Document_and_Entity_Informatio
Document and Entity Information | 9 Months Ended |
Sep. 30, 2014 | |
Document and Entity Information: | ' |
Entity Registrant Name | 'Omega Flex, Inc. |
Document Type | '10-Q |
Document Period End Date | 30-Sep-14 |
Amendment Flag | 'false |
Entity Central Index Key | '0001317945 |
Current Fiscal Year End Date | '--12-31 |
Entity Common Stock, Shares Outstanding | 10,091,822 |
Entity Filer Category | 'Smaller Reporting Company |
Entity Current Reporting Status | 'Yes |
Entity Voluntary Filers | 'No |
Entity Well-known Seasoned Issuer | 'No |
Document Fiscal Year Focus | '2014 |
Document Fiscal Period Focus | 'Q3 |
CONDENSED_CONSOLIDATED_BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS (unaudited) (USD $) | Sep. 30, 2014 | Dec. 31, 2013 | ||
In Thousands, unless otherwise specified | ||||
Current Assets | ' | ' | ||
Cash and Cash Equivalents | $16,123 | $8,257 | ||
Accounts Receivable | 15,094 | [1] | 12,968 | [1] |
Inventories-Net | 6,560 | 6,728 | ||
Deferred Taxes | 791 | 871 | ||
Other Current Assets | 996 | 1,359 | ||
Total Current Assets | 39,564 | 30,183 | ||
Property and Equipment - Net | 4,454 | 4,762 | ||
Goodwill-Net | 3,526 | 3,526 | ||
Other Long Term Assets | 1,409 | 1,603 | ||
Total Assets | 48,953 | 40,074 | ||
Current Liabilities: | ' | ' | ||
Accounts Payable | 2,000 | 1,793 | ||
Accrued Compensation | 3,043 | 3,114 | ||
Accrued Commissions and Sales Incentives | 2,780 | 3,934 | ||
Taxes Payable | 455 | 134 | ||
Other Liabilities | 3,603 | 3,575 | ||
Total Current Liabilities | 11,881 | 12,550 | ||
Deferred Taxes | 1,466 | 1,032 | ||
Other Long Term Liabilities | 854 | 861 | ||
Total Liabilities | 14,201 | 14,443 | ||
Omega Flex, Inc. Shareholders' Equity: | ' | ' | ||
Common Stock | 102 | [2] | 102 | [2] |
Treasury Stock | -1 | -1 | ||
Paid-in Capital | 10,808 | 10,808 | ||
Retained Earnings | 24,055 | 14,929 | ||
Accumulated Other Comprehensive Loss | -425 | -329 | ||
Total Omega Flex, Inc. Shareholders' Equity | 34,539 | 25,509 | ||
Noncontrolling Interest | 213 | 122 | ||
Total Shareholders' Equity | 34,752 | 25,631 | ||
Total Liabilities and Shareholders' Equity | $48,953 | $40,074 | ||
[1] | Less allowances of $785 and $729, respectively | |||
[2] | Common Stock - par value $0.01 Share: authorized 20,000,000 Shares: 10,153,633 shares issued and 10,091,822 outstanding at September 30, 2014 and December 31, 2013, respectively. |
CONDENSED_CONSOLIDATED_BALANCE1
CONDENSED CONSOLIDATED BALANCE SHEETS - PARENTHETICAL (unaudited) (USD $) | Sep. 30, 2014 | Dec. 31, 2013 |
In Thousands, except Share data, unless otherwise specified | ||
CONDENSED CONSOLIDATED BALANCE SHEETS | ' | ' |
Allowance for doubtful Accounts Receivable | $785 | $729 |
Common Stock, Par Value | $0.01 | $0.01 |
Common Stock, Shares Authorized | 20,000,000 | 20,000,000 |
Common Stock, Shares Issued | 10,153,633 | 10,153,633 |
Common Stock, Shares Outstanding | 10,091,822 | 10,091,822 |
CONDENSED_CONSOLIDATED_STATEME
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (unaudited) (USD $) | 3 Months Ended | 9 Months Ended | ||
In Thousands, except Share data, unless otherwise specified | Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 |
CONDENSED CONSOLIDATED STATEMENTS OF INCOME | ' | ' | ' | ' |
Net Sales | $23,837 | $19,988 | $60,298 | $55,262 |
Cost of Goods Sold | 9,521 | 9,009 | 25,249 | 25,462 |
Gross Profit | 14,316 | 10,979 | 35,049 | 29,800 |
Selling Expense | 3,706 | 3,185 | 10,257 | 9,429 |
General and Administrative Expense | 3,751 | 3,032 | 9,011 | 7,908 |
Engineering Expense | 764 | 673 | 2,126 | 2,017 |
Operating Profit | 6,095 | 4,089 | 13,655 | 10,446 |
Interest Income (Expense), Net | 9 | 3 | 21 | 3 |
Other Income (Expense), Net | -32 | 64 | -25 | -62 |
Income Before Income Taxes | 6,072 | 4,156 | 13,651 | 10,387 |
Income Tax Expense | 2,002 | 1,420 | 4,430 | 3,518 |
Net Income | 4,070 | 2,736 | 9,221 | 6,869 |
Net (Income) Loss attributable to the Noncontrolling Interest, net of tax | -35 | -27 | -95 | -43 |
Net Income attributable to Omega Flex, Inc. | $4,035 | $2,709 | $9,126 | $6,826 |
Basic and Diluted Earnings per Common Share | $0.40 | $0.27 | $0.90 | $0.68 |
Basic and Diluted Weighted-Average Shares Outstanding | 10,092 | 10,092 | 10,092 | 10,092 |
CONDENSED_CONSOLIDATED_STATEME1
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (unaudited) (USD $) | 3 Months Ended | 9 Months Ended | ||
In Thousands, unless otherwise specified | Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 |
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME | ' | ' | ' | ' |
Net Income | $4,070 | $2,736 | $9,221 | $6,869 |
Other Comprehensive Income (Loss), Net of Tax: | ' | ' | ' | ' |
Foreign Currency Translation Adjustment, Net of Taxes | -193 | 99 | -100 | 40 |
Other Comprehensive Income | -193 | 99 | -100 | 40 |
Comprehensive Income | 3,877 | 2,835 | 9,121 | 6,909 |
Less: Comprehensive Income (Loss) Attributable to the Noncontrolling Interest | -26 | -33 | -91 | -45 |
Total Other Comprehensive Income | $3,851 | $2,802 | $9,030 | $6,864 |
CONDENSED_CONSOLIDATED_STATEME2
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited) (USD $) | 9 Months Ended | |
In Thousands, unless otherwise specified | Sep. 30, 2014 | Sep. 30, 2013 |
Cash Flows from Operating Activities: | ' | ' |
Net Income | $9,221 | $6,869 |
Adjustments to Reconcile Net Income to Net Cash Provided By (Used In) Operating Activities: | ' | ' |
Non-Cash Compensation Expense | 139 | 234 |
Depreciation and Amortization | 379 | 393 |
Provision for Losses on Accounts Receivable, net of write-offs and recoveries | 56 | 135 |
Changes in Assets and Liabilities | ' | ' |
Accounts Receivable Change | -2,220 | -718 |
Inventory Change | 151 | 3 |
Other Assets Change | 636 | 119 |
Accounts Payable Change | 217 | -668 |
Accrued Compensation Change | -71 | 1,854 |
Accrued Commissions and Sales Incentives Change | -1,156 | -558 |
Other Liabilities Change | 672 | -758 |
Net Cash Provided by (Used In) Operating Activities | 8,024 | 6,905 |
Cash Flows from Investing Activities: | ' | ' |
Capital Expenditures | -78 | -473 |
Net Cash Provided By (Used In) Investing Activities | -78 | -473 |
Cash Flows from Financing Activities: | ' | ' |
Principal Payments on Line of Credit | 0 | -324 |
Net Cash Provided by (Used In) Financing Activities | 0 | -324 |
Net Increase (Decrease) in Cash and Cash Equivalents | 7,946 | 6,108 |
Translation effect on cash | -80 | -15 |
Cash and Cash Equivalents - Beginning of Period | 8,257 | 939 |
Cash and Cash Equivalents - End of Period | 16,123 | 7,032 |
Supplemental Disclosure of Cash Flow Information | ' | ' |
Cash paid for Income Taxes | 2,247 | 3,556 |
Cash paid for Interest | $0 | $1 |
1_Basis_of_Presentation_and_De
1. Basis of Presentation and Description of Business | 9 Months Ended |
Sep. 30, 2014 | |
Notes | ' |
1. Basis of Presentation and Description of Business | ' |
1. BASIS OF PRESENTATION AND DESCRIPTION OF BUSINESS | |
Basis of Presentation | |
The accompanying unaudited condensed consolidated financial statements include the accounts of Omega Flex, Inc. (Omega) and its subsidiaries (collectively the “Company”). The Company’s unaudited condensed consolidated financial statements for the quarter ended September 30, 2014 have been prepared in accordance with accounting principles generally accepted in the United States (GAAP), and with the instructions of Form 10-Q and Article 10 of Regulation S-X. Certain information and note disclosures normally included in annual financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to those rules and regulations, although the company believes that the disclosures made are adequate to make the information not misleading. It is suggested that these condensed consolidated financial statements be read in conjunction with the financial statements and the notes thereto included in the Company’s latest shareholders’ annual report (Form 10-K). All material inter-company accounts and transactions have been eliminated in consolidation. It is Management’s opinion that all adjustments necessary for a fair statement of the results for the interim periods have been made, and that all adjustments are of a normal recurring nature or a description is provided for any adjustments that are not of a normal recurring nature. | |
