Document and Entity Information
Document and Entity Information - shares | 3 Months Ended | |
Mar. 30, 2019 | May 10, 2019 | |
Document and Entity Information | ||
Entity Registrant Name | CONTINENTAL MATERIALS CORP | |
Entity Central Index Key | 0000024104 | |
Document Type | 10-Q | |
Document Period End Date | Mar. 30, 2019 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-28 | |
Entity Current Reporting Status | Yes | |
Entity Filer Category | Non-accelerated Filer | |
Entity Common Stock, Shares Outstanding | 1,715,487 | |
Document Fiscal Year Focus | 2019 | |
Document Fiscal Period Focus | Q1 | |
Entity Small Business | true | |
Entity Emerging Growth Company | false |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Mar. 30, 2019 | Dec. 29, 2018 |
Current assets: | ||
Cash and cash equivalents | $ 35,421 | $ 594 |
Receivables, net | 15,053 | 15,321 |
Receivable for insured losses | 875 | 874 |
Finished goods | 7,481 | 5,448 |
Work in process | 1,414 | 1,365 |
Raw materials and supplies | 4,538 | 7,993 |
Prepaid expenses | 2,066 | 1,785 |
Refundable income taxes | 494 | |
Other current assets | 4,549 | 2,500 |
Other current assets held for sale | 10,968 | |
Total current assets | 71,397 | 47,342 |
Property, plant and equipment | 9,972 | 10,431 |
Other assets | ||
Right-of use assets | 5,114 | |
Goodwill | 1,000 | 1,000 |
Deferred income taxes | 2,353 | 3,414 |
Other long-term assets | 773 | 448 |
Other assets held for sale | 13,068 | |
Total assets | 90,609 | 75,703 |
Current liabilities: | ||
Revolving bank loan payable | 800 | 2,200 |
Accounts payable and accrued expenses | 11,617 | 13,316 |
Short-term lease liabilities | 933 | |
Liability for unpaid claims covered by insurance | 875 | 874 |
Income taxes payable | 3,373 | |
Other current liabilities held for sale | 3,800 | |
Total current liabilities | 17,598 | 20,190 |
Long-term lease liabilities | 4,240 | |
Other long-term liabilities | 6,301 | 6,445 |
Other long-term liabilities held for sale | 292 | |
Commitments and contingencies (Note 6) | ||
SHAREHOLDERS? EQUITY | ||
Common shares, $.25 par value; authorized 3,000,000 shares; issued 2,574,264 shares | 643 | 643 |
Capital in excess of par value | 2,013 | 1,930 |
Retained earnings | 74,453 | 61,131 |
Treasury shares, 858,777 and 876,409 at cost | (14,639) | (14,928) |
Total shareholders' equity | 62,470 | 48,776 |
Total liabilities and shareholders' equity | $ 90,609 | $ 75,703 |
CONDENSED CONSOLIDATED BALANC_2
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares | Mar. 30, 2019 | Dec. 29, 2018 |
Consolidated Balance Sheets | ||
Common shares, par value (in dollars per share) | $ 0.25 | $ 0.25 |
Common shares, authorized shares | 3,000,000 | 3,000,000 |
Common shares, issued shares | 2,574,264 | 2,574,264 |
Treasury, shares | 858,777 | 876,409 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND RETAINED EARNINGS - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | |
Mar. 30, 2019 | Mar. 31, 2018 | |
Consolidated Statements of Income | ||
Net sales | $ 22,528 | $ 23,410 |
Type of Revenue [Extensible List] | us-gaap:ProductMember | us-gaap:ProductMember |
Costs and expenses: | ||
Cost of sales (exclusive of depreciation, depletion and amortization) | $ 17,847 | $ 18,404 |
Depreciation, depletion and amortization | 519 | 405 |
Selling and administrative | 6,792 | 5,190 |
Charges related to write-off of deferred development | 6,934 | |
Gain on legal settlement | (15,000) | |
Gain on disposition of property and equipment | (5) | |
Total costs and expenses | 10,153 | 30,933 |
Operating income (loss) | 12,375 | (7,523) |
Interest income | 149 | 24 |
Interest expense | (71) | (108) |
Other income, net | 13 | 19 |
Income (loss) from continuing operations before income taxes | 12,466 | (7,588) |
Provision (benefit) for income taxes | 3,366 | (1,898) |
Income (loss) from continuing operations | 9,100 | (5,690) |
Income (loss) from discontinued operations net of income tax provision of $1,562 and benefit of $167 | 4,222 | (503) |
Net income (loss) | 13,322 | (6,193) |
Retained earnings, beginning of period | 61,131 | 66,987 |
Retained earnings, end of period | $ 74,453 | $ 60,794 |
Basic and diluted income (loss) per share: | ||
Income (loss) from continuing operations | $ 5.33 | $ (3.35) |
Income (loss) from discontinued operations | 2.47 | (0.30) |
Basic and diluted income (loss) per share (in dollar per share) | $ 7.80 | $ (3.65) |
Average shares outstanding (in shares) | 1,709 | 1,696 |
CONDENSED CONSOLIDATED STATEM_2
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND RETAINED EARNINGS (Parenthetical) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 30, 2019 | Mar. 31, 2018 | |
Consolidated Statements of Income | ||
Income tax provision (benefit) | $ 1,562 | $ 167 |
CONDENSED CONSOLIDATED STATEM_3
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 30, 2019 | Mar. 31, 2018 | |
Operating activities | ||
Net cash provided (used) by continuing operations | $ 11,624 | $ (1,615) |
Net cash provided by discontinued operations | (15) | 16 |
Net cash provided (used) by operating activities | 11,609 | (1,599) |
Investing activities: | ||
Capital expenditures by continuing operations | (63) | (411) |
Capital expenditures by discontinued operations | (172) | (289) |
Cash proceeds from sale of discontinued operations | 24,927 | |
Cash proceeds from sale of property and equipment | 5 | |
Net cash provided (used) in investing activities | 24,697 | (700) |
Financing activities: | ||
Borrowings on the revolving bank loan | 4,050 | 9,900 |
Repayments on the revolving bank loan | (5,450) | (7,700) |
Repayments of finance lease obligations | (10) | |
Payments to acquire treasury stock | (69) | |
Net cash (used) provided by financing activities | (1,479) | 2,200 |
Net increase (decrease) in cash and cash equivalents | 34,827 | (99) |
Cash and cash equivalents: | ||
Beginning of period | 594 | 507 |
End of period | 35,421 | 408 |
Cash paid during the year for: | ||
Interest, net | $ 72 | $ 104 |
CONDENSED STATEMENT OF CHANGES
CONDENSED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY - USD ($) $ in Thousands | Common Stock [Member] | Additional Paid-in Capital [Member] | Retained Earnings [Member] | Treasury Stock [Member] | Total |
Balance at at Dec. 30, 2017 | $ 643 | $ 1,887 | $ 66,987 | $ (15,195) | $ 54,322 |
Balance at (in shares) at Dec. 30, 2017 | 2,574,264 | 892,097 | |||
Consolidated Statements of Shareholders' Equity | |||||
Net income (loss) | (6,193) | (6,193) | |||
Compensation of Board of Directors by issuance of treasury shares | 43 | $ 271 | 314 | ||
Compensation of Board of Directors by issuance of treasury shares (in shares) | (16,000) | ||||
Purchase of treasury shares (in shares) | 112 | ||||
Balance at at Mar. 31, 2018 | $ 643 | 1,930 | 60,794 | $ (14,924) | 48,443 |
Balance (in shares) at Mar. 31, 2018 | 2,574,264 | 876,209 | |||
Balance at at Dec. 29, 2018 | $ 643 | 1,930 | 61,131 | $ (14,928) | 48,776 |
Balance at (in shares) at Dec. 29, 2018 | 2,574,264 | 876,409 | |||
Consolidated Statements of Shareholders' Equity | |||||
Net income (loss) | 13,322 | 13,322 | |||
Compensation of Board of Directors by issuance of treasury shares | 83 | $ 358 | 441 | ||
Compensation of Board of Directors by issuance of treasury shares (in shares) | (21,000) | ||||
Purchase of treasury shares | $ (69) | (69) | |||
Purchase of treasury shares (in shares) | 3,368 | ||||
Balance at at Mar. 30, 2019 | $ 643 | $ 2,013 | $ 74,453 | $ (14,639) | $ 62,470 |
Balance (in shares) at Mar. 30, 2019 | 2,574,264 | 858,777 |
SIGNIFICANT ACCOUNTING POLICIES
SIGNIFICANT ACCOUNTING POLICIES | 3 Months Ended |
Mar. 30, 2019 | |
SIGNIFICANT ACCOUNTING POLICIES | |
