Ag&e (WGA) 10-Q 14 Nov 14 2014 Q3 Quarterly report Financial data

Document_And_Entity_Informatio

Document And Entity Information	9 Months Ended
	Sep. 30, 2014	Nov. 10, 2014
Entity Registrant Name	'AG&E HOLDINGS INC.	'
Entity Central Index Key	'0000105608	'
Current Fiscal Year End Date	'--12-31	'
Entity Filer Category	'Smaller Reporting Company	'
Entity Current Reporting Status	'Yes	'
Entity Voluntary Filers	'No	'
Entity Well-known Seasoned Issuer	'No	'
Entity Common Stock, Shares Outstanding (in shares)	'	11,724,000
Document Type	'10-Q	'
Document Period End Date	30-Sep-14	'
Document Fiscal Year Focus	'2014	'
Document Fiscal Period Focus	'Q3	'
Amendment Flag	'false	'

Condensed_Consolidated_Stateme

Condensed Consolidated Statements of Earnings (unaudited) (USD $)	3 Months Ended		9 Months Ended
	Sep. 30, 2014	Sep. 30, 2013	Sep. 30, 2014	Sep. 30, 2013
Net sales	$5,261,000	$5,255,000	$18,513,000	$19,925,000
Cost of sales	4,197,000	4,353,000	14,958,000	16,625,000
Gross margin	1,064,000	902,000	3,555,000	3,300,000
Selling & administrative expenses	1,543,000	1,258,000	4,043,000	4,116,000
Goodwill Impairment	1,329,000	0	1,329,000	0
Operating Loss	-1,808,000	-356,000	-1,817,000	-816,000
Interest expense	15,000	15,000	45,000	60,000
Other income, net	-5,000	-6,000	-18,000	-5,000
Income tax expense	501,000	0	539,000	1,000
Loss from continuing operations	-2,319,000	-365,000	-2,383,000	-872,000
Discontinued Operations:	'	'	'	'
(Loss) earnings from discontinued operations	-1,450,000	325,000	-1,089,000	1,413,000
Loss on sale of assets	-2,145,000	0	-2,145,000	0
Discontinued operations, net of income taxes	-3,595,000	325,000	-3,234,000	1,413,000
Net (loss) income	($5,914,000)	($40,000)	($5,617,000)	$541,000
Basic earnings per share:	'	'	'	'
Continuing operations (in dollars per share)	($0.20)	($0.03)	($0.20)	($0.07)
Discontinued operations (in dollars per share)	($0.30)	$0.03	($0.28)	$0.12
Net (loss) income per share (in dollars per share)	($0.50)	$0	($0.48)	$0.05
Diluted earnings per share:	'	'	'	'
Continuing operations (in dollars per share)	($0.20)	($0.03)	($0.20)	($0.07)
Discontinued operations (in dollars per share)	($0.30)	$0.03	($0.28)	$0.12
Net (loss) income per share (in dollars per share)	($0.50)	$0	($0.48)	$0.05
Basic average common shares outstanding (in shares)	11,771,286	11,725,944	11,751,673	11,709,446
Diluted average common shares outstanding (in shares)	11,771,286	11,728,018	11,751,673	11,711,689

Condensed_Consolidated_Balance

Condensed Consolidated Balance Sheets (USD $)	Sep. 30, 2014	Dec. 31, 2013	Sep. 30, 2013
Current assets:	'	'	'
Cash	$6,239,000	$464,000	$237,000
Accounts receivable, net	5,066,000	7,481,000	8,305,000
Accounts receivable, subcontractor	0	4,062,000	3,431,000
Inventory	5,108,000	11,840,000	11,833,000
Current deferred tax asset, net	0	170,000	0
Prepaid expenses & other assets	206,000	650,000	903,000
Total current assets	16,619,000	24,667,000	24,709,000
Property, plant & equipment, net	80,000	160,000	181,000
Other assets:	'	'	'
Deferred tax asset, net	0	327,000	469,000
Other long term receivable	104,000	231,000	186,000
Goodwill	0	1,329,000	1,329,000
Total other assets	104,000	1,887,000	1,984,000
Total assets	16,803,000	26,714,000	26,874,000
Current liabilities:	'	'	'
Accounts payable	3,419,000	3,058,000	6,173,000
Accounts payable, subcontractor	0	4,046,000	2,980,000
Accrued expenses	2,391,000	1,445,000	1,212,000
Total current liabilities	5,810,000	8,549,000	10,365,000
Note payable	0	1,598,000	72,000
Total liabilities	5,810,000	10,147,000	10,437,000
Shareholders' Equity:	'	'	'
Common Stock	11,724,000	11,700,000	11,706,000
Additional paid-in capital	5,165,000	5,157,000	5,162,000
Accumulated deficit	-5,690,000	-73,000	-183,000
Unearned compensation	-206,000	-217,000	-248,000
Total shareholders' equity	10,993,000	16,567,000	16,437,000
Total liabilities & shareholders' equity	$16,803,000	$26,714,000	$26,874,000