Description of Business | |
The Company is a leading manufacturer of flexible metal hose, which is used in a variety of applications to carry gases and liquids within their particular applications. These applications include carrying liquefied gases in certain processing applications, fuel gases within residential and commercial buildings and vibration absorbers in high vibration applications. In addition, our flexible metal piping is used to carry other types of gases or fluids in a number of industrial applications where the customer requires a degree of flexibility, an ability to carry corrosive compounds or mixtures, a double containment system, or piping to carry gases or fluids at very high or very low (cryogenic) temperatures. | |
The Company manufactures flexible metal hose at its facilities in Exton, Pennsylvania, and in Banbury, Oxfordshire in the United Kingdom. The Company sells its product through distributors, wholesalers and to original equipment manufacturers (“OEMs”) throughout North America, and in certain European markets. |
2_Significant_Accounting_Polic
2. Significant Accounting Policies | 9 Months Ended |
Sep. 30, 2014 | |
Notes | ' |
2. Significant Accounting Policies | ' |
2. SIGNIFICANT ACCOUNTING POLICIES | |
Use of Estimates | |
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and, the disclosure of contingent assets and liabilities at the dates of the financial statements and the reported amounts of revenues and expenses during the reporting periods. The most significant estimates and assumptions relate to revenue recognition and related sales incentives, accounts receivable valuations, inventory valuations, goodwill valuation, product liability reserve and accounting for income taxes. Actual amounts could differ significantly from these estimates. | |
Revenue Recognition | |
The Company’s revenue recognition activities relate almost entirely to the manufacture and sale of flexible metal hose and pipe. Under GAAP, revenues are considered to have been earned when the Company has substantially accomplished what it must do to be entitled to the benefits represented by the revenues. The following criteria represent preconditions to the recognition of revenue: | |
• Persuasive evidence of an arrangement for the sale of product or services must exist. | |
• Delivery has occurred or services rendered. | |
• The sales price to the customer is fixed or determinable. | |
• Collection is reasonably assured. | |
The Company recognizes revenue upon shipment in accordance with the above principles. | |
Gross sales are reduced for all consideration paid to customers for which no identifiable benefit is received by the Company. This includes promotional incentives, which includes various programs including year-end rebates and discounts. The amounts of certain incentives are known with reasonable certainty at the time of sale, while others are projected based upon the most reliable information available at the reporting date. | |
Commissions, for which the Company receives an identifiable benefit, are accounted for as a sales expense. | |
Accounts Receivable | |
Accounts receivable are reduced by an allowance for amounts that may become uncollectible in the future. The estimated allowance for uncollectible amounts is based primarily on specific analysis of accounts in the receivable portfolio and historical write-off experience. While management believes the allowance to be adequate, if the financial condition of the Company’s customers were to deteriorate, resulting in their inability to make payments, additional allowances may be required. | |
Inventory | |
Inventories are valued at the lower of cost or market. Cost of inventories is determined by the first-in, first-out (FIFO) method. The Company generally considers inventory quantities beyond two-years usage, measured on a historical usage basis, to be excess inventory and reduces the gross carrying value of inventory accordingly. | |
Goodwill and Intangible Assets | |
In accordance with Financial Accounting Standards Board (FASB) ASC Topic 350, Intangibles – Goodwill and Other, the Company performed an annual impairment test in accordance with this guidance as of December 31, 2013. This analysis did not indicate any impairment of goodwill. There are no circumstances that indicate that Goodwill might be impaired at September 30, 2014. | |
Product Liability Reserves | |
Product liability reserves represent the estimated unpaid amounts under the Company’s insurance policies with respect to existing claims. The Company uses the most current available data to estimate claims. As explained more fully under Note 5, Commitments and Contingencies, for various product liability claims covered under the Company’s general liability insurance policies, the Company must pay certain defense costs within its deductible or self-insured retention limits, ranging primarily from $25,000 to $250,000 per claim, depending on the terms of the policy in the applicable policy year, up to an aggregate amount. The Company is vigorously defending against all known claims. | |
Fair Value of Financial and Nonfinancial Instruments | |
The Company measures financial instruments in accordance with FASB ASC Topic 820, Fair Value Measurements and Disclosures. The accounting standard defines fair value, establishes a framework for measuring fair value under GAAP, and enhances disclosures about fair value measurements. Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Valuation techniques used to measure fair value must maximize the use of observable inputs and minimize the use of unobservable inputs. The standard creates a fair value hierarchy which prioritizes the inputs to valuation techniques used to measure fair value into three broad levels as follows: Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities; Level 2 inputs are inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly; and Level 3 inputs are unobservable inputs that reflect the Company’s own assumptions about the assumptions market participants would use in pricing the asset or liability. The Company relies on its actively traded share value – a level 1 input – in determining the fair value of the reporting unit in its annual impairment test as described in the FASB ASC Topic 350, Intangibles - Goodwill and Other. | |
Earnings per Common Share | |
Basic earnings per share have been computed using the weighted-average number of common shares outstanding. For the periods presented, there are no dilutive securities. Consequently, basic and dilutive earnings per share are the same. | |
Currency Translation | |
Assets and liabilities denominated in foreign currencies are translated into U.S. dollars at exchange rates prevailing on the balance sheet dates. The statements of income are translated into U.S. dollars at average exchange rates for the period. Adjustments resulting from the translation of financial statements are excluded from the determination of income and are accumulated in a separate component of shareholders’ equity. Exchange gains and losses resulting from foreign currency transactions are included in operations (other income (expense)) in the period in which they occur. | |
Income Taxes | |
The Company accounts for taxes in accordance with the FASB ASC Topic 740, Income Taxes. Under this method the Company records income tax expense and the related deferred taxes and tax benefits. | |
Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities from a change in tax rates is recognized in income in the period in which the rate is enacted. A valuation allowance is provided for deferred tax assets if it is more likely than not that these items will either expire before the Company is able to realize the benefit, or that future deductibility is uncertain. No valuation reserve was deemed necessary at September 30, 2014 or at December 31, 2013. Also, in accordance with FASB ASC Topic 740 (formerly FIN 48), the Company had reserves on the books for uncertainties in tax positions of $104,000, and $100,000 at September 30, 2014, and December 31, 2013, respectively. These reserves are reviewed each quarter. | |
Other Comprehensive Income (Loss) | |
For the three and nine-months ended September 30, 2014 and 2013, respectively, the sole component of Other Comprehensive Income (Loss) was a foreign currency translation adjustment. | |
New Accounting Pronouncements | |
In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers (Topic 606), requiring an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers. The updated standard will replace most existing revenue recognition guidance in U.S. GAAP when it becomes effective and permits the use of either a full retrospective or retrospective with cumulative effect transition method. Early adoption is not permitted. The updated standard becomes effective for the Company in the first quarter of fiscal year 2017. The Company has not yet selected a transition method and is currently evaluating the effect that the updated standard will have on the consolidated financial statements. | |
ASU 2013-11, “Income Taxes (Topic 740): Presentation of Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists (a consensus of the FASB Emerging Issues Task Force). Per this ASU, an unrecognized tax benefit, or a portion of an unrecognized tax benefit, should be presented in the financial statements as a reduction to a deferred tax asset for a net operating loss carryforward, a similar tax loss, or a tax credit carryforward, except as follows. To the extent a net operating loss carryforward, a similar tax loss, or a tax credit carryforward is not available at the reporting date under the tax law of the applicable jurisdiction to settle any additional income taxes that would result from the disallowance of a tax position or the tax law of the applicable jurisdiction does not require the entity to use, and the entity does not intend to use, the deferred tax asset for such purpose, the unrecognized tax benefit should be presented in the financial statements as a liability and should not be combined with deferred tax assets. The initial adoption of this guidance in 2014 did not have a material effect on the Company’s financial statements. | |
Concentrations | |
The Company has one significant customer who represents more than 10% of the Company’s Net Sales for the quarter and first nine months of 2014 and 2013, and more than 10% of the Company’s Accounts Receivable balance at September 30, 2014 and December 31, 2013. Geographically, the Company has a significant amount of sales in the United States versus internationally. These concentrations are discussed in detail in the Company’s December 31, 2013 Form 10-K, and there has been little change as of this quarterly report. |
3_Inventories
3. Inventories | 9 Months Ended | |||
Sep. 30, 2014 | ||||
Notes | ' | |||
3. Inventories | ' | |||
3. INVENTORIES | ||||
Inventories, net of reserves consisted of the following: | ||||
September 30, | December 31, | |||
2014 | 2013 | |||
(dollars in thousands) | ||||
Finished Goods | $ 4,749 | $ 4,839 | ||
Raw Materials | 1,811 | 1,889 | ||
Total Inventory | $ 6,560 | $ 6,728 |
4_Line_of_Credit
4. Line of Credit | 9 Months Ended |
Sep. 30, 2014 | |
Notes | ' |
4. Line of Credit | ' |
4. LINE OF CREDIT | |
As of October 23, 2014, the Company agreed to new proposed terms provided by Santander Bank, formerly Sovereign Bank, NA (“Sovereign”) which would allow the Company to borrow on an unsecured $15,000,000 line of credit for a period of five years with interest rates slightly more favorable to the Company than provided in the December 30, 2010 agreement, which is detailed below. The revised formal Revolving Line of Credit Note and Loan Agreement are currently being finalized. | |
On December 30, 2010, the Company agreed to a Revolving Line of Credit Note and Loan Agreement with Sovereign. The Company established a line of credit facility in the maximum amount of $10,000,000, maturing on December 31, 2014, with funds available for working capital purposes and other cash needs. The loan is collateralized by all of the Company’s tangible and intangible assets. The loan agreement provides for the payment of any borrowings under the agreement at an interest rate range of either LIBOR plus 1.75% to plus 2.75% (for borrowings with a fixed term of 30, 60, or 90 days), or, Prime less 0.50% to plus 0.50% (for borrowings with no fixed term other than the December 31, 2014 maturity date), depending upon the Company’s then existing financial ratios. At September 30, 2014, the Company’s ratio would allow for the most favorable rate under the agreement’s range, which would be a rate of 1.98% (LIBOR plus 1.75%). The Company is required to pay an annual commitment fee for the access to the funds, and is also obligated to pay a “Line Fee” ranging from 17.5 to 35.0 basis points of the average unused balance on a quarterly basis, depending again upon the Company’s then existing financial ratios. The Company may terminate the line at any time during the four year term, as long as there are no amounts outstanding. | |
As of September 30, 2014, and December 31, 2013, the Company had no outstanding borrowings on its line of credit, and the Company was in compliance with all debt covenants. |
5_Commitments_and_Contingencie
5. Commitments and Contingencies | 9 Months Ended |
Sep. 30, 2014 | |
Notes | ' |
5. Commitments and Contingencies | ' |
5. COMMITMENTS AND CONTINGENCIES | |
Commitments: | |
Under a number of indemnity agreements between the Company and each of its officers and directors, the Company has agreed to indemnify each of its officers and directors against any liability asserted against them in their capacity as an officer or director, or both. The Company’s indemnity obligations under the indemnity agreements are subject to certain conditions and limitations set forth in each of the agreements. Under the terms of the Agreement, the Company is contingently liable for costs which may be incurred by the officers and directors in connection with claims arising by reason of these individuals’ roles as officers and directors. The Company has obtained directors’ and officers’ insurance policies to fund certain of the Company’s obligations under the indemnity agreements. | |
The Company has salary continuation agreements with one current employee, and one former employee who retired at the end of 2010. These agreements provide for monthly payments to each of the employees or their designated beneficiary upon the employee’s retirement or death. The payment benefits range from $1,000 per month to $3,000 per month with the term of such payments limited to 15 years after the employee’s retirement at age 65. The agreements also provide for survivorship benefits if the employee dies before attaining age 65, and severance payments if the employee is terminated without cause; the amount of which is dependent on the length of company service at the date of termination. The net present value of the retirement payments associated with these agreements is $489,000 at September 30, 2014, of which $477,000 is included in Other Long Term Liabilities, and the remaining current portion of $12,000 is included in Other Liabilities, associated with the retired employee previously noted who is now receiving benefit payments. The December 31, 2013 liability of $451,000, had $439,000 reported in Other Long Term Liabilities, and a current portion of $12,000 in Other Liabilities. | |
The Company has obtained and is the beneficiary of three whole life insurance policies with respect to the two employees discussed above, and one other employee policy. The cash surrender value of such policies (included in Other Long Term Assets) amounts to $1,006,000 at September 30, 2014 and $962,000 at December 31, 2013. | |