SIGNIFICANT ACCOUNTING POLICIES | 1. Significant Accounting Policies: Basis of Presentation: The unaudited interim condensed consolidated financial statements included herein are prepared pursuant to the Securities and Exchange Commission (the “Commission”) rules and regulations for reporting on Form 10-Q. Accordingly, certain information and footnote disclosures normally accompanying the annual consolidated financial statements have been omitted. The condensed consolidated balance sheet of Continental Materials Corporation (the “Company”) as of December 29, 2018 has been derived from the audited consolidated balance sheet of the Company as of that date. The interim condensed consolidated financial statements and notes should be read in conjunction with the consolidated financial statements and notes thereto included in the Company’s latest annual report on Form 10-K. In the opinion of management, the condensed consolidated financial statements include all adjustments (none of which were other than normal recurring adjustments) necessary for a fair statement of the results for the interim periods and to ensure the financial statements are not misleading. Certain reclassifications have been made to the 2018 consolidated financial statements to conform to the 2019 presentation. The reclassifications had no effect on the consolidated results of operations, the net decrease in cash or the total assets, liabilities or shareholders’ equity of the Company. During the quarter ended March 30, 2019 the Company sold substantially all of the assets of Transit Mix Concrete Company’s ready-mix business and Daniels sand operation. The assets and liabilities related to these operations are presented as held for sale in accordance with generally accepted accounting principles. See Note 15. Accordingly, the operations of these businesses are presented as discontinued operations for all periods presented. Revenue Recognition: Effective December 31, 2017, the Company adopted Accounting Standards Update (ASU) 2014-09, Revenue from Contracts with Customers (Topic 606) and related amendments, which creates a single source of revenue guidance for all companies in all industries and is more principles-based than previous revenue guidance. The Company adopted the standard using the modified retrospective approach. The adoption of this standard did not result in significant changes to the Company’s accounting policies, business processes, systems or controls, or have a material impact on its financial position, consolidated results of operations or consolidated cash flows. As such, prior period financial statements were not recast and there was no cumulative effect adjustment upon adoption. Sales are recognized when control of the promised goods or services transfers to the Company’s customers in an amount that reflects the consideration the Company expects to be entitled to in exchange for those goods or services. The Company’s payment terms generally range between 30 to 90 days after invoice is billed to the customer. Sales are reported net of sales tax. Shipping and other transportation costs paid by the Company and rebilled to the buyer are recorded gross (as both sales and cost of sales). The Company generally recognizes revenue from the sale of products at the time the products are shipped. While the return of products is generally not allowed, some large customers have been granted the right to return a certain amount at the end of the normal selling season for seasonal products. Sales returns and allowances are estimated based on current program terms and historical experience. Provisions for estimated returns, discounts, volume rebates and other price adjustments are provided for in the same period the related revenues are recognized and are netted against revenues. The Company is responsible for warranties related to the manufacture of its HVAC products and estimates the future warranty claims based upon historical experience and management estimates. The Company reviews warranty and related claims activities and records provisions, as necessary. The Company does not perform installation services except for installation of electronic access and security systems in the Door segment. These installation service contracts are generally short-term in nature, usually less than 30 days. It was determined for the installation service contracts there are two performance obligations, the equipment and the installation services. The transaction price for these contracts is allocated to each performance obligation based on its stated stand-alone selling price. Revenue is recognized at a point in time as each performance obligation is completed. No maintenance or service contracts are offered by the Company. See Note 7, Segment reporting for disaggregation of revenue by segment. Leases Effective December 30, 2018 (the beginning of fiscal 2019) the Company adopted ASU No. 2016-02, “Leases (Topic 842),” which superseded Topic 840, “Leases”. As allowed under the new accounting standard, the Company elected to apply practical expedients to carry forward the original lease determinations, lease classifications and accounting of initial direct costs for all asset classes at the time of adoption. The Company also elected not to separate lease components from non-lease components for asset categories, except office space, and to exclude short-term leases from its Consolidated Balance Sheet. For the office space lease category the election was made to report lease and non-lease components separately as the non-lease components are billed and paid separately and are not a fixed amount over the lease term. The implicit discount rate of leases is used to calculate present values when available. When an implicit discount rate is not readily available an incremental borrowing rate is used to calculate present values. |
INCOME TAXES
INCOME TAXES | 3 Months Ended |
Mar. 30, 2019 | |
INCOME TAXES | |
INCOME TAXES | 2. Income taxes are accounted for under the asset and liability method that requires deferred income taxes to reflect the future tax consequences attributable to differences between the tax and financial reporting bases of assets and liabilities. Deferred tax assets and liabilities recognized are based on the tax rates in effect in the year in which differences are expected to reverse. Deferred tax assets are reduced by a valuation allowance when, based on available positive and negative evidence, it is “more likely than not” (greater than a 50% likelihood) that some or all of the net deferred tax assets will not be realized. On December 22, 2017, the Tax Cuts and Jobs Act (the “Tax Act”) was enacted in the United States. The Tax Act significantly revised the U.S. tax code by, among other items, reducing the Company’s federal tax rate from 34% to 21%, providing for the full expensing of certain depreciable property and eliminating the corporate Alternative Minimum Tax (AMT). The Tax Act repeals AMT and allows for all existing credit carryforwards to be used to offset regular tax liability for tax years beginning after December 31, 2017. Additionally, for tax years 2018, 2019 and 2020, to the extent that the AMT credit carryover exceeds the regular tax liability, 50% of the excess AMT credit is refundable. Any remaining credits will be fully refundable in 2021. For state tax purposes, net operating losses can be carried forward for various periods for the states that the Company is required to file in. California Enterprise Zone credits can be used through 2023 while Colorado credits can be carried forward for 7 years. The Company has established a valuation reserve related to a portion of the California Enterprise Zone credit not expected to be utilized prior to expiration. The Company’s income tax returns are subject to audit by the Internal Revenue Service (the “IRS”) and state tax authorities. The amounts recorded for income taxes reflect the Company’s tax positions based on research and interpretations of complex laws and regulations. The Company accrues liabilities related to uncertain tax positions taken or expected to be taken in its tax returns. The Company did not identify any such uncertain tax positions as of March 30, 2019 or December 29, 2018. |
FAIR VALUE MEASUREMENTS
FAIR VALUE MEASUREMENTS | 3 Months Ended |
Mar. 30, 2019 | |
FAIR VALUE MEASUREMENTS | |