Condensed_Consolidated_Balance1

Condensed Consolidated Balance Sheets (Parentheticals) (USD $)	Sep. 30, 2014	Dec. 31, 2013	Sep. 30, 2013
Common stock, authorized (in shares)	25,000,000	25,000,000	25,000,000
Common stock, par value (in dollars per share)	$1	$1	$1
Common stock, issued (in shares)	11,724,446	11,700,286	11,706,286
Common stock, outstanding (in shares)	11,724,446	11,700,286	11,706,286

Condensed_Consolidated_Stateme1

Condensed Consolidated Statements of Cash Flows (unaudited) (USD $)	3 Months Ended		9 Months Ended
	Sep. 30, 2014	Sep. 30, 2013	Sep. 30, 2014	Sep. 30, 2013
Cash flows from operating activities:	'	'	'	'
Net (loss) earnings	($5,914,000)	($40,000)	($5,617,000)	$541,000
Net (loss) earnings from discontinued operations	-3,595,000	325,000	-3,234,000	1,413,000
Net loss from continuing operations	-2,319,000	-365,000	-2,383,000	-872,000
Adjustments to reconcile net loss to net cash provided by operating activities:	'	'	'	'
Depreciation and amortization	9,000	35,000	38,000	104,000
Bad debt expense (recovery)	17,000	-18,000	28,000	1,000
Amortization of unearned compensation	22,000	23,000	59,000	52,000
Goodwill Impairment	1,329,000	0	1,329,000	0
Loss on sale of fixed assets	7,000	0	7,000	0
Decrease (increase) of long term receivable	69,000	-22,000	127,000	-122,000
Deferred taxes	497,000	0	497,000	0
Changes in current assets & liabilities	'	'	'	'
Accounts receivable	290,000	432,000	1,127,000	-514,000
Inventory	-1,287,000	-1,752,000	-1,139,000	-1,715,000
Prepaid expenses & other	261,000	67,000	165,000	48,000
Accounts payable	889,000	2,262,000	776,000	1,651,000
Accrued expenses	1,389,000	-61,000	1,017,000	172,000
Discontinued Operations:	'	'	'	'
Net cash (used in) provided by operating activities	-758,000	476,000	251,000	4,303,000
Net cash provided by operating activities	415,000	1,077,000	1,899,000	3,108,000
Cash provided by used in investing activities:	'	'	'	'
Proceeds from sale of discontinued operations	5,500,000	0	5,500,000	0
Additions to plant & equipment	-5,000	-4,000	-26,000	-28,000
Net cash provided by (used in) investing activities	5,495,000	-4,000	5,474,000	-28,000
Cash provided by (used in) financing activities:	'	'	'	'
Repayments - note payable	-232,000	-912,000	-1,598,000	-3,629,000
Issuance (cancellation) restricted shares, options exercised	0	15,000	0	18,000
Net cash used in financing activities	-232,000	-897,000	-1,598,000	-3,611,000
Net increase (decrease) in cash	5,678,000	176,000	5,775,000	-531,000
Cash at beginning of period	561,000	61,000	464,000	768,000
Cash at end of period	6,239,000	237,000	6,239,000	237,000
Supplemental cash flow disclosure:	'	'	'	'
Interest paid	16,000	15,000	46,000	60,000
Taxes paid	$15,000	$0	$53,000	$2,000