As disclosed in detail in the December 31, 2013 Form 10-K, the Company has several lease obligations in place that will be paid out over time. Most notably, the Company has a lease for its manufacturing facility in Banbury, England, and also leases one of its buildings in Exton, Pennsylvania. Both locations provide manufacturing, warehousing and distribution space. | |
Contingencies: | |
The Company’s general liability insurance policies are subject to deductibles or retentions, ranging primarily from $25,000 to $250,000 per claim, (depending on the terms of the policy and the applicable policy year) up to an aggregate amount. The Company is insured on a ‘first dollar’ basis for workers’ compensation subject to statutory limits. In the ordinary and normal conduct of the Company’s business, it is subject to periodic lawsuits, investigations and claims (collectively, the “Claims”). For several years, there has been an increase in the number of those Claims relating primarily to product liability. Although the pace of new Claims has slowed during 2014, many of the new Claims are associated with higher deductable or retention programs. The Company does not believe that the Claims have legal merit, and is therefore vigorously defending against those Claims. In 2013, the Company won two of the Claims at two separate trials, both of which were held in U.S. District Court; one in St. Louis, Missouri and the other in Bridgeport, Connecticut. In both cases, the jury unanimously found that the Company was not negligent in designing its TracPipe® product, and that the TracPipe® product was not defective or unreasonably dangerous. In 2010, the Company took its first Claim to trial in Pennsylvania, and the jury returned a verdict that the Company was not negligent in designing and selling the TracPipe product, but that under the unique law in Pennsylvania for strict liability, the product lacked “any element” necessary to make it safe for its intended use. The Company has appealed that portion of the verdict, and the Supreme Court of Pennsylvania heard oral arguments on that case with the focus on whether the product liability law in Pennsylvania should be revised. A decision is expected in 2014. | |
The Company has in place commercial general liability insurance policies that cover the Claims, as noted above, including those alleging damages as a result of product defects. Litigation is subject to many uncertainties and management is unable to predict the outcome of the pending suits and claims. The potential liability for a given claim could range from zero to a maximum of $250,000, depending upon the insurance deductible or retention in place for the respective claim year. The aggregate maximum exposure for all current open Claims is estimated to not exceed approximately $4,100,000, which represents the potential costs that may be incurred over time for the Claims within the applicable insurance policy deductibles or retentions. It is possible that the results of operations or liquidity of the Company, as well as the Company’s ability to procure reasonably priced insurance, could be adversely affected by the pending litigation, potentially materially. The Company is currently unable to estimate the ultimate liability, if any, that may result from the pending litigation, or potential litigation from future claims or claims that have not yet come to our attention, and accordingly, the liability in the consolidated financial statements primarily represents an accrual for legal costs for services previously rendered and outstanding settlements for existing claims. The liabilities recorded on the Company’s books at September 30, 2014 and December 31, 2013 were $518,000 and $686,000, respectively, and are included in Other Liabilities. | |
Finally, two putative class action cases have been filed against the Company; one in U.S. District Court for the Middle District of Florida titled Hall v. Omega Flex, Inc. and one in U.S. District Court for the Southern District of Ohio titled Schoelwer v. Omega Flex, Inc. In both cases, the lead plaintiffs claimed that they are exposed to an increased likelihood of harm if one of the plaintiffs’ houses that contain TracPipe CSST is struck by lightning, that could damage the CSST causing a release of fuel gas in the house and causing a fire. However, none of the lead plaintiffs have suffered any actual harm. In January 2014, the judge in the Hall case granted the Company’s motion to dismiss all of the plaintiff’s claims due primarily to a lack of jurisdiction because there is no actual case or controversy posed by these claims. The plaintiff in Schoelwer voluntarily dismissed her claims in January 2014, but refiled the case in May 2014 alleging purely economic damages (i.e., no personal injury or property damage). The Company does not believe that the Schoelwer Claim has any legal merit, and is therefore vigorously defending that Claim. | |
In February of 2012, the Company was made aware of a fraud perpetrated by an outside party involving insurance related premiums that the Company had prepaid for umbrella coverage. The assets are currently secured by a governmental agency who investigated the case, held in a custodial account. As of May of 2014, utilizing the secured funds, the court has ordered restitution to all victims including Omega. It is not clear however at this point what amount will eventually be received by the Company. The value of the assets on the books amount to $213,000 at September 30, 2014, and $227,000 at December 31, 2013, and are included in Other Long Term Assets. It is possible that not all of those funds will be returned to the Company, or the Company may need to incur additional costs to procure collection. The Company is currently pursuing all avenues in an effort to bring closure to the event, reclaim the assets, and has since replaced the aforementioned insurance coverage. |
6_Stock_Based_Plans
6. Stock Based Plans | 9 Months Ended | |||
Sep. 30, 2014 | ||||
Notes | ' | |||
6. Stock Based Plans | ' | |||
6. STOCK BASED PLANS | ||||
Phantom Stock Plan | ||||
Plan Description. On April 1, 2006, the Company adopted the Omega Flex, Inc. 2006 Phantom Stock Plan (the “Plan”). The Plan authorizes the grant of up to one million units of phantom stock to employees, officers or directors of the Company and of any of its subsidiaries. The phantom stock units ("Units") each represent a contractual right to payment of compensation in the future based on the market value of the Company’s common stock. | ||||
The Units are not shares of the Company’s common stock, and a recipient of the Units does not receive any of the following: | ||||
• ownership interest in the Company | ||||
• shareholder voting rights | ||||
• other incidents of ownership to the Company’s common stock | ||||
The Units are granted to participants upon the recommendation of the Company’s CEO, and the approval of the Compensation Committee. Each of the Units that are granted to a participant will be initially valued by the Compensation Committee, and at a minimum, the Unit’s value will be equal to the closing price of the Company’s common stock on the grant date. The Units follow a vesting schedule, with a maximum vesting of 3 years after the grant date. Upon vesting, the Units represent a contractual right of payment for the value of the Unit. The Units will be paid on their maturity date, one year after all of the Units granted in a particular award have fully vested, unless an acceptable event occurs under the terms of the Plan prior to one year, which would allow for earlier payment. The amount to be paid to the participant on the maturity date is dependent on the type of Unit granted to the participant. | ||||
