Document and Entity Information
Document and Entity Information - shares | 6 Months Ended | |
Jul. 04, 2015 | Jul. 29, 2015 | |
Document and Entity Information [Abstract] | ||
Entity Registrant Name | EASTERN CO | |
Entity Central Index Key | 31,107 | |
Current Fiscal Year End Date | --01-02 | |
Entity Well-known Seasoned Issuer | No | |
Entity Voluntary Filers | No | |
Entity Current Reporting Status | Yes | |
Entity Filer Category | Accelerated Filer | |
Entity Common Stock, Shares Outstanding | 6,245,038 | |
Document Fiscal Year Focus | 2,015 | |
Document Fiscal Period Focus | Q2 | |
Document Type | 10-Q | |
Amendment Flag | false | |
Document Period End Date | Jul. 4, 2015 |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED) - USD ($) | Jul. 04, 2015 | Jan. 03, 2015 |
Current Assets | ||
Cash and cash equivalents | $ 13,320,316 | $ 15,834,444 |
Accounts receivable, less allowances: $429,000 - 2015; $414,000 - 2014 | 19,945,228 | 17,064,245 |
Inventories | 34,903,196 | 34,402,197 |
Prepaid expenses and other assets | 2,131,757 | 2,659,737 |
Recoverable income taxes receivable | 0 | 380,000 |
Deferred income taxes | 950,024 | 950,024 |
Total Current Assets | 71,250,521 | 71,290,647 |
Property, Plant and Equipment | 64,210,404 | 62,970,497 |
Accumulated depreciation | (36,325,780) | (34,919,067) |
Net Property, Plant and Equipment | 27,884,624 | 28,051,430 |
Goodwill | 14,797,557 | 14,960,354 |
Trademarks | 168,688 | 174,662 |
Patents, technology and other intangibles net of accumulated amortization | 2,314,239 | 2,498,570 |
Deferred income taxes | 3,921,865 | 4,294,893 |
Total Other Assets | 21,202,349 | 21,928,479 |
TOTAL ASSETS | 120,337,494 | 121,270,556 |
Current Liabilities | ||
Accounts payable | 9,327,877 | 8,256,600 |
Accrued compensation | 1,870,323 | 2,916,832 |
Other accrued expenses | 691,356 | 1,201,114 |
Current portion of long-term debt | 1,071,429 | 1,071,429 |
Total Current Liabilities | 12,960,985 | 13,445,975 |
Other long-term liabilities | 564,669 | 564,669 |
Long-term debt, less current portion | 2,500,000 | 3,214,285 |
Accrued postretirement benefits | 2,992,026 | 2,905,908 |
Accrued pension cost | $ 26,182,873 | $ 26,164,812 |
Shareholders' Equity | ||
Voting Preferred Stock, no par value: Authorized and unissued: 1,000,000 shares | ||
Nonvoting Preferred Stock, no par value: Authorized and unissued: 1,000,000 shares | ||
Common Stock, no par value: Authorized: 50,000,000 shares Issued: 8,939,767 shares in 2015 and 8,938,742 shares in 2014 | $ 28,952,017 | $ 28,932,058 |
Treasury Stock: 2,694,729 shares in 2015 and 2014 | (19,105,723) | (19,105,723) |
Retained earnings | 87,765,487 | 87,680,667 |
Accumulated other comprehensive income (loss): | ||
Foreign currency translation | 233,256 | 855,179 |
Unrecognized net pension and postretirement benefit costs, net of tax | (22,708,096) | (23,387,274) |
Accumulated other comprehensive loss | (22,474,840) | (22,532,095) |
Total Shareholders' Equity | 75,136,941 | 74,974,907 |
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY | $ 120,337,494 | $ 121,270,556 |
CONDENSED CONSOLIDATED BALANCE3
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED) (Parenthetical) - USD ($) | Jul. 04, 2015 | Jan. 03, 2015 |
Current Assets | ||
Accounts receivable, allowances | $ 429,000 | $ 414,000 |
Shareholders' Equity | ||
Voting Preferred Stock, no par value (in dollars per share) | $ 0 | $ 0 |
Voting Preferred Stock, shares authorized (in shares) | 1,000,000 | 1,000,000 |
Nonvoting Preferred Stock, no par value (in dollars per share) | $ 0 | $ 0 |
Nonvoting Preferred Stock, shares authorized (in shares) | 1,000,000 | 1,000,000 |
Common Stock, no par value (in dollars per share) | $ 0 | $ 0 |
Common Stock, shares authorized (in shares) | 50,000,000 | 50,000,000 |
Common Stock, shares issued (in shares) | 8,939,767 | 8,938,742 |
Treasury Stock, shares (in shares) | 2,694,729 | 2,694,729 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jul. 04, 2015 | Jun. 28, 2014 | Jul. 04, 2015 | Jun. 28, 2014 | |
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) [Abstract] | ||||
Net sales | $ 37,037,697 | $ 34,779,773 | $ 73,914,539 | $ 70,628,899 |
Cost of products sold | (29,125,536) | (27,003,469) | (58,667,200) | (55,339,189) |
Gross margin | 7,912,161 | 7,776,304 | 15,247,339 | 15,289,710 |
Selling and administrative expenses | (7,056,139) | (4,988,364) | (13,019,834) | (10,204,653) |
Operating profit | 856,022 | 2,787,940 | 2,227,505 | 5,085,057 |
Interest expense | (47,745) | (64,626) | (100,570) | (133,195) |
Other income | 19,960 | 16,683 | 26,967 | 23,966 |
Income before income taxes | 828,237 | 2,739,997 | 2,153,902 | 4,975,828 |
Income taxes | 243,643 | 1,046,494 | 695,357 | 1,779,440 |