Note_1

Note 1	9 Months Ended
	Sep. 30, 2014
Notes to Financial Statements	'
Nature of Operations [Text Block]	'
	1.     On September 12, 2014, the Company sold its LCD monitor business operations to HT Precision Technologies U.S., Inc. (“HTP”), a wholly owned subsidiary of HT Precision Technologies, Inc. of Taiwan. The Company sold the “Wells-Gardner” brand as part of the sale of the OEM manufacturing business and therefore agreed to change its name to AG&E Holdings Inc, which was approved by the shareholders on October 24, 2014. The Company retained its distribution operations, which operate under the American Gaming & Electronics (“AG&E”) name. The AG&E distribution operations consist of parts, repair and service, and replacement monitor distribution to casinos throughout the United States and Video Gaming Terminals distribution in Illinois. Going forward, the continuing operations portion of the financial statements will reflect only the AG&E distribution operations plus public company and other corporate expenses. The Company’s prior LCD monitor business operations will be shown as discontinued operations.

Note_2

Note 2	9 Months Ended
	Sep. 30, 2014
Notes to Financial Statements	'
Organization, Consolidation and Presentation of Financial Statements Disclosure [Text Block]	'
	2.     In the opinion of management, the accompanying unaudited condensed consolidated financial statements contain all adjustments, consisting of normal recurring adjustments, which are necessary for a fair presentation of the financial position and results of operations for the periods presented. These condensed consolidated financial statements were prepared in accordance with the instructions for Form 10-Q and, therefore, do not include all information or footnotes necessary for a complete presentation in conformity with accounting principles generally accepted in the United States. These condensed consolidated financial statements should be read in conjunction with the audited financial statements and notes included in the Company's 2013 Annual Report to Shareholders. The results of operations for the three months and nine months ended September 30, 2014 are not necessarily indicative of the operating results for the full year.

Note_3

Note 3	9 Months Ended
	Sep. 30, 2014
Notes to Financial Statements	'
Earnings Per Share [Text Block]	'
	3.     Basic earnings per share are based on the weighted average number of shares outstanding whereas diluted earnings per share include the dilutive effect of unexercised common stock equivalents. Potentially dilutive securities are excluded from diluted earnings per share calculations for periods with a net loss.

Note_4

Note 4	9 Months Ended
	Sep. 30, 2014
Notes to Financial Statements	'
Significant Accounting Policies [Text Block]	'
	4.     Revenue from video gaming terminal sales with standard payment terms is recognized upon the passage of title and transfer of the risk of loss. The Company recognizes revenue even if it retains a form of title to products delivered to customers, provided the sole purpose is to enable the Company to recover the products in the event of a customer payment default and the arrangement does not prohibit the customer’s use of the product in the ordinary course of business.

Note_5

Note 5	9 Months Ended
	Sep. 30, 2014
Notes to Financial Statements	'
Fair Value Disclosures [Text Block]	'
	5.
	The fair value of the Company’s financial instruments does not materially vary from the carrying value of such instruments.

Note_6

Note 6	9 Months Ended
	Sep. 30, 2014
Notes to Financial Statements	'
Reclassifications [Text Block]	'
	6.     Certain amounts in previously issued financial statements have been reclassified to conform to the current year’s presentation.

Note_7

Note 7	9 Months Ended
	Sep. 30, 2014
Notes to Financial Statements	'
Disclosure of Compensation Related Costs, Share-based Payments [Text Block]	'
	7.
	The Company maintains an Incentive Stock Option Plan and a Stock Award Plan under which officers and key employees may acquire up to a maximum of 2,155,028 common shares.
	Stock Options
	Under the Incentive Stock Option Plan, which expired in 2008, no options have been awarded since 2004. At September 30, 2014 there are no options outstanding as all remaining options expired unexercised in April 2014.
	Restricted Shares
	All restricted shares granted are governed by the Company’s Stock Award Plan, which was approved by shareholders in 2000. As of September 30, 2014, 151,690 restricted shares are outstanding on a dividend adjusted basis. The employees will earn the restricted shares in exchange for services to be provided to the Company over a three-year or five-year vesting period. Total unrecognized compensation cost related to unvested stock awards is approximately $206,000 and is expected to be recognized over a weighted average period of 2.5 years.
	The following table summarizes information regarding Restricted Share activity for the nine months ending September 30, 2014:
		Shares	Weighted Average Grant Date
			Fair Value
	Unvested at December 31, 2013	147,130	$2.16
	Granted	71,000	$1.78
	Vested	-19,600	$2.22
	Forfeited	-46,840	$2.01
	Unvested, September 30, 2014	151,690	$2.02