The Units may be Full Value, in which the value of each Unit at the maturity date, will equal the closing price of the Company’s common stock as of the maturity date; or Appreciation Only, in which the value of each Unit at the maturity date will be equal to the closing price of the Company’s common stock at the maturity date minus the closing price of the Company’s common stock at the grant date. | ||||
On December 9, 2009, the Board of Directors authorized an amendment to the Plan to pay an amount equal to the value of any cash or stock dividend declared by the Company on its common stock to be accrued to the phantom stock units outstanding as of the record date of the common stock dividend. The dividend equivalent will be paid at the same time the underlying phantom stock units are paid to the participant. | ||||
In certain circumstances, the Units may be immediately vested upon the participant’s death or disability. All Units granted to a participant are forfeited if the participant is terminated from his relationship with the Company or its subsidiary for “cause,” which is defined under the Plan. If a participant’s employment or relationship with the Company is terminated for reasons other than for “cause,” then any vested Units will be paid to the participant upon termination. However, Units granted to certain “specified employees” as defined in Section 409A of the Internal Revenue Code will be paid approximately 181 days after termination. | ||||
Grants of Phantom Stock Units. As of December 31, 2013, the Company had 17,193 unvested units outstanding, all of which were granted at Full Value. On February 19, 2014, the Company granted an additional 10,460 Full Value Units with a fair value of $17.72 per unit on grant date, using historical volatility. In March 2014, the Company paid $199,000 for the 8,100 fully vested and matured units that were granted on March 3, 2010, including their respective earned dividend values. As of September 30, 2014, the Company had 19,156 unvested units outstanding. | ||||
The Company uses the Black-Scholes option pricing model as its method for determining fair value of the Units. The Company uses the straight-line method of attributing the value of the stock-based compensation expense relating to the Units. The compensation expense (including adjustment of the liability to its fair value) from the Units is recognized over the vesting period of each grant or award. | ||||
The FASB ASC Topic 718, Stock Compensation, requires forfeitures to be estimated at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates in order to derive the Company’s best estimate of awards ultimately to vest. | ||||
Forfeitures represent only the unvested portion of a surrendered Unit and are typically estimated based on historical experience. Based on an analysis of the Company’s historical data, which has limited experience related to any stock-based plan forfeitures, the Company applied a 0% forfeiture rate to Plan Units outstanding in determining its Plan Unit compensation expense as of September 30, 2014. | ||||
The total Phantom Stock related liability as of September 30, 2014 was $439,000 of which $167,000 is included in other liabilities, as it is expected to be paid in March 2015, and the balance of $272,000 is included in other long term liabilities. | ||||
In accordance with FASB ASC Topic 718, Stock Compensation, the Company recorded compensation expense of approximately $139,000 and $234,000 related to the Phantom Stock Plan for the nine months ended September 30, 2014 and 2013, respectively. | ||||
The following table summarizes information about the Company’s nonvested phantom stock Units at September 30, 2014: | ||||
Units | Weighted Average Grant Date Fair Value | |||
Number of Phantom Stock Unit Awards: | ||||
Nonvested at December 31, 2013 | 17,193 | $12.89 | ||
Granted | 10,460 | $17.72 | ||
Vested | (8,497) | $12.57 | ||
Forfeited | --- | --- | ||
Canceled | --- | --- | ||
Nonvested at September 30, 2014 | 19,156 | $15.67 | ||
Phantom Stock Unit Awards Expected to Vest | 19,156 | $15.67 | ||
The total unrecognized compensation costs calculated at September 30, 2014 are $244,000 which will be recognized through February of 2017. The Company will recognize the related expense over the weighted average period of 1.48 years. |
7_Noncontrolling_Interests
7. Noncontrolling Interests | 9 Months Ended |
Sep. 30, 2014 | |
Notes | ' |
7. Noncontrolling Interests | ' |
7. NONCONTROLLING INTERESTS | |
The Company owns 100% of all subsidiaries, except for a small portion of one, which is owned by a Noncontrolling Interest. At December 31, 2013, Total Shareholders’ Equity was $25,631,000, and the Noncontrolling Interest was $122,000. For the nine month period ended September 30, 2014, the Noncontrolling Interest’s portion of Net Income was approximately $95,000, and their portion of Other Comprehensive Income was a loss of $4,000. At September 30, 2014, Total Shareholders’ Equity was $34,752,000, of which the Noncontrolling Interest held a value of $213,000. |
8_Shareholders_Equity
8. Shareholders' Equity | 9 Months Ended |
Sep. 30, 2014 | |
Notes | ' |
8. Shareholders' Equity | ' |
8. SHAREHOLDERS’ EQUITY | |
As of September 30, 2014 and December 31, 2013, the Company had authorized 20,000,000 common stock shares with par value of $0.01 per share. At both dates, the number of shares issued was 10,153,633, and the total number of outstanding shares was 10,091,822, with the 61,811 variance representing shares held in Treasury. | |
On April 4, 2014, the Company’s Board of Directors authorized an extension of its stock repurchase program without expiration, up to a maximum amount of $1,000,000. The original program established in December of 2007 authorized the purchase of up to $5,000,000 of its common stock. The purchases may be made from time-to-time in the open market or in privately negotiated transactions, depending on market and business conditions. The Board retained the right to cancel, extend, or expand the share buyback program, at any time and from time-to-time. Since inception, the Company has purchased a total of 61,811 shares for approximately $932,000, or approximately $15 per share. The Company did not make any stock repurchases during the first nine months of 2014, or during the year ended December 31, 2013. |
9_Subsequent_Events
9. Subsequent Events | 9 Months Ended |
Sep. 30, 2014 | |
Notes | ' |
9. Subsequent Events | ' |
9. SUBSEQUENT EVENTS | |
The Company evaluated all events or transactions that occurred through the date of this filing. During this period, the Company did not have any material subsequent events that impacted its condensed consolidated financial statements. |
2_Significant_Accounting_Polic1
2. Significant Accounting Policies: Use of Estimates (Policies) | 9 Months Ended |
Sep. 30, 2014 | |
Policies | ' |
Use of Estimates | ' |
Use of Estimates | |
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and, the disclosure of contingent assets and liabilities at the dates of the financial statements and the reported amounts of revenues and expenses during the reporting periods. The most significant estimates and assumptions relate to revenue recognition and related sales incentives, accounts receivable valuations, inventory valuations, goodwill valuation, product liability reserve and accounting for income taxes. Actual amounts could differ significantly from these estimates. |
2_Significant_Accounting_Polic2
2. Significant Accounting Policies: Revenue Recognition (Policies) | 9 Months Ended |
Sep. 30, 2014 | |
Policies | ' |
Revenue Recognition | ' |
Revenue Recognition | |
The Company’s revenue recognition activities relate almost entirely to the manufacture and sale of flexible metal hose and pipe. Under GAAP, revenues are considered to have been earned when the Company has substantially accomplished what it must do to be entitled to the benefits represented by the revenues. The following criteria represent preconditions to the recognition of revenue: | |
• Persuasive evidence of an arrangement for the sale of product or services must exist. | |