FAIR VALUE MEASUREMENTS | 3. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Fair value measurements must maximize the use of observable inputs and minimize the use of unobservable inputs. There is a hierarchy of three levels of inputs that may be used to measure fair value: Level 1 Quoted prices in active markets for identical assets or liabilities. Level 2 Observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. Level 3 Unobservable inputs supported by little or no market activity that are significant to the fair value of the assets or liabilities. Unobservable inputs reflect the assumptions that market participants would use when pricing the asset or liability including assumptions about risk. The following methods were used to estimate the fair value of all other financial instruments recognized in the accompanying balance sheet: Cash and Cash Equivalents: The carrying amount approximates fair value and was valued as Level 1. Revolving Bank Loan Payable: Fair value is estimated based on the borrowing rates then available to the Company for bank loans with similar terms and maturities and determined through the use of a discounted cash flow model. The carrying amount of the Revolving Bank Loan Payable represents a reasonable estimate of the corresponding fair value as the Company’s debt is held at variable interest rates and was valued as Level 2. There were no transfers between fair value measurement levels of any financial instruments in the current quarter. |
RECENTLY ISSUED ACCOUNTING PRON
RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS | 3 Months Ended |
Mar. 30, 2019 | |
RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS | |
RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS | 4. In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers (Topic 606). This new revenue standard creates a single source of revenue guidance for all companies in all industries and is more principles-based than current revenue guidance. Subsequently, the FASB issued various ASUs to provide further clarification around certain aspects of ASC 606. This standard was adopted by the Company in the first quarter of fiscal 2018. See Note 1 for further discussion of the Company’s revenue recognition policies and practices. In November 2016, the FASB issued ASU 2016-18, Statement of Cash Flows (Topic 230), requiring that the statement of cash flows explain the change in total cash, cash equivalents and amounts generally described as restricted cash or restricted cash equivalents. This standard was adopted by the Company is the first quarter of fiscal 2018 and did not have a material impact to the consolidated statement of cash flows. In February 2016, the FASB issued ASU No. 2016-02, “Leases (Topic 842),” which superseded Topic 840, “Leases”. The new accounting standard was effective for the Company beginning on December 30, 2018 (the beginning of fiscal 2019) and required the recognition on the balance sheet of right-of-use assets (ROU) and lease liabilities for all long-term leases, including operating leases. The Company elected the optional transition method and adopted the new guidance on December 30, 2018 on a modified retrospective basis with no restatement of prior period amounts. As allowed under the new accounting standard, the Company elected to apply practical expedients to carry forward the original lease determinations, lease classifications and accounting of initial direct costs for all asset classes at the time of adoption. The Company also elected not to separate lease components from non-lease components for most asset categories and to exclude short-term leases from its Consolidated Balance Sheet. The Company’s adoption of the new standard resulted in the recognition of ROUs of $5,353,000 and liabilities of $5,427,000 related to operating leases, with no material cumulative effect adjustment to equity as of the date of adoption. In connection with the adoption of this guidance, as required, the Company reclassified deferred rent liabilities as reductions to lease assets. Adoption of the new standard did not have a material impact on the Company’s Consolidated Statements of Income or Cash Flows. See Note 13. There are no other significant prospective accounting pronouncements that are expected to have a material effect on the Company’s consolidated financial statements. |
SEASONALITY AND CURRENT ECONOMI
SEASONALITY AND CURRENT ECONOMIC CONDITIONS | 3 Months Ended |
Mar. 30, 2019 | |
SEASONALITY AND CURRENT ECONOMIC CONDITIONS | |
SEASONALITY AND CURRENT ECONOMIC CONDITIONS | 5. Operating results for the first three months of 2019 are not necessarily indicative of performance for the entire year due to the seasonality of most of the Company’s products. Historically, sales of the Evaporative Cooling segment are higher in the first and second quarters, sales of the Concrete, Aggregates and Construction Supplies (CACS) segment are higher in the second and third quarters and sales of furnaces in the Heating and Cooling segment are higher in the third and fourth quarters. Sales of the Door segment are generally more evenly spread throughout the year. |
EARNINGS PER SHARE
EARNINGS PER SHARE | 3 Months Ended |
Mar. 30, 2019 | |
EARNINGS PER SHARE | |
EARNINGS PER SHARE | 6. There is no difference in the calculation of basic and diluted earnings per share (EPS) for the three-month periods ended March 30, 2019 and March 31, 2018 as the Company does not have any dilutive instruments. |
INDUSTRY SEGMENT INFORMATION
INDUSTRY SEGMENT INFORMATION | 3 Months Ended |
Mar. 30, 2019 | |
INDUSTRY SEGMENT INFORMATION | |
INDUSTRY SEGMENT INFORMATION | 7. The Company operates primarily in two industry groups, Heating, Ventilation and Air Conditioning (HVAC) and Construction Products. The Company has identified two reportable segments within each of the industry groups: the Heating and Cooling segment and the Evaporative Cooling segment in the HVAC industry group and the CACS segment and the Door segment in the Construction Products industry group. The Heating and Cooling segment primarily produces and sells gas-fired wall furnaces, console heaters and fan coils from the Company’s wholly-owned subsidiary, Williams Furnace Co. (WFC) of Colton, California. The Evaporative Cooling segment primarily produces and sells evaporative coolers from the Company’s wholly-owned subsidiary, Phoenix Manufacturing, Inc. (PMI) of Phoenix, Arizona. Sales of these two segments are nationwide, but are concentrated in the southwestern United States. Concrete, aggregates and construction supplies were offered from numerous locations along the Southern Front Range of Colorado operated by the Company’s wholly-owned subsidiaries Castle Concrete Company and Transit Mix Concrete Co., of Colorado Springs and Transit Mix of Pueblo, Inc. of Pueblo, Colorado (the three companies collectively are referred to as TMC). On February 1, 2019 the Company sold the assets of the ready-mix and Daniels sand operations of TMC, previously reported in the CACS segment. The Company retained the remaining aggregates operations and the construction supply business, and the associated assets and liabilities, which were rebranded as Castle Aggregates and Castle Rebar & Supply, respectively. See additional discussion of the discontinued operations in Note 15. The Door segment sells hollow metal and wood doors, door frames and related hardware, lavatory fixtures and electronic access and security systems from the Company’s wholly-owned subsidiary, McKinney Door and Hardware, Inc. (MDHI), which operates out of facilities in Pueblo and Colorado Springs, Colorado. Sales of these two segments are highly concentrated in the Southern Front Range of Colorado although door sales are also made throughout the United States. In addition to the above reporting segments, an “Unallocated Corporate” classification is used to report the unallocated expenses of the corporate office which provides treasury, insurance and tax services as well as strategic business planning and general management services. Expenses related to the corporate information technology group are allocated to all locations, including the corporate office. The Company evaluates the performance of its segments and allocates resources to them based on a number of criteria including operating income, return on investment and other strategic objectives. Operating income is determined by deducting operating expenses from all revenues. In computing operating income, none of the following has been added or deducted: unallocated corporate expenses, interest, other income or loss or income taxes. The following table presents information about reported segments for the three-month periods ended March 30, 2019 and March 31, 