Note_8

Note 8	9 Months Ended
	Sep. 30, 2014
Notes to Financial Statements	'
Inventory Disclosure [Text Block]	'
	8.     Our inventory detail as of September 30, 2014, September 30, 2013 and December 31, 2013 was as follows:
		September 30,		September 30,		December 31,
	(in $000's)	2014		2013		2013
		(unaudited)		(unaudited)
	Inventory:
	Raw materials	$	674	$	2,690	$	3,009
	In transit finished goods		0		1,570		2,291
	Finished goods		4,434		7,573		6,540
	Total	$	5,108	$	11,833	$	11,840

Note_9

Note 9	9 Months Ended
	Sep. 30, 2014
Notes to Financial Statements	'
Line Of Credit Facilities [Text Block]	'
	9.     As of September 30, 2014, the Company had no outstanding bank debt. On October 30, 2014, the Company terminated the credit facility with Wells Fargo Bank. As a result of having zero debt on September 30, 2014 and the cancellation of the line of credit, the Company does not have any bank covenants for the 3rd quarter 2014.

Note_10

Note 10	9 Months Ended
	Sep. 30, 2014
Notes to Financial Statements	'
Income Tax Disclosure [Text Block]	'
	10.     An income tax valuation allowance is provided when it is more likely than not that some portion or all of the deferred tax assets will not be realized. The net change in the valuation allowance for the nine months ended September 30, 2014 was an increase of $2,944,000 to recognize the increase in deferred tax assets during the first nine months. The net deferred tax asset of $0 as of September 30, 2014 represents the Company’s uncertainty that a profit will be generated over the next twelve to eighteen months which would allow the Company to use a portion of the current net operating loss carry forwards. As of December 31, 2013, the Company has net operating loss carry forwards for Federal income tax purposes of approximately $4,933,000, which are available to offset future Federal taxable income, if any, that begin to expire in 2021. The Company also has a net operating loss carry forward for Illinois state income tax purposes of approximately $5,823,000 as of December 31, 2013. The Company also has alternative minimum tax credit carry forwards of approximately $136,000, which are available to reduce future Federal regular income taxes, if any, over an indefinite period. No unrecognized tax benefits are set to expire in the next twelve months that may have an impact upon the Company’s effective tax rate. The Company files tax returns in the U.S. federal jurisdiction and various state jurisdictions. The tax years 2011, 2012 and 2013 remain open to examinations. Our policy is to recognize interest and penalties related to uncertain tax positions in income tax expense. During the six months ended September 30, 2014, the Company did not recognize expense for interest or penalties related to income tax, and do not have any amounts accrued at September 30, 2014, as the Company does not believe it has taken any uncertain income tax positions.

Note_11

Note 11	9 Months Ended
	Sep. 30, 2014
Notes to Financial Statements	'
Goodwill Disclosure [Text Block]	'
	11.
	The Company’s goodwill resulting from its purchase of American Gaming and Electronics, Inc. (AGE) is tested for impairment at least annually, which the Company does in the fourth quarter or more often if circumstances warrant.  The Company reviewed its future projections for the AGE distribution operations at the end of the third quarter 2014.  It now appears that Chicago will not approve VGTs for the foreseeable future and that no new states will be added until at least the second half of 2016 or sometime in 2017.  AG&E also has higher operating expense, since it will be absorbing all the public company and other corporate expense previously charged to its discontinued operations.  By utilization of a discounted cash flow analysis which takes into account projected sales and expenses, the Company determined that the AGE goodwill was impaired, which resulted in a charge to the third quarter of $1.33 million.