• Delivery has occurred or services rendered. | |
• The sales price to the customer is fixed or determinable. | |
• Collection is reasonably assured. | |
The Company recognizes revenue upon shipment in accordance with the above principles. | |
Gross sales are reduced for all consideration paid to customers for which no identifiable benefit is received by the Company. This includes promotional incentives, which includes various programs including year-end rebates and discounts. The amounts of certain incentives are known with reasonable certainty at the time of sale, while others are projected based upon the most reliable information available at the reporting date. | |
Commissions, for which the Company receives an identifiable benefit, are accounted for as a sales expense. |
2_Significant_Accounting_Polic3
2. Significant Accounting Policies: Accounts Receivable (Policies) | 9 Months Ended |
Sep. 30, 2014 | |
Policies | ' |
Accounts Receivable | ' |
Accounts Receivable | |
Accounts receivable are reduced by an allowance for amounts that may become uncollectible in the future. The estimated allowance for uncollectible amounts is based primarily on specific analysis of accounts in the receivable portfolio and historical write-off experience. While management believes the allowance to be adequate, if the financial condition of the Company’s customers were to deteriorate, resulting in their inability to make payments, additional allowances may be required. |
2_Significant_Accounting_Polic4
2. Significant Accounting Policies: Inventory (Policies) | 9 Months Ended |
Sep. 30, 2014 | |
Policies | ' |
Inventory | ' |
Inventory | |
Inventories are valued at the lower of cost or market. Cost of inventories is determined by the first-in, first-out (FIFO) method. The Company generally considers inventory quantities beyond two-years usage, measured on a historical usage basis, to be excess inventory and reduces the gross carrying value of inventory accordingly. |
2_Significant_Accounting_Polic5
2. Significant Accounting Policies: Goodwill and Intangible Assets (Policies) | 9 Months Ended |
Sep. 30, 2014 | |
Policies | ' |
Goodwill and Intangible Assets | ' |
Goodwill and Intangible Assets | |
In accordance with Financial Accounting Standards Board (FASB) ASC Topic 350, Intangibles – Goodwill and Other, the Company performed an annual impairment test in accordance with this guidance as of December 31, 2013. This analysis did not indicate any impairment of goodwill. There are no circumstances that indicate that Goodwill might be impaired at September 30, 2014. |
2_Significant_Accounting_Polic6
2. Significant Accounting Policies: Product Liability Reserves (Policies) | 9 Months Ended |
Sep. 30, 2014 | |
Policies | ' |
Product Liability Reserves | ' |
Product Liability Reserves | |
Product liability reserves represent the estimated unpaid amounts under the Company’s insurance policies with respect to existing claims. The Company uses the most current available data to estimate claims. As explained more fully under Note 5, Commitments and Contingencies, for various product liability claims covered under the Company’s general liability insurance policies, the Company must pay certain defense costs within its deductible or self-insured retention limits, ranging primarily from $25,000 to $250,000 per claim, depending on the terms of the policy in the applicable policy year, up to an aggregate amount. The Company is vigorously defending against all known claims. |
2_Significant_Accounting_Polic7
2. Significant Accounting Policies: Fair Value of Financial and Nonfinancial Instruments (Policies) | 9 Months Ended |
Sep. 30, 2014 | |
Policies | ' |
Fair Value of Financial and Nonfinancial Instruments | ' |
Fair Value of Financial and Nonfinancial Instruments | |
The Company measures financial instruments in accordance with FASB ASC Topic 820, Fair Value Measurements and Disclosures. The accounting standard defines fair value, establishes a framework for measuring fair value under GAAP, and enhances disclosures about fair value measurements. Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Valuation techniques used to measure fair value must maximize the use of observable inputs and minimize the use of unobservable inputs. The standard creates a fair value hierarchy which prioritizes the inputs to valuation techniques used to measure fair value into three broad levels as follows: Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities; Level 2 inputs are inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly; and Level 3 inputs are unobservable inputs that reflect the Company’s own assumptions about the assumptions market participants would use in pricing the asset or liability. The Company relies on its actively traded share value – a level 1 input – in determining the fair value of the reporting unit in its annual impairment test as described in the FASB ASC Topic 350, Intangibles - Goodwill and Other. |
2_Significant_Accounting_Polic8
2. Significant Accounting Policies: Earnings Per Common Share (Policies) | 9 Months Ended |
Sep. 30, 2014 | |
Policies | ' |
Earnings Per Common Share | ' |
Earnings per Common Share | |
Basic earnings per share have been computed using the weighted-average number of common shares outstanding. For the periods presented, there are no dilutive securities. Consequently, basic and dilutive earnings per share are the same. |
2_Significant_Accounting_Polic9
2. Significant Accounting Policies: Currency Translation (Policies) | 9 Months Ended |
Sep. 30, 2014 | |
Policies | ' |
Currency Translation | ' |
Currency Translation | |
Assets and liabilities denominated in foreign currencies are translated into U.S. dollars at exchange rates prevailing on the balance sheet dates. The statements of income are translated into U.S. dollars at average exchange rates for the period. Adjustments resulting from the translation of financial statements are excluded from the determination of income and are accumulated in a separate component of shareholders’ equity. Exchange gains and losses resulting from foreign currency transactions are included in operations (other income (expense)) in the period in which they occur. |
Recovered_Sheet1
2. Significant Accounting Policies: Income Taxes (Policies) | 9 Months Ended |
Sep. 30, 2014 | |
Policies | ' |
Income Taxes | ' |
Income Taxes | |
The Company accounts for taxes in accordance with the FASB ASC Topic 740, Income Taxes. Under this method the Company records income tax expense and the related deferred taxes and tax benefits. | |
Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities from a change in tax rates is recognized in income in the period in which the rate is enacted. A valuation allowance is provided for deferred tax assets if it is more likely than not that these items will either expire before the Company is able to realize the benefit, or that future deductibility is uncertain. No valuation reserve was deemed necessary at September 30, 2014 or at December 31, 2013. Also, in accordance with FASB ASC Topic 740 (formerly FIN 48), the Company had reserves on the books for uncertainties in tax positions of $104,000, and $100,000 at September 30, 2014, and December 31, 2013, respectively. These reserves are reviewed each quarter. |
Recovered_Sheet2
2. Significant Accounting Policies: Other Comprehensive Income (loss) (Policies) | 9 Months Ended |
Sep. 30, 2014 | |
Policies | ' |
Other Comprehensive Income (loss) | ' |
Other Comprehensive Income (Loss) | |
For the three and nine-months ended September 30, 2014 and 2013, respectively, the sole component of Other Comprehensive Income (Loss) was a foreign currency translation adjustment. |
Recovered_Sheet3
2. Significant Accounting Policies: New Accounting Pronouncements (Policies) | 9 Months Ended |
Sep. 30, 2014 | |
Policies | ' |
New Accounting Pronouncements | ' |
New Accounting Pronouncements | |