2018 along with the items necessary to reconcile the segment information to the totals reported in the financial statements (amounts in thousands): Construction Products Industry HVAC Industry Concrete, Aggregates & Combined Heating Combined Construction Construction and Evaporative HVAC Unallocated Held for Supplies Doors Products Cooling Cooling Products Corporate Sale Total Three Months ended March 30, 2019 Revenues from external customers $ 1,554 $ 4,242 $ 5,796 $ 10,345 $ 6,376 $ 16,720 $ 11 $ — $ 22,528 Depreciation, depletion and amortization 52 43 96 303 107 411 13 — 519 Operating income (loss) 14,044 379 14,423 (216) (265) (481) (1,567) — 12,375 Segment assets 11,760 6,805 18,565 18,019 12,152 30,171 41,873 — 90,609 Capital expenditures — 19 19 44 — 44 — — 63 Construction Products Industry HVAC Industry Concrete, Aggregates & Combined Heating Combined Construction Construction and Evaporative HVAC Unallocated Held for Supplies Doors Products Cooling Cooling Products Corporate Sale Total Three Months ended March 31, 2018 Revenues from external customers $ 1,601 $ 4,296 $ 5,897 $ 10,993 $ 6,516 $ 17,509 $ 4 $ — $ 23,410 Depreciation, depletion and amortization 85 40 125 162 107 269 11 — 405 Operating income (loss) (7,252) 438 (6,814) 571 (256) 315 (1,024) — (7,523) Segment assets (a) 11,315 8,003 19,318 19,668 9,335 29,003 3,346 24,036 75,703 Capital expenditures 62 33 95 200 65 265 51 — 411 (a) Segment assets are as of December 29, 2018. (b) Capital expenditures are presented on the accrual basis of accounting. There are no differences in the basis of segmentation or in the basis of measurement of segment profit or loss from the last annual report. |
DISCONTINUED OPERATIONS
DISCONTINUED OPERATIONS | 3 Months Ended |
Mar. 30, 2019 | |
DISCONTINUED OPERATIONS | |
DISCONTINUED OPERATIONS | 8. On September 15, 2016 a Partial Summary Judgment Order was issued regarding the Company’s previously disclosed litigation, Continental Materials Corporation v. Valco, Inc., Civil Action No. 2014-cv-2510, filed in the United States District Court for the District of Colorado. The suit regards a Fee Sand and Gravel Lease (“Lease”) between the Company as Lessee and Valco, Inc. (“Valco”) as Lessor that calls for the payment of royalties over the life of the Lease on an agreed 50,000,000 tons of sand and gravel reserves. In the suit the Company sought declaratory judgment and damages pursuant to the Lease on the grounds that Agreed Sand and Gravel Reserves of 50 million tons did not exist, and for other relief including return of approximately $1,470,000 in royalty payments made by the Company to Valco in excess of tonnage actually produced (“Prepayments”). Based on information obtained through discovery, the Company alleges, in addition to the abovementioned claims, nondisclosure or concealment by Valco of material facts concerning the existence of Agreed Sand and Gravel Reserves of 50 million tons, and breach of warranty concerning the same. Valco asserted counterclaims against the Company alleging breach of contract and seeking declaratory judgment regarding the Company’s refusal to make further royalty payments under the Lease. In the ordinary course of business and absent any breach by Valco, the Company is required to make quarterly royalty payments amounting to not less than $300,000 in a calendar year. In response to Valco’s breaches of contract, the Company stopped making royalty payments at the start of the 2015 calendar year. The Company has asserted partial failure of consideration as an affirmative defense to Valco’s counterclaims to offset the alleged back-due quarterly royalty payments and the amount due on quarterly royalty payments in the future. The Partial Summary Judgment Order resolved many of the Company’s claims in Valco’s favor, but did not resolve Valco’s counterclaims or the Company’s affirmative defense. During the third quarter of 2016, the Company recorded a $632,000 write-down representing the portion of the royalty overpayment paid prior to the statutorily allowed period because of litigation risk attendant to recovering that amount. The Company sought certification of the Partial Summary Judgment Order because it and its legal counsel believe the court improperly resolved factual issues in its Partial Summary Judgment Order that should have been decided by a jury. On February 23, 2017, the Partial Summary Judgment Order was certified for immediate appeal, and all other claims, counterclaims and affirmative defenses were stayed pending the resolution of that appeal. The Company filed a notice of appeal which was denied on July 2, 2018 for lack of jurisdiction and remanded to the trial court for further proceedings. Subsequently, the trial court vacated its September 15, 2016 Partial Summary Judgment Order and set the matter for trial by jury on all issues on January 28, 2019. The Company filed its Third Amended Complaint on November 16, 2018 in which it dropped its claim to recover royalty overpayments but continued to seek to recover $1,470,000 in Prepayments. The Company wrote off the remaining royalty overpayment of $627,000, previously reported as Other assets on the Consolidated Balance Sheet, as of December 29, 2018 due to filing of the Third Amended Complaint. At the trial preparation conference on January 18, 2019, the court informed the parties that the trial would be rescheduled due to an ongoing shutdown of the federal government. The jury trial on all issues was then rescheduled for May 13, 2019. On April 30, 2019 the court entered an order stating: “Due to a conflict in the Court’s calendar, the trial preparation conference set for May 3, 2019 and the May 13, 2019, trial date are vacated.” The trial date has yet to be rescheduled. The Company has paid royalties on approximately 17,700,000 tons, including the Prepayments, of the 50,000,000 tons of sand and gravel reserves through the end of the third quarter of 2014. The impact of these proceedings could have a material financial effect on the Company; however, the Company does not believe that there is a reasonable basis for estimating the financial impact, if any, of the final outcome of these proceedings and accordingly no accrual or reserve has been recorded in compliance with accounting principles generally accepted in the United States of America. |
NON-EMPLOYEE DIRECTORS SHARE-BA
NON-EMPLOYEE DIRECTORS SHARE-BASED COMPENSATION | 3 Months Ended |
Mar. 30, 2019 | |
NON-EMPLOYEE DIRECTORS SHARE-BASED COMPENSATION | |
NON-EMPLOYEE DIRECTORS SHARE-BASED COMPENSATION | 9. The Company issued a total of 21,000 shares to the seven eligible board members effective February 7, 2019 as full payment for their 2019 retainer fee. The Company issued a total of 16,000 shares to the eight eligible board members effective January 16, 2018 as full payment for their 2018 retainer fee. All shares were issued under the 2010 Non-Employee Directors Stock Plan. |
REVOLVING BANK LOAN AND LONG-TE
REVOLVING BANK LOAN AND LONG-TERM DEBT | 3 Months Ended |
Mar. 30, 2019 | |
REVOLVING BANK LOAN | |
