	Sep. 16, 2019
Dividends, date of record	Aug. 20, 2019
Stock repurchase program [Abstract]
Common stock repurchased (in shares)	0		0				0	156,410

Leases (Details)

Leases (Details) - USD ($) $ in Thousands	3 Months Ended	9 Months Ended
	Sep. 30, 2019	Sep. 30, 2019	Dec. 31, 2018
Leases [Abstract]
Right-of-use asset	$ 3,055	$ 3,055	$ 0
Lease liability	2,329	2,329	0
Leases [Abstract]
Operating lease expense	$ 256	764
Cash Flows Related to Operating Leases
Operating cash flows from leases		$ (772)
Operating Lease Weighted Average Remaining Lease Term and Discount Rate [Abstract]
Weighted average remaining lease term	5 years 1 month 6 days	5 years 1 month 6 days
Weighted average discount rate	3.70%	3.70%
Maturity of Operating Lease Liabilities [Abstract]
2019	$ 258	$ 258
2020	1,039	1,039
2021	708	708
2022	431	431
2023	265	265
Thereafter	882	882
Total undiscounted lease payments	3,583	3,583
Less imputed interest	322	322
Total lease liabilities	$ 3,261	$ 3,261
Future Minimum Rental Commitments Under Non-Cancelable Operating Leases [Abstract]
Total undiscounted rental commitments			4,300
2019			1,000
2020			1,000
2021			700
2022			400
2023			300
Thereafter			900
Minimum [Member]
Leases [Abstract]
Remaining lease terms		1 year
Maximum [Member]
Leases [Abstract]
Remaining lease terms		8 years
Extension period for leases		5 years
Termination period for leases		1 year
ASC 842 [Member]
Leases [Abstract]
Right-of-use asset			3,700
Lease liability			$ 3,900

Income taxes (Details)

Income taxes (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended		12 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018	Dec. 31, 2017
Income taxes [Abstract]
Income tax provision	$ (143)	$ 581	$ (54)	$ 1,064
Effective tax rate	(59.30%)	18.40%	(4.30%)	19.20%
Unrecognized tax benefits that would favorably affect effective income tax rate if recognized	$ 79		$ 79
Unrecognized tax benefits that will lapse upon expiration of statute of limitations	25
Accrued interest and penalties related to uncertain tax positions	$ 15		$ 15
U.S. corporate income tax rate					34.00%
Maximum [Member]
Income taxes [Abstract]
U.S. corporate income tax rate					35.00%