In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers (Topic 606), requiring an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers. The updated standard will replace most existing revenue recognition guidance in U.S. GAAP when it becomes effective and permits the use of either a full retrospective or retrospective with cumulative effect transition method. Early adoption is not permitted. The updated standard becomes effective for the Company in the first quarter of fiscal year 2017. The Company has not yet selected a transition method and is currently evaluating the effect that the updated standard will have on the consolidated financial statements. | |
ASU 2013-11, “Income Taxes (Topic 740): Presentation of Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists (a consensus of the FASB Emerging Issues Task Force). Per this ASU, an unrecognized tax benefit, or a portion of an unrecognized tax benefit, should be presented in the financial statements as a reduction to a deferred tax asset for a net operating loss carryforward, a similar tax loss, or a tax credit carryforward, except as follows. To the extent a net operating loss carryforward, a similar tax loss, or a tax credit carryforward is not available at the reporting date under the tax law of the applicable jurisdiction to settle any additional income taxes that would result from the disallowance of a tax position or the tax law of the applicable jurisdiction does not require the entity to use, and the entity does not intend to use, the deferred tax asset for such purpose, the unrecognized tax benefit should be presented in the financial statements as a liability and should not be combined with deferred tax assets. The initial adoption of this guidance in 2014 did not have a material effect on the Company’s financial statements. |
Recovered_Sheet4
2. Significant Accounting Policies: Concentrations (Policies) | 9 Months Ended |
Sep. 30, 2014 | |
Policies | ' |
Concentrations | ' |
Concentrations | |
The Company has one significant customer who represents more than 10% of the Company’s Net Sales for the quarter and first nine months of 2014 and 2013, and more than 10% of the Company’s Accounts Receivable balance at September 30, 2014 and December 31, 2013. Geographically, the Company has a significant amount of sales in the United States versus internationally. These concentrations are discussed in detail in the Company’s December 31, 2013 Form 10-K, and there has been little change as of this quarterly report. |
3_Inventories_Schedule_of_Inve
3. Inventories: Schedule of Inventory, Current (Tables) | 9 Months Ended | |||
Sep. 30, 2014 | ||||
Tables/Schedules | ' | |||
Schedule of Inventory, Current | ' | |||
September 30, | December 31, | |||
2014 | 2013 | |||
(dollars in thousands) | ||||
Finished Goods | $ 4,749 | $ 4,839 | ||
Raw Materials | 1,811 | 1,889 | ||
Total Inventory | $ 6,560 | $ 6,728 |
6_Stock_Based_Plans_Schedule_o
6. Stock Based Plans: Schedule of nonvested phantom stock units (Tables) | 9 Months Ended | |||
Sep. 30, 2014 | ||||
Tables/Schedules | ' | |||
Schedule of nonvested phantom stock units | ' | |||
Units | Weighted Average Grant Date Fair Value | |||
Number of Phantom Stock Unit Awards: | ||||
Nonvested at December 31, 2013 | 17,193 | $12.89 | ||
Granted | 10,460 | $17.72 | ||
Vested | (8,497) | $12.57 | ||
Forfeited | --- | --- | ||
Canceled | --- | --- | ||
Nonvested at September 30, 2014 | 19,156 | $15.67 | ||
Phantom Stock Unit Awards Expected to Vest | 19,156 | $15.67 |
Recovered_Sheet5
2. Significant Accounting Policies: Income Taxes (Details) (USD $) | Sep. 30, 2014 | Dec. 31, 2013 |
In Thousands, unless otherwise specified | ||
Details | ' | ' |
Liability for Uncertain Tax Positions, Current | $104 | $100 |
3_Inventories_Schedule_of_Inve1
3. Inventories: Schedule of Inventory, Current (Details) (USD $) | Sep. 30, 2014 | Dec. 31, 2013 |
In Thousands, unless otherwise specified | ||
Details | ' | ' |
Inventory, Finished Goods, Gross | $4,749 | $4,839 |
Inventory, Raw Materials, Gross | 1,811 | 1,889 |
Inventories-Net | $6,560 | $6,728 |
4_Line_of_Credit_Details
4. Line of Credit (Details) (USD $) | 9 Months Ended | |
In Thousands, unless otherwise specified | Sep. 30, 2014 | Dec. 31, 2013 |
Line of Credit Facility, Description | 'As of October 23, 2014, the Company agreed to new proposed terms provided by Santander Bank, formerly Sovereign Bank, NA (“Sovereign”) which would allow the Company to borrow on an unsecured $15,000,000 line of credit for a period of five years with interest rates slightly more favorable to the Company than provided in the December 30, 2010 agreement, which is detailed below. The revised formal Revolving Line of Credit Note and Loan Agreement are currently being finalized. On December 30, 2010, the Company agreed to a Revolving Line of Credit Note and Loan Agreement with Sovereign. The Company established a line of credit facility in the maximum amount of $10,000,000, maturing on December 31, 2014, with funds available for working capital purposes and other cash needs. | ' |
Sovereign Bank, NA | ' | ' |
Line of Credit Facility, Maximum Borrowing Capacity | $10,000 | ' |
Line of Credit Facility, Collateral | 'The loan is collateralized by all of the Company’s tangible and intangible assets. | ' |
Line of Credit Facility, Interest Rate Description | 'The loan agreement provides for the payment of any borrowings under the agreement at an interest rate range of either LIBOR plus 1.75% to plus 2.75% (for borrowings with a fixed term of 30, 60, or 90 days), or, Prime less 0.50% to plus 0.50% (for borrowings with no fixed term other than the December 31, 2014 maturity date), depending upon the Company’s then existing financial ratios. At September 30, 2014, the Company’s ratio would allow for the most favorable rate under the agreement’s range, which would be a rate of 1.98% (LIBOR plus 1.75%). | ' |
Line of Credit Facility, Commitment Fee Description | 'The Company is required to pay an annual commitment fee for the access to the funds, and is also obligated to pay a “Line Fee” ranging from 17.5 to 35.0 basis points of the average unused balance on a quarterly basis, depending again upon the Company’s then existing financial ratios. | ' |
Line of Credit Facility, Amount Outstanding | $0 | $0 |
5_Commitments_and_Contingencie1
5. Commitments and Contingencies (Details) (USD $) | 9 Months Ended | |
In Thousands, unless otherwise specified | Sep. 30, 2014 | Dec. 31, 2013 |
Details | ' | ' |
Loss Contingency, Management's Assessment and Process | 'Under a number of indemnity agreements between the Company and each of its officers and directors, the Company has agreed to indemnify each of its officers and directors against any liability asserted against them in their capacity as an officer or director, or both. The Company’s indemnity obligations under the indemnity agreements are subject to certain conditions and limitations set forth in each of the agreements. Under the terms of the Agreement, the Company is contingently liable for costs which may be incurred by the officers and directors in connection with claims arising by reason of these individuals’ roles as officers and directors. The Company has obtained directors’ and officers’ insurance policies to fund certain of the Company’s obligations under the indemnity agreements. | ' |
Deferred Compensation Arrangements, Overall, Description | 'The Company has salary continuation agreements with one current employee, and one former employee who retired at the end of 2010. These agreements provide for monthly payments to each of the employees or their designated beneficiary upon the employee’s retirement or death. The payment benefits range from $1,000 per month to $3,000 per month with the term of such payments limited to 15 years after the employee’s retirement at age 65. The agreements also provide for survivorship benefits if the employee dies before attaining age 65, and severance payments if the employee is terminated without cause; the amount of which is dependent on the length of company service at the date of termination. | ' |