Net income | $ 584,594 | $ 1,693,503 | $ 1,458,545 | $ 3,196,388 |
Earnings per Share: | ||||
Basic (in dollars per share) | $ 0.09 | $ 0.27 | $ 0.23 | $ 0.51 |
Diluted (in dollars per share) | 0.09 | 0.27 | 0.23 | 0.51 |
Cash dividends per share: (in dollars per share) | $ 0.11 | $ 0.11 | $ 0.22 | $ 0.22 |
CONDENSED CONSOLIDATED STATEME5
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jul. 04, 2015 | Jun. 28, 2014 | Jul. 04, 2015 | Jun. 28, 2014 | |
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED) [Abstract] | ||||
Net income | $ 584,594 | $ 1,693,503 | $ 1,458,545 | $ 3,196,388 |
Other comprehensive income/(loss): | ||||
Change in foreign currency translation | (27,591) | 313,757 | (621,923) | (52,772) |
Change in pension and postretirement benefit costs, net of taxes of: 2015 - $373,028 and $186,514, respectively 2014 - $200,718 and $100,368, respectively | 339,588 | 184,365 | 679,178 | 368,695 |
Total other comprehensive income | 311,997 | 498,122 | 57,255 | 315,923 |
Comprehensive income | $ 896,591 | $ 2,191,625 | $ 1,515,800 | $ 3,512,311 |
CONDENSED CONSOLIDATED STATEME6
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED) (Parenthetical) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jul. 04, 2015 | Jun. 28, 2014 | Jul. 04, 2015 | Jun. 28, 2014 | |
Other comprehensive income/(loss): | ||||
Change in pension and postretirement benefit costs, taxes | $ 186,514 | $ 100,368 | $ 373,028 | $ 200,718 |
CONDENSED CONSOLIDATED STATEME7
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) - USD ($) | 6 Months Ended | |
Jul. 04, 2015 | Jun. 28, 2014 | |
Operating Activities | ||
Net income | $ 1,458,545 | $ 3,196,388 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Depreciation and amortization | 1,902,386 | 1,666,843 |
Unrecognized pension and postretirement benefits | 1,156,385 | 674,219 |
Loss on sale of equipment and other assets | 17,734 | 84,785 |
Provision for doubtful accounts | 26,626 | 51,330 |
Issuance of Common Stock for directors' fees | 19,960 | 14,994 |
Changes in operating assets and liabilities: | ||
Accounts receivable | (3,038,008) | (2,096,292) |
Inventories | (724,353) | (120,992) |
Prepaid expenses and other | 513,110 | 378,211 |
Recoverable taxes receivable | 380,000 | 0 |
Other assets | 21,384 | (96,529) |
Accounts payable | 1,099,021 | 1,137,942 |
Accrued compensation | (1,039,252) | (1,356,886) |
Other accrued expenses | (440,315) | (391,757) |
Net cash provided by operating activities | 1,353,223 | 3,142,256 |
Investing Activities | ||
Purchases of property, plant and equipment | (1,609,471) | (1,608,421) |
Net cash used in investing activities | (1,609,471) | (1,608,421) |
Financing Activities | ||
Principal payments on long-term debt | (714,285) | (714,285) |
Dividends paid | (1,373,724) | (1,368,927) |
Net cash used in financing activities | (2,088,009) | (2,083,212) |
Effect of exchange rate changes on cash | (169,871) | (61,671) |
Net change in cash and cash equivalents | (2,514,128) | (611,048) |
Cash and cash equivalents at beginning of period | 15,834,444 | 19,988,361 |
Cash and cash equivalents at end of period | $ 13,320,316 | $ 19,377,313 |
Basis of Presentation
Basis of Presentation | 6 Months Ended |
Jul. 04, 2015 | |
Basis of Presentation [Abstract] | |
Basis of Presentation | Note A – Basis of Presentation The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with the instructions to Form 10-Q and do not include all of the information and footnotes required by generally accepted accounting principles in the United States for complete financial statements. Refer to the Company’s consolidated financial statements and notes thereto included in its Form 10-K for the year ended January 3, 2015 for additional information. The accompanying condensed consolidated financial statements are unaudited. However, in the opinion of management, all adjustments (consisting only of normal recurring accruals) necessary for a fair presentation of the results of operations for interim periods have been reflected therein. All intercompany accounts and transactions are eliminated. Operating results for interim periods are not necessarily indicative of the results that may be expected for the full year. The condensed consolidated balance sheet as of January 3, 2015 has been derived from the audited consolidated balance sheet at that date. |
Earnings Per Share
Earnings Per Share | 6 Months Ended |
Jul. 04, 2015 | |
Earnings Per Share [Abstract] | |