Note_12

Note 12	9 Months Ended
	Sep. 30, 2014
Notes to Financial Statements	'
New Accounting Pronouncements and Changes in Accounting Principles [Text Block]	'
	12.
	Recently issued accounting pronouncements
	-
	In May 2014, the Financial Accounting Standards Board (FASB) issued guidance on the recognition of revenue from contracts with customers. Revenue recognition will depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The guidance also requires disclosures regarding the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers. The guidance permits two methods of adoption: retrospectively to each prior reporting period presented or retrospectively with the cumulative effect of initially applying the guidance recognized at the date of initial application. The guidance is effective January 1, 2017 and early adoption is not permitted. The company is currently evaluating the impact of the new guidance and the method of adoption in the consolidated financial results.

Note_13

Note 13	9 Months Ended
	Sep. 30, 2014
Notes to Financial Statements	'
Disposal Groups, Including Discontinued Operations, Disclosure [Text Block]	'
	13.
	Discontinued Operations
	-
	On September 12, 2014, the Company sold its LCD monitor business operations to HT Precision Technologies U.S., Inc. (“HTP”), a wholly owned subsidiary of HT Precision Technologies, Inc. of Taiwan for approximately $7.0 million in cash ($5.5 million cash received as of September 30, 2014). Due to the divestiture of the LCD business, reporting of this business has been included in discontinued operations for all periods presented.
	The following amounts related to the discontinued operations were derived from historical financial information and have been segregated from continuing operations and reported as discontinued operations in the Condensed Consolidated Statement of Earnings:
		Three Months Ended					Nine
		September					Months Ended
		30					September
							30
		2014			2013		2014			2013
	Net sales	$	2,915,000		$	6,991,000	$	14,498,000		$	24,428,000
	(Loss) earnings from discontinued operations		(1,450,000	)		325,000		(1,089,000	)		1,413,000
	Loss on sale of assets		(2,145,000	)		0		(2,145,000	)		0
	Discontinued operations, net of income taxes		(3,595,000	)		325,000		(3,234,000	)		1,413,000

Note_14

Note 14	9 Months Ended
	Sep. 30, 2014
Notes to Financial Statements	'
Subsequent Events [Text Block]	'
	14.     The Company has evaluated subsequent events through the date the condensed consolidated financial statements were issued for the nine months ended September 30, 2014.

Note_7_Tables

Note 7 (Tables)	9 Months Ended
	Sep. 30, 2014
Notes Tables	'
Schedule of Share-based Compensation, Restricted Stock and Restricted Stock Units Activity [Table Text Block]	'
		Shares	Weighted Average Grant Date
			Fair Value
	Unvested at December 31, 2013	147,130	$2.16
	Granted	71,000	$1.78
	Vested	-19,600	$2.22
	Forfeited	-46,840	$2.01
	Unvested, September 30, 2014	151,690	$2.02

Note_8_Tables

Note 8 (Tables)	9 Months Ended
	Sep. 30, 2014
Notes Tables	'
Schedule of Inventory, Current [Table Text Block]	'
		September 30,		September 30,		December 31,
	(in $000's)	2014		2013		2013
		(unaudited)		(unaudited)
	Inventory:
	Raw materials	$	674	$	2,690	$	3,009
	In transit finished goods		0		1,570		2,291
	Finished goods		4,434		7,573		6,540
	Total	$	5,108	$	11,833	$	11,840

Note_13_Tables

Note 13 (Tables)	9 Months Ended
	Sep. 30, 2014
Notes Tables	'
Schedule of Disposal Groups, Including Discontinued Operations, Income Statement, Balance Sheet and Additional Disclosures [Table Text Block]	'
		Three Months Ended					Nine
		September					Months Ended
		30					September
							30
		2014			2013		2014			2013
	Net sales	$	2,915,000		$	6,991,000	$	14,498,000		$	24,428,000
	(Loss) earnings from discontinued operations		(1,450,000	)		325,000		(1,089,000	)		1,413,000
	Loss on sale of assets		(2,145,000	)		0		(2,145,000	)		0
	Discontinued operations, net of income taxes		(3,595,000	)		325,000		(3,234,000	)		1,413,000