Other Deferred Compensation Arrangements, Liability, Current and Noncurrent | $489 | $451 |
Other Deferred Compensation Arrangements, Liability, Classified, Noncurrent | 477 | 439 |
Other Deferred Compensation Arrangements, Liability, Current | 12 | 12 |
Cash Surrender Value of Life Insurance | $1,006 | $962 |
5_Commitments_and_Contingencie2
5. Commitments and Contingencies: Contingencies (Details) (USD $) | 9 Months Ended | |
Sep. 30, 2014 | Dec. 31, 2013 | |
Positive Outcome of Litigation | ' | ' |
Loss Contingency, Range of Possible Loss, Maximum | $213,000 | $227,000 |
Loss Contingency, Balance Sheet Caption | 'Other Long Term Assets | ' |
Insurance Claims | ' | ' |
Product Liability Inurance Deductible - Range, minimum | 25,000 | ' |
Product Liability Inurance Deductible - Range, maximum | 250,000 | ' |
Pending or Threatened Litigation | ' | ' |
Product Liability Contingency, Loss Exposure Not Accrued, High Estimate | 4,100,000 | ' |
Loss Contingency Accrual | $518,000 | $686,000 |
6_Stock_Based_Plans_Details
6. Stock Based Plans (Details) (USD $) | 9 Months Ended | ||
Sep. 30, 2014 | Sep. 30, 2013 | Dec. 31, 2013 | |
Employee Service Share-based Compensation, Nonvested Awards, Compensation Cost Not yet Recognized, Period for Recognition | '1 year 5 months 23 days | ' | ' |
Phantom Stock Plan | ' | ' | ' |
Share-based Compensation Arrangement by Share-based Payment Award, Description | 'Plan Description. On April 1, 2006, the Company adopted the Omega Flex, Inc. 2006 Phantom Stock Plan (the “Plan”). The Plan authorizes the grant of up to one million units of phantom stock to employees, officers or directors of the Company and of any of its subsidiaries. The phantom stock units ('Units') each represent a contractual right to payment of compensation in the future based on the market value of the Company’s common stock. The Units are not shares of the Company’s common stock, | ' | ' |
Share-based Compensation Arrangement by Share-based Payment Award, Number of Shares Authorized | 1,000,000 | ' | ' |
Share-based Compensation Arrangement by Share-based Payment Award, Terms of Award | 'The phantom stock units ('Units') each represent a contractual right to payment of compensation in the future based on the market value of the Company's common stock. The Units are not shares of the Company's common stock, and a recipient of the Units does not receive any of the following: (a) ownership interest in the Company, (b) shareholder voting rights, and (c) other incidents of ownership to the Company's common stock. The Units are granted to participants upon the recommendation of the Company's CEO, and the approval of the Compensation Committee. Each of the Units that are granted to a participant will be initially valued by the Compensation Committee, and at a minimum, the Unit's value will be equal to the closing price of the Company's common stock on the grant date. The Units follow a vesting schedule, with a maximum vesting of 3 years after the grant date. Upon vesting, the Units represent a contractual right of payment for the value of the Unit. The Units will be paid on their maturity date, one year after all of the Units granted in a particular award have fully vested, unless an acceptable event occurs under the terms of the Plan prior to one year, which would allow for earlier payment. The amount to be paid to the participant on the maturity date is dependent on the type of Unit granted to the participant. | ' | ' |
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Rights | 'The Units follow a vesting schedule, with a maximum vesting of 3 years after the grant date. Upon vesting, the Units represent a contractual right of payment for the value of the Unit. | ' | ' |
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Period, Maximum | '3 years | ' | ' |
Unvested units outstanding | 19,156 | ' | 17,193 |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Net of Forfeitures | 10,460 | ' | ' |
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period, Weighted Average Grant Date Fair Value | $17.72 | ' | ' |
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Share-based Liabilities Paid | $199,000 | ' | ' |
Employee Service, Share-based Compensation, Paid Shares | 8,100 | ' | ' |
Fair Value, Option, Methodology and Assumptions | 'The Company uses the Black-Scholes option pricing model as its method for determining fair value of the Units. The Company uses the straight-line method of attributing the value of the stock-based compensation expense relating to the Units. The compensation expense (including adjustment of the liability to its fair value) from the Units is recognized over the vesting period of each grant or award. | ' | ' |
Deferred Compensation Share-based Arrangements, Liability, Current and Noncurrent | 439,000 | ' | ' |
Deferred Compensation Share-based Arrangements, Liability, Current | 167,000 | ' | ' |
Deferred Compensation Share-based Arrangements, Liability, Classified, Noncurrent | 272,000 | ' | ' |
Allocated Share-based Compensation Expense | 139,000 | 234,000 | ' |
Employee Service Share-based Compensation, Nonvested Awards, Compensation Cost Not yet Recognized | $244,000 | ' | ' |
6_Stock_Based_Plans_Schedule_o1
6. Stock Based Plans: Schedule of nonvested phantom stock units (Details) (Phantom Stock Plan, USD $) | 9 Months Ended |
Sep. 30, 2014 | |
Phantom Stock Plan | ' |
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Number, Beginning Balance | 17,193 |
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Weighted Average Grant Date Fair Value, Beginning Balance | $12.89 |
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period | 10,460 |
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period, Weighted Average Grant Date Fair Value | $17.72 |
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Vested in Period | -8,497 |
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Vested in Period, Weighted Average Grant Date Fair Value | $12.57 |
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Forfeited in Period | 0 |
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Forfeited in Period, Weighted Average Grant Date Fair Value | $0 |
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Number, Ending Balance | 19,156 |
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Weighted Average Grant Date Fair Value, Ending Balance | $15.67 |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Expected to Vest, Outstanding, Number | 19,156 |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Vested, Weighted Average Grant Date Fair Value | $15.67 |
7_Noncontrolling_Interests_Det
7. Noncontrolling Interests (Details) (USD $) | 3 Months Ended | 9 Months Ended | |||
In Thousands, unless otherwise specified | Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 | Dec. 31, 2013 |
Total Shareholders' Equity | $34,752 | ' | $34,752 | ' | $25,631 |
Net (Income) Loss attributable to the Noncontrolling Interest, net of tax | -35 | -27 | -95 | -43 | ' |
Other Comprehensive Income (Loss), Net of Tax, Portion Attributable to Noncontrolling Interest | ' | ' | -4 | ' | ' |
A non-controlling interest | ' | ' | ' | ' | ' |
Shareholders' Equity attributable to non-controlling interest | 213 | ' | 213 | ' | 122 |
Net (Income) Loss attributable to the Noncontrolling Interest, net of tax | ' | ' | ($95) | ' | ' |
8_Shareholders_Equity_Details
8. Shareholders' Equity (Details) (USD $) | 9 Months Ended | 12 Months Ended |
Sep. 30, 2014 | Dec. 31, 2013 | |
Common Stock, Shares Authorized | 20,000,000 | 20,000,000 |
Common Stock, Par Value | $0.01 | $0.01 |
Common Stock, Shares Issued | 10,153,633 | 10,153,633 |
Common Stock, Shares Outstanding | 10,091,822 | 10,091,822 |
Treasury Stock, Number of Shares Held | 61,811 | 61,811 |
Stock Repurchased During Period, Shares | 0 | 0 |
4-Apr-14 | ' | ' |
Stock Repurchase Program, Authorized Amount | $1,000,000 | ' |
Dec-07 | ' | ' |
Stock Repurchase Program, Authorized Amount | $5,000,000 | ' |