REVOLVING BANK LOAN | 10. The Company entered into an Amended and Restated Credit Agreement (the “Credit Agreement”) effective November 18, 2011. The Company entered into the Tenth Amendment to Credit Agreement effective March 22, 2019. The Company had previously entered into nine separate amendments to the Credit Agreement. Cumulatively, the amendments were entered into by the Company to, among other things, (i) modify certain of the financial covenants, (ii) adjust the amount of the Revolving Commitment, (iii) terminate the Term Loan Commitment upon the repayment in full of the outstanding principal balance (and accrued interest thereon) of the Term Loan, (iv) modify the Borrowing Base calculation to provide for borrowing availability in respect of new Capital Expenditures, (v) decrease the interest rates on the Revolving Loans, (vi) extend the maturity date and (vii) decrease the Letter of Credit fee rate. Borrowings under the Credit Agreement are secured by the Company’s accounts receivable, inventories, machinery, equipment, vehicles, certain real estate and the common stock of all of the Company’s subsidiaries. Borrowings under the Credit Agreement bear interest based on a London Interbank Offered Rate (LIBOR) or prime rate based option. The Credit Agreement either limits or requires prior approval by the lender of additional borrowings, acquisition of stock of other companies, purchase of treasury shares and payment of cash dividends. Payment of accrued interest is due monthly or at the end of the applicable LIBOR period. The Credit Agreement as amended provides for the following: · The Revolving Commitment is $20,000,000. · Borrowings under the Revolving Commitment are limited to (a) 80% of eligible accounts receivable, (b) the lesser of 50% of eligible inventories and $8,500,000 plus (c) 80% of new qualifying Capital Expenditures not to exceed $5,500,000 in any fiscal year (excluding the aggregate amount of any Capital Expenditures financed with the proceeds of a Revolving Line Advance). · The Minimum Fixed Charge Coverage Ratio is not permitted to be below 1.06 to 1.0 for each trailing twelve month period measured at the end of each Fiscal Quarter. · The maturity date of the credit facility is May 1, 2020. · Interest rate pricing for the revolving credit facility is currently LIBOR plus 2.25% or the prime rate. Definitions under the Credit Agreement as amended are as follows: · Fixed Charge Coverage Ratio is defined as, for any computation period, the ratio of (a) the sum for such period of (i) EBITDA, as defined, minus (ii) the sum of income taxes paid in cash, the amount expended related to the development of the mining property discussed in Note 12 and all unfinanced capital expenditures to (b) the sum for such period of interest expense related to the Credit Agreement. · EBITDA means for any Computation Period (or another time period to the extent expressly provided for in the Credit Agreement) the sum of the following with respect to the Company and its Subsidiaries each as determined in accordance with GAAP: (a) Consolidated Net Income, plus (b) federal, state and other income taxes deducted in the determination of Consolidated Net Income, plus (c) Interest Expense deducted in the determination of Consolidated Net Income, plus (d) depreciation, depletion and amortization expense deducted in the determination of Consolidated Net Income, plus (e) non-recurring fees and costs paid by the Company in respect of the following: (i) fees and due diligence costs associated with the Company’s permitted acquisitions; (ii) legal fees and costs associated with the Valco trial preparation; (iii) executive recruitment fees for the Company’s new Chief Financial Officer and Chief Operating Officer; and (iv) additional fees and costs associated with the exploration of the Company’s Hitch Rack Ranch facility in Colorado Springs, Colorado to determine the suitability for mining and the pursuit of mining permits, plus (f) any other non-cash charges and any extraordinary charges deducted in the determination of Consolidated Net Income, including any asset impairment charges (including write downs of goodwill), minus (g) any gains from Asset Dispositions, any extraordinary gains and any gains from discontinued operations included in the determination of Consolidated Net Income. Outstanding funded revolving debt was $800,000 as of March 30, 2019 compared to $2,200,000 as of December 29, 2018. The highest balance outstanding during the first three months of 2019 and 2018 was $2,200,000 and $6,200,000, respectively. Average outstanding funded debt was $802,000 and $3,792,000 for the first three months of 2019 and 2018, respectively. At March 30, 2019, the Company had outstanding letters of credit totaling $4,745,000. At all times since the inception of the Credit Agreement, the Company has had sufficient qualifying and eligible assets such that the available borrowing capacity exceeded the cash needs of the Company and this situation is expected to continue for the foreseeable future. The Company believes that its existing cash balance, anticipated cash flow from operations and borrowings available under the Credit Agreement will be sufficient to cover expected cash needs, including planned capital expenditures, for the next twelve months. The Company expects to be in compliance with all debt covenants, as amended, throughout the facility’s remaining term. |
LEGAL PROCEEDINGS
LEGAL PROCEEDINGS | 3 Months Ended |
Mar. 30, 2019 | |
LEGAL PROCEEDINGS | |
LEGAL PROCEEDINGS | 11. The Company is involved in litigation matters related to its business. In the Company’s opinion, none of these proceedings, when concluded, will have a material adverse effect on the Company’s consolidated results of operations or financial condition as the Company has established adequate accruals for matters that are probable and estimable. The Company does not accrue estimated future legal costs related to the defense of these matters but rather expenses legal costs as incurred. Additionally, see Note 8 for discussion of litigation regarding the Pueblo sand and gravel lease. |
DEFERRED DEVELOPMENT WRITE OFF
DEFERRED DEVELOPMENT WRITE OFF | 3 Months Ended |
Mar. 30, 2019 | |
DEFERRED DEVELOPMENT WRITE OFF | |
DEFERRED DEVELOPMENT WRITE OFF | 12. During July 2015, TMC began development of a granite mining property south of Colorado Springs. Prior to beginning the development process, the Company deposited $2,500,000 in an escrow account per agreement with the land owner. This amount was previously included in Other long-term assets on the Consolidated Balance Sheet. The development costs included drilling the property to ascertain its suitability for mining, engineering studies and legal expenses related to the preparation of TMC’s application to obtain the required mining permits from the State of Colorado and El Paso County. TMC made its initial application for a mining permit from the state of Colorado in 2016. TMC filed its second application to the state in November 2017, which was rejected on April 26, 2018. The Company wrote off all capitalized costs associated with the permit application in the first quarter of 2018, a total of $6,934,000. As of March 30, 2019 and December 29, 2018 the $2,500,000 escrow balance mentioned above was included in Other current assets as the Company has begun the process to settle the account and recover the funds. |
LEASES
LEASES | 3 Months Ended |
Mar. 30, 2019 | |
Leases | |
Leases | 13. The Company adopted ASU No. 2016-02 “Leases (Topic 842)” on December 30, 2018 (the beginning of fiscal 2019), resulting in the recognition of operating right-of-use assets of $5,353,000 and operating lease liabilities of $5,427,000. The Company has entered into lease arrangements for office space, manufacturing facilities, water rights and certain equipment. A number of the leases include one or more options to renew the lease terms, purchase the leased property or terminate the lease. The exercise of these options is at the Company’s discretion and is therefore recognized on the balance sheet when it is reasonably certain the Company will exercise such options. Substantially all of the Company’s leases are considered operating leases. Finance leases were not material as of March 30, 2019 or for the three months ended March 30, 2019. The following table displays the undiscounted cash flows related to operating leases as of March 30, 2019, along with a reconciliation to the discounted amount recorded on the March 30, 2019 Consolidated Balance Sheet (amounts in thousands): OPERATING LEASE LIABILITIES 2019 $ 932 2020 1,209 2021 1,196 2022 1,156 2023 694 Thereafter 899 Total lease payments 6,086 Less: interest (913) Present value of operating lease liabilities $ 5,173 Short-term lease cost represents the Company’s cost with respect to leases with a duration of 12 months or less and are not reflected on the Company’s Consolidated Balance Sheet. Lease expense for minimum lease payments is recognized on a straight-line basis over the lease term. For the three months ended March 30, 2019 operating lease cost was $529,000 including $203,000 of short-term lease costs. New leases entered into during the three month period ended March 30, 2019 were not material. At March 30, 2019 the weighted-average remaining lease term and discount rate for operating leases was 5.5 years and 6.1%, respectively. |
SETTLEMENT RECEIPT
SETTLEMENT RECEIPT | 3 Months Ended |