Note_7_Details_Textual

Note 7 (Details Textual) (USD $)	Sep. 30, 2014	Sep. 30, 2014	Sep. 30, 2013	Sep. 30, 2014	Sep. 30, 2013	Sep. 30, 2013
		Employee Stock Option [Member]	Restricted Stock [Member]	Restricted Stock [Member]	Restricted Stock [Member]	Restricted Stock [Member]
					Maximum [Member]	Minimum [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Number of Shares Authorized	2,155,028	'	'	'	'	'
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Period	'	'	'	'	'5 years	'3 years
Employee Service Share-based Compensation, Nonvested Awards, Compensation Cost Not yet Recognized	'	'	$206,000	'	'	'
Employee Service Share-based Compensation, Nonvested Awards, Compensation Cost Not yet Recognized, Period for Recognition	'	'	'2 years 182 days	'	'	'
Share-based Compensation Arrangement by Share-based Payment Award, Non-Option Equity Instruments, Outstanding, Number	'	'	'	151,690	'	'
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Gross	'	0	'	'	'	'
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Number	'	0	'	'	'	'

Note_7_Restricted_Share_Activi

Note 7 - Restricted Share Activity (Details) (Restricted Stock [Member], USD $)	9 Months Ended
	Sep. 30, 2014	Dec. 31, 2013
Restricted Stock [Member]	'	'
Unvested at December 31, 2013 (in shares)	151,690	147,130
Unvested at December 31, 2013 (in dollars per share)	$2.02	$2.16
Granted (in shares)	71,000	'
Granted (in dollars per share)	$1.78	'
Vested (in shares)	-19,600	'
Vested (in dollars per share)	$2.22	'
Forfeited (in shares)	-46,840	'
Forfeited (in dollars per share)	$2.01	'

Note_8_Inventory_Detail_Detail

Note 8 - Inventory Detail (Details) (USD $)	Sep. 30, 2014	Dec. 31, 2013	Sep. 30, 2013
In Thousands, unless otherwise specified
Inventory:	'	'	'
Raw materials	$674	$3,009	$2,690
In transit finished goods	0	2,291	1,570
Finished goods	4,434	6,540	7,573
Total	$5,108	$11,840	$11,833

Note_9_Details_Textual

Note 9 (Details Textual) (USD $)	Sep. 30, 2014
Long-term Line of Credit	$0

Note_10_Details_Textual

Note 10 (Details Textual) (USD $)	9 Months Ended
	Sep. 30, 2014	Dec. 31, 2013
Valuation Allowance, Deferred Tax Asset, Increase (Decrease), Amount	$2,944,000	'
Deferred Tax Assets, Net	0	'
Deferred Tax Assets, Operating Loss Carryforwards, Domestic	'	4,933,000
Deferred Tax Assets, Operating Loss Carryforwards, State and Local	'	5,823,000
Deferred Tax Assets, Tax Credit Carryforwards, Alternative Minimum Tax	136,000	'
Unrecognized Tax Benefits that Would Impact Effective Tax Rate	0	'
Unrecognized Tax Benefits, Income Tax Penalties and Interest Expense	0	'
Unrecognized Tax Benefits, Income Tax Penalties and Interest Accrued	$0	'

Note_11_Details_Textual

Note 11 (Details Textual) (USD $)	3 Months Ended		9 Months Ended
	Sep. 30, 2014	Sep. 30, 2013	Sep. 30, 2014	Sep. 30, 2013
Goodwill, Impairment Loss	$1,329,000	$0	$1,329,000	$0

Note_13_Details_Textual

Note 13 (Details Textual) (USD $)	3 Months Ended		9 Months Ended		0 Months Ended
	Sep. 30, 2014	Sep. 30, 2013	Sep. 30, 2014	Sep. 30, 2013	Sep. 12, 2014
					LCD Monitor [Member]
Proceeds from Divestiture of Businesses	$5,500,000	$0	$5,500,000	$0	$7,000,000

Note_13_Summary_of_Discontined

Note 13 - Summary of Discontined Operations (Details) (USD $)	3 Months Ended		9 Months Ended
	Sep. 30, 2014	Sep. 30, 2013	Sep. 30, 2014	Sep. 30, 2013
Net sales	$2,915,000	$6,991,000	$14,498,000	$24,428,000
(Loss) earnings from discontinued operations	-1,450,000	325,000	-1,089,000	1,413,000
Loss on sale of assets	-2,145,000	0	-2,145,000	0
Discontinued operations, net of income taxes	($3,595,000)	$325,000	($3,234,000)	$1,413,000