Mar. 30, 2019 | |
SETTLEMENT RECEIPT | |
SETTLEMENT RECEIPT | 14. On January 15, 2019, the Company reached an amicable resolution to a business dispute by way of a settlement agreement. Pursuant to the settlement agreement, the Company received $15,000,000. The other party and the Company further agreed to set up a joint escrow account to support certain conditions in the agreement. The Company’s contribution to the escrow account was $200,000. The Settlement Agreement does not contain any admission of liability, wrongdoing, or responsibility by any of the parties. |
DISPOSITION OF ASSETS
DISPOSITION OF ASSETS | 3 Months Ended |
Mar. 30, 2019 | |
DISPOSITION OF ASSETS | |
DISCONTINUED OPERATIONS | 15. On February 1, 2019, the Company and certain of its subsidiaries sold substantially all of the real property, tangible personal property and executory contracts of TMC’s ready-mix business and the operations of Daniels Sand Company (Daniels) to Aggregate Industries — WCR, Inc. (the Buyer), a Colorado corporation for $27,129,000. The purchase price was paid to the Company on February 1, 2019 less certain amounts to be held in escrow, as provided in the Asset Purchase Agreement among the Company parties and the Buyer (Purchase Agreement), to secure the Company’s obligations to pay its working capital adjustment and indemnification obligations under the Purchase Agreement. The working capital adjustment has not been finalized as of March 30, 2019 and will impact the final gain on the sale. The escrow also retained amounts to be held pending the subdivision of certain real property to be sold to the Buyer at a subsequent date as included in the Purchase Agreement. Combined escrow amounts of $2,049,000 were included in Other current assets in the Consolidated Balance Sheet at March 30, 2019. The Company retained the aggregates operations and retail building materials business of TMC and all related assets and liabilities. These operations include the Pikeview quarry business located in Colorado Springs, the aggregates mining business located in Pueblo, the sand and gravel mining business located in Fremont County, and the retail building materials business at sites located in Colorado Springs and Pueblo. In the quarter ended March 30, 2019, the Company recorded a $6,508,000 pre-tax gain on the sale of TMC assets. The operations of the ready-mix and Daniels sand businesses were classified as discontinued operations and assets held for sale for all periods presented. General corporate overhead charges were not allocated to discontinued operations. Revenue, expenses and pre-tax income reclassified to discontinued operations were as follows (amounts in thousands): MARCH 30, MARCH 31, 2019 2018 Revenue $ 4,058 $ 13,463 Costs and expenses 3,900 12,940 Depreciation, depletion and amortization 578 271 Selling and administrative 304 922 Pre-tax income (loss) $ 5,784 $ (670) The results of discontinued operations are summarized as follows: MARCH 30, MARCH 31, 2019 2018 Operating (loss) $ (724) $ (670) Gain on sale of assets 6,508 — Income tax provision (benefit) 1,562 (167) Income (loss) from discontinued operations $ 4,222 $ (503) The assets and liabilities held for sale related to TMC’s ready-mix and Daniels sand businesses were as follows: MARCH 30, DECEMBER 29, 2019 2018 Accounts receivable, net $ — $ 9,054 Inventory — 1,914 Property, plant and equipment, net — 6,741 Other assets — 6,327 Total assets held for sale $ — $ 24,036 Accounts payable and accrued expenses $ $ 3,800 Other long-term liabilites — 292 Total liabilites held for sale $ — $ 4,092 |
SIGNIFICANT ACCOUNTING POLICI_2
SIGNIFICANT ACCOUNTING POLICIES (Policies) | 3 Months Ended |
Mar. 30, 2019 | |
SIGNIFICANT ACCOUNTING POLICIES | |
Basis of Presentation | Basis of Presentation: The unaudited interim condensed consolidated financial statements included herein are prepared pursuant to the Securities and Exchange Commission (the “Commission”) rules and regulations for reporting on Form 10-Q. Accordingly, certain information and footnote disclosures normally accompanying the annual consolidated financial statements have been omitted. The condensed consolidated balance sheet of Continental Materials Corporation (the “Company”) as of December 29, 2018 has been derived from the audited consolidated balance sheet of the Company as of that date. The interim condensed consolidated financial statements and notes should be read in conjunction with the consolidated financial statements and notes thereto included in the Company’s latest annual report on Form 10-K. In the opinion of management, the condensed consolidated financial statements include all adjustments (none of which were other than normal recurring adjustments) necessary for a fair statement of the results for the interim periods and to ensure the financial statements are not misleading. Certain reclassifications have been made to the 2018 consolidated financial statements to conform to the 2019 presentation. The reclassifications had no effect on the consolidated results of operations, the net decrease in cash or the total assets, liabilities or shareholders’ equity of the Company. During the quarter ended March 30, 2019 the Company sold substantially all of the assets of Transit Mix Concrete Company’s ready-mix business and Daniels sand operation. The assets and liabilities related to these operations are presented as held for sale in accordance with generally accepted accounting principles. See Note 15. Accordingly, the operations of these businesses are presented as discontinued operations for all periods presented. |
Revenue Recognition | Revenue Recognition: Effective December 31, 2017, the Company adopted Accounting Standards Update (ASU) 2014-09, Revenue from Contracts with Customers (Topic 606) and related amendments, which creates a single source of revenue guidance for all companies in all industries and is more principles-based than previous revenue guidance. The Company adopted the standard using the modified retrospective approach. The adoption of this standard did not result in significant changes to the Company’s accounting policies, business processes, systems or controls, or have a material impact on its financial position, consolidated results of operations or consolidated cash flows. As such, prior period financial statements were not recast and there was no cumulative effect adjustment upon adoption. Sales are recognized when control of the promised goods or services transfers to the Company’s customers in an amount that reflects the consideration the Company expects to be entitled to in exchange for those goods or services. The Company’s payment terms generally range between 30 to 90 days after invoice is billed to the customer. Sales are reported net of sales tax. Shipping and other transportation costs paid by the Company and rebilled to the buyer are recorded gross (as both sales and cost of sales). The Company generally recognizes revenue from the sale of products at the time the products are shipped. While the return of products is generally not allowed, some large customers have been granted the right to return a certain amount at the end of the normal selling season for seasonal products. Sales returns and allowances are estimated based on current program terms and historical experience. Provisions for estimated returns, discounts, volume rebates and other price adjustments are provided for in the same period the related revenues are recognized and are netted against revenues. The Company is responsible for warranties related to the manufacture of its HVAC products and estimates the future warranty claims based upon historical experience and management estimates. The Company reviews warranty and related claims activities and records provisions, as necessary. The Company does not perform installation services except for installation of electronic access and security systems in the Door segment. These installation service contracts are generally short-term in nature, usually less than 30 days. It was determined for the installation service contracts there are two performance obligations, the equipment and the installation services. The transaction price for these contracts is allocated to each performance obligation based on its stated stand-alone selling price. Revenue is recognized at a point in time as each performance obligation is completed. No maintenance or service contracts are offered by the Company. See Note 7, Segment reporting for disaggregation of revenue by segment. |
Leases | Leases Effective December 30, 2018 (the beginning of fiscal 2019) the Company adopted ASU No. 2016-02, “Leases (Topic 842),” which superseded Topic 840, “Leases”. As allowed under the new accounting standard, the Company elected to apply practical expedients to carry forward the original lease determinations, lease classifications and accounting of initial direct costs for all asset classes at the time of adoption. The Company also elected not to separate lease components from non-lease components for asset categories, except office space, and to exclude short-term leases from its Consolidated Balance Sheet. For the office space lease category the election was made to report lease and non-lease components separately as the non-lease components are billed and paid separately and are not a fixed amount over the lease term. The implicit discount rate of leases is used to calculate present values when available. When an implicit discount rate is not readily available an incremental borrowing rate is used to calculate present values. |
INDUSTRY SEGMENT INFORMATION (T
INDUSTRY SEGMENT INFORMATION (Tables) | 3 Months Ended |
Mar. 30, 2019 | |
INDUSTRY SEGMENT INFORMATION | |
Schedule of information about reported segments along with the items necessary to reconcile the segment information to totals reported in financial statements | The following table presents information about reported segments for the three-month periods ended March 30, 2019 and March 31, 2018 along with the items necessary to reconcile the segment information to the totals reported in the financial statements (amounts in thousands): Construction Products Industry HVAC Industry Concrete, Aggregates & Combined Heating Combined Construction Construction and Evaporative HVAC Unallocated Held for Supplies Doors Products Cooling Cooling Products Corporate Sale Total Three Months ended March 30, 2019 Revenues from external customers $ 1,554 $ 4,242 $ 5,796 $ 10,345 $ 6,376 $ 16,720 $ 11 $ — $ 22,528 Depreciation, depletion and amortization 52 43 96 303 107 411 13 — 519 Operating income (loss) 14,044 379 14,423 (216) (265) (481) (1,567) — 12,375 Segment assets 11,760 6,805 18,565 18,019 12,152 30,171 41,873 — 90,609 Capital expenditures — 19 19 44 — 44 — — 63 Construction Products Industry HVAC Industry Concrete, Aggregates & Combined Heating Combined Construction Construction and Evaporative HVAC Unallocated Held for Supplies Doors Products Cooling Cooling Products Corporate Sale Total Three Months ended March 31, 2018 Revenues from external customers $ 1,601 $ 4,296 $ 5,897 $ 10,993 $ 6,516 $ 17,509 $ 4 $ — $ 23,410 Depreciation, depletion and amortization 85 40 125 162 107 269 11 — 405 Operating income (loss) (7,252) 438 (6,814) 571 (256) 315 (1,024) — (7,523) Segment assets (a) 11,315 8,003 19,318 19,668 9,335 29,003 3,346 24,036 75,703 Capital expenditures 62 33 95 200 65 265 51 — 411 (a) Segment assets are as of December 29, 2018. (b) Capital expenditures are presented on the accrual basis of accounting. |
LEASES (Tables)
LEASES (Tables) | 3 Months Ended |
Mar. 30, 2019 | |
Leases | |
Summary of undiscounted cash flows related to operating leases | The following table displays the undiscounted cash flows related to operating leases as of March 30, 2019, along with a reconciliation to the discounted amount recorded on the March 30, 2019 Consolidated Balance Sheet (amounts in thousands): OPERATING LEASE LIABILITIES 2019 $ 932 2020 1,209 2021 1,196 2022 1,156 2023 694 Thereafter 899 Total lease payments 6,086 Less: interest (913) Present value of operating lease liabilities $ 5,173 |
DISPOSITION OF ASSETS (Tables)
DISPOSITION OF ASSETS (Tables) | 3 Months Ended |
Mar. 30, 2019 | |
DISCONTINUED OPERATIONS | |
Summary of revenue, expenses and pre-tax income reclassified to discontinued operations, results of discontinued operations and assets and liabilities held for sale | Revenue, expenses and pre-tax income reclassified to discontinued operations were as follows (amounts in thousands): MARCH 30, MARCH 31, 2019 2018 Revenue $ 4,058 $ 13,463 Costs and expenses 3,900 12,940 Depreciation, depletion and amortization 578 271 Selling and administrative 304 922 Pre-tax income (loss) $ 5,784 $ (670) The results of discontinued operations are summarized as follows: MARCH 30, MARCH 31, 2019 2018 Operating (loss) $ (724) $ (670) Gain on sale of assets 6,508 — Income tax provision (benefit) 1,562 (167) Income (loss) from discontinued operations $ 4,222 $ (503) The assets and liabilities held for sale related to TMC’s ready-mix and Daniels sand businesses were as follows: MARCH 30, DECEMBER 29, 2019 2018 Accounts receivable, net $ — $ 9,054 Inventory — 1,914 Property, plant and equipment, net — 6,741 Other assets — 6,327 Total assets held for sale $ — $ 24,036 Accounts payable and accrued expenses $ $ 3,800 Other long-term liabilites — 292 Total liabilites held for sale $ — $ 4,092 |
SIGNIFICANT ACCOUNTING POLICI_3
SIGNIFICANT ACCOUNTING POLICIES (Details) | 3 Months Ended |
Mar. 30, 2019item | |
Number of performance obligations for installation service contracts | 2 |
Minimum [Member] | |
Payment terms number of days | 30 days |
Maximum [Member] | |
Payment terms number of days | 90 days |
INCOME TAXES - (Details)
INCOME TAXES - (Details) | 3 Months Ended | 12 Months Ended |
Mar. 30, 2019 | Dec. 30, 2017 | |
Difference between tax rate for continuing operations on income or loss for financial statement purposes and federal statutory tax rate | ||
Federal Income Tax rate | 21.00% | 34.00% |
INCOME TAXES - Other (Details)
INCOME TAXES - Other (Details) | 3 Months Ended |
Mar. 30, 2019 | |
INCOME TAXES | |
Percentage of excess AMT credit refundable | 50.00% |
COLORADO | State and Local Jurisdiction [Member] | |
INCOME TAXES | |
Tax credits carry-forward period | 7 years |
FAIR VALUE MEASUREMENTS (Detail
FAIR VALUE MEASUREMENTS (Details) | Mar. 30, 2019USD ($) |
Fair Value Measurements | |
Fair value, financial instruments transferred between levels | $ 0 |
RECENTLY ISSUED ACCOUNTING PR_2
RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS - (Details) - USD ($) | Mar. 30, 2019 | Dec. 30, 2018 |
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||
Operating right-of-use assets | $ 5,114,000 | |
Liabilities related to operating leases | $ 5,173,000 | |
ASU 2016-02 | Restatement Adjustment [Member] | ||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||
Operating right-of-use assets | $ 5,353,000 | |
Liabilities related to operating leases | $ 5,427,000 |
EARNINGS PER SHARE (Details)
EARNINGS PER SHARE (Details) - $ / shares | 3 Months Ended | |
Mar. 30, 2019 | Mar. 31, 2018 | |
EARNINGS PER SHARE | ||
Difference between the calculation of basic and diluted EPS (in dollars per share) | $ 0 | $ 0 |
INDUSTRY SEGMENT INFORMATION (D
INDUSTRY SEGMENT INFORMATION (Details) $ in Thousands | 3 Months Ended | ||
Mar. 30, 2019USD ($)segmentcompanyitem | Mar. 31, 2018USD ($) | Dec. 29, 2018USD ($) | |
INDUSTRY SEGMENT INFORMATION | |||
Number of industry groups in which the entity operates | item | 2 | ||
Number of reportable segments | segment | 2 | ||
Number of companies that comprise TMC | company | 3 | ||
Revenues from external customers | $ 22,528 | $ 23,410 | |
Depreciation, depletion and amortization | 519 | 405 | |
Operating income (loss) | 12,375 | (7,523) | |
Segment assets | 90,609 | 75,703 | $ 75,703 |
Capital expenditures | 63 | 411 | |
Held for Sale | |||
INDUSTRY SEGMENT INFORMATION | |||
Segment assets | 24,036 | ||
Corporate, Non-Segment [Member] | |||
INDUSTRY SEGMENT INFORMATION | |||
Revenues from external customers | 11 | 4 | |
Depreciation, depletion and amortization | 13 | 11 | |
Operating income (loss) | (1,567) | (1,024) | |
Segment assets | 41,873 | 3,346 | |
Capital expenditures | 51 | ||
Concrete Aggregates and Construction Supplies [Member] | |||
INDUSTRY SEGMENT INFORMATION | |||
Revenues from external customers | 1,554 | 1,601 | |
Depreciation, depletion and amortization | 52 | 85 | |
Operating income (loss) | 14,044 | (7,252) | |
Segment assets | 11,760 | 11,315 | |
Capital expenditures | 62 | ||
Doors [Member] | |||
INDUSTRY SEGMENT INFORMATION | |||
Revenues from external customers | 4,242 | 4,296 | |
Depreciation, depletion and amortization | 43 | 40 | |
Operating income (loss) | 379 | 438 | |
Segment assets | 6,805 | 8,003 | |
Capital expenditures | 19 | 33 | |
Heating and Cooling [Member] | |||
INDUSTRY SEGMENT INFORMATION | |||
Revenues from external customers | 10,345 | 10,993 | |
Depreciation, depletion and amortization | 303 | 162 | |
Operating income (loss) | (216) | 571 | |
Segment assets | 18,019 | 19,668 | |
Capital expenditures | 44 | 200 | |
Evaporative Cooling [Member] | |||
INDUSTRY SEGMENT INFORMATION | |||
Revenues from external customers | 6,376 | 6,516 | |
Depreciation, depletion and amortization | 107 | 107 | |
Operating income (loss) | (265) | (256) | |
Segment assets | 12,152 | 9,335 | |
Capital expenditures | 65 | ||
Construction Products [Member] | |||
INDUSTRY SEGMENT INFORMATION | |||
Revenues from external customers | 5,796 | 5,897 | |
Depreciation, depletion and amortization | 96 | 125 | |
Operating income (loss) | 14,423 | (6,814) | |
Segment assets | 18,565 | 19,318 | |
Capital expenditures | 19 | 95 | |
Heating Ventilation and Air Conditioning Products [Member] | |||
INDUSTRY SEGMENT INFORMATION | |||
Revenues from external customers | 16,720 | 17,509 | |
Depreciation, depletion and amortization | 411 | 269 | |
Operating income (loss) | (481) | 315 | |
Segment assets | 30,171 | 29,003 | |
Capital expenditures | $ 44 | $ 265 |
DISCONTINUED OPERATIONS (Detail
DISCONTINUED OPERATIONS (Details) | Sep. 15, 2016USD ($)T | Sep. 27, 2014T | Sep. 30, 2016USD ($) | Dec. 29, 2018USD ($) | Nov. 16, 2016USD ($) |
Minimum [Member] | |||||
Disposition of assets. | |||||
Quarterly royalty payment | $ 300,000 | ||||
Pueblo Colorado gravel operations | |||||
Disposition of assets. | |||||
Sand and gravel reserves (in tons) | T | 50,000,000 | ||||
Royalty overpayments | $ 1,470,000 | ||||
Write off of prepaid royalties | $ 632,000 | ||||
Recovery amount due pending outcome of litigation | $ 1,470,000 | ||||
Charges related to cessation of mining an aggregates deposit | $ 627,000 | ||||
Sand and gravel tons paid for | T | 17,700,000 | ||||
Pre payment of sand and gravel reserve | T | 50,000,000 |
NON-EMPLOYEE DIRECTORS SHARE-_2
NON-EMPLOYEE DIRECTORS SHARE-BASED COMPENSATION (Details) - Director [Member] | Feb. 07, 2019shares | Jan. 16, 2018directorshares |
NON-EMPLOYEE DIRECTORS SHARE-BASED COMPENSATION | ||
Number of shares issued to eligible board members | 21,000 | 16,000 |
Number of eligible board members | 7 | 8 |
REVOLVING BANK LOAN (Details)
REVOLVING BANK LOAN (Details) | 3 Months Ended | ||
Mar. 30, 2019USD ($)agreement | Mar. 31, 2018USD ($) | Dec. 29, 2018USD ($) | |
Debt Instrument [Line Items] | |||
Number of separate amendments to the Credit agreement | agreement | 9 | ||
Period over which existing cash balance, anticipated cash flow from operations and borrowings available under the credit agreement will be sufficient to cover expected cash needs | 12 months | ||
Minimum [Member] | Period Ending June 28, 2014 [Member] | |||
Debt Instrument [Line Items] | |||
Fixed charge coverage ratio | 1.06 | ||
Revolving Credit Facility [Member] | |||
Debt Instrument [Line Items] | |||
Maximum revolving credit facility line | $ 20,000,000 | ||
Borrowings as a percentage of capital expenditures | 80.00% | ||
Annual capital expenditures for fiscal year 2016, maximum | $ 5,500,000 | ||
Outstanding amount | 800,000 | $ 2,200,000 | |
Highest balance outstanding during the period | 2,200,000 | $ 6,200,000 | |
Average outstanding | 802,000 | $ 3,792,000 | |
Outstanding amount of letters of credit total | $ 4,745,000 | ||
Revolving Credit Facility [Member] | Minimum [Member] | |||
Debt Instrument [Line Items] | |||
Borrowings as a percentage of eligible accounts receivable | 80.00% | ||
Borrowings as a percentage of eligible inventories | 50.00% | ||
Maximum inventory borrowings | $ 8,500,000 | ||
Revolving Credit Facility [Member] | LIBOR | |||
Debt Instrument [Line Items] | |||
Variable interest rate base | LIBOR | ||
Percentage points added to the reference rate | 2.25% | ||
Revolving Credit Facility [Member] | Prime Rate | |||
Debt Instrument [Line Items] | |||
Variable interest rate base | prime rate |
LEGAL PROCEEDINGS (Details)
LEGAL PROCEEDINGS (Details) | 3 Months Ended |
Mar. 30, 2019item | |
LEGAL PROCEEDINGS | |
Number of proceedings having material adverse effect on the consolidated results of operations, cash flows or financial condition | 0 |
DEFERRED DEVELOPMENT WRITE OFF
DEFERRED DEVELOPMENT WRITE OFF (Details) - USD ($) | 3 Months Ended | ||||
Mar. 31, 2018 | Mar. 30, 2019 | Jan. 15, 2019 | Dec. 29, 2018 | Jun. 30, 2015 | |
DEFERRED DEVELOPMENT WRITE OFF | |||||
Escrow Deposit | $ 2,500,000 | $ 200,000 | $ 2,500,000 | $ 2,500,000 | |
Write-off of deferred development costs | $ 6,934,000 |
LEASES (Details)
LEASES (Details) - USD ($) | 3 Months Ended | |
Mar. 30, 2019 | Dec. 30, 2018 | |
Lessee, Lease, Description [Line Items] | ||
Operating right-of-use assets | $ 5,114,000 | |
Present value of operating lease liabilities | $ 5,173,000 | |
Options to renew | true | |
ASU 2016-02 | Restatement Adjustment [Member] | ||
Lessee, Lease, Description [Line Items] | ||
Operating right-of-use assets | $ 5,353,000 | |
Present value of operating lease liabilities | $ 5,427,000 |
LEASES - Operating Leases (Deta
LEASES - Operating Leases (Details) $ in Thousands | Mar. 30, 2019USD ($) |
Undiscounted cash flows related to operating leases | |
2019 | $ 932 |
2020 | 1,209 |
2021 | 1,196 |
2022 | 1,156 |
2023 | 694 |
Thereafter | 899 |
Total lease payments | 6,086 |
Less: interest | (913) |
Present value of operating lease liabilities | $ 5,173 |
LEASES - Additional Information
LEASES - Additional Information (Details) | 3 Months Ended |
Mar. 30, 2019USD ($) | |
Leases | |
Operating lease cost | $ 529,000 |
Short-term lease costs | $ 203,000 |
Weighted-average remaining lease term | 5 years 6 months |
Weighted-average discount rate | 6.10% |
SETTLEMENT RECEIPT (Details)
SETTLEMENT RECEIPT (Details) - USD ($) | Jan. 15, 2019 | Mar. 30, 2019 | Dec. 29, 2018 | Jun. 30, 2015 |
SETTLEMENT RECEIPT | ||||
Settlement receipt | $ 15,000,000 | |||
Escrow deposit | $ 200,000 | $ 2,500,000 | $ 2,500,000 | $ 2,500,000 |
DISPOSITION OF ASSETS (Details)
DISPOSITION OF ASSETS (Details) - USD ($) | 3 Months Ended | |||||
Mar. 30, 2019 | Mar. 31, 2018 | Feb. 01, 2019 | Jan. 15, 2019 | Dec. 29, 2018 | Jun. 30, 2015 | |
Disposition of assets. | ||||||
Escrow Deposit | $ 2,500,000 | $ 200,000 | $ 2,500,000 | $ 2,500,000 | ||
The results of discontinued operations | ||||||
Income tax provision (benefit) | 1,562,000 | $ 167,000 | ||||
Income (loss) from discontinued operations | 4,222,000 | (503,000) | ||||
Transit Mix Concrete | Discontinued operation | ||||||
Disposition of assets. | ||||||
Sale price | $ 27,129,000 | |||||
Escrow Deposit | $ 2,049,000 | |||||
Revenue, expenses and pre-tax income reclassified to discontinued operations | ||||||
Revenue | 4,058,000 | 13,463,000 | ||||
Costs and expenses | 3,900,000 | 12,940,000 | ||||
Depreciation, depletion and amortization | 578,000 | 271,000 | ||||
Selling and administrative | 304,000 | 922,000 | ||||
Pre-tax income (loss) | 5,784,000 | (670,000) | ||||
The results of discontinued operations | ||||||
Operating (loss) | (724,000) | (670,000) | ||||
Gain on sale of assets | 6,508,000 | |||||
Income tax provision (benefit) | 1,562,000 | (167,000) | ||||
Income (loss) from discontinued operations | $ 4,222,000 | $ (503,000) |
DISPOSITION OF ASSETS- Assets a
DISPOSITION OF ASSETS- Assets and Liabilities Held for Sale (Details) - Transit Mix Concrete - Discontinued operation $ in Thousands | Dec. 29, 2018USD ($) |
Disposal Group, Including Discontinued Operation, Balance Sheet Disclosures [Abstract] | |
Accounts receivable, net | $ 9,054 |
Inventory | 1,914 |
Property, plant and equipment, net | 6,741 |
Other assets | 6,327 |
Total assets held for sale | 24,036 |
Accounts payable and accrued expenses | 3,800 |
Other long-term liabilities | 292 |
Total liabilities held for sale | $ 4,092 |