Earnings Per Share | Note B – Earnings Per Share The denominators used in the earnings per share computations follow: Six Months Ended Three Months Ended July June July June Basic: Weighted average shares outstanding 6,244,250 6,222,444 6,244,451 6,222,676 Diluted: Weighted average shares outstanding 6,244,250 6,222,444 6,244,451 6,222,676 Dilutive stock options - 17,063 - 17,190 Denominator for diluted earnings per share 6,244,250 6,239,507 6,244,451 6,239,866 |
Inventories
Inventories | 6 Months Ended |
Jul. 04, 2015 | |
Inventories [Abstract] | |
Inventories | Note C – Inventories The components of inventories follow: July January Raw material and component parts $ 9,354,057 $ 9,219,341 Work in process 7,190,058 7,074,950 Finished goods 18,359,081 18,107,906 $ 34,903,196 $ 34,402,197 |
Segment Information
Segment Information | 6 Months Ended |
Jul. 04, 2015 | |
Segment Information [Abstract] | |
Segment Information | Note D – Segment Information Segment financial information follows: Six Months Ended Three Months Ended July June July June Revenues: Sales to unaffiliated customers: Industrial Hardware $ 29,906,612 $ 29,195,398 $ 15,119,946 $ 15,064,647 Security Products 29,536,240 24,967,882 15,435,324 12,420,846 Metal Products 14,471,687 16,465,619 6,482,427 7,294,280 $ 73,914,539 $ 70,628,899 $ 37,037,697 $ 34,779,773 Income before income taxes: Industrial Hardware $ 1,369,091 $ 2,566,403 $ 637,546 $ 1,470,569 Security Products 1,436,293 1,445,451 650,002 890,165 Metal Products (577,879 ) 1,073,203 (431,526 ) 427,206 Operating Profit 2,227,505 5,085,057 856,022 2,787,940 Interest expense (100,570 ) (133,195 ) (47,745 ) (64,626 ) Other income 26,967 23,966 19,960 16,683 $ 2,153,902 $ 4,975,828 $ 828,237 $ 2,739,997 |
Recent Accounting Pronouncement
Recent Accounting Pronouncements | 6 Months Ended |
Jul. 04, 2015 | |
Recent Accounting Pronouncements [Abstract] | |
Recent Accounting Pronouncements | Note E – Recent Accounting Pronouncements In January 2015, the FASB issued authoritative guidance that modifies reporting of extraordinary items in the income statement. The amendments in this update are effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2015. The adoption of the new guidance is not expected to have a material impact on the consolidated financial statements of the Company. In February 2015, the FASB issued authoritative guidance which amends certain requirements for determining whether a variable interest entity must be consolidated. The amendments in this update are effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2015. The adoption of the new guidance is not expected to have a material impact on the consolidated financial statements of the Company. In April 2015, the FASB issued authoritative guidance which simplifies the presentation of debt issuance costs. The amendments in this accounting standard update require debt issuance costs be presented on the balance sheet as a direct reduction from the carrying amount of the related debt liability. The amendments in this accounting standard update are to be applied retrospectively and are effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2015. The adoption of the new guidance is not expected to have a material impact on the consolidated financial statements of the Company. The Company has implemented all new accounting pronouncements that are in effect and that could impact its consolidated financial statements and does not believe that there are any other new accounting pronouncements that have been issued, but are not yet effective, that might have a material impact on the consolidated financial statements of the Company. |
Debt
Debt | 6 Months Ended |
Jul. 04, 2015 | |
Debt [Abstract] | |
Debt | Note F – Debt On January 29, 2010, the Company signed a secured Loan Agreement (the “Loan Agreement”) with People’s United Bank which included a $5,000,000 . . , January July , The Company has loan covenants under the Loan Agreement which required the Company to maintain a fixed charge coverage ratio of at least 1.1 to 1, a leverage ratio of no more than 1.75 to 1, and minimum tangible net worth of $43 million as of the end of Fiscal 2010 increasing each year by 50% of consolidated net income. As part of the amendment signed on January 23, 2014, the leverage ratio was eliminated and the minimum tangible net worth covenant was modified to a fixed $55 million, effective as of March 29, 2014. In addition, the Company has restrictions on, among other things, new capital leases, purchases or redemptions of its capital stock, mergers and divestitures, and new borrowing. The Company was in compliance with all covenants in 2014 and for the six month period ended July 4, 2015. |
Goodwill
Goodwill | 6 Months Ended |
Jul. 04, 2015 | |
Goodwill [Abstract] | |
Goodwill | Note G – Goodwill The following is a roll-forward of goodwill from year-end 2014 to the end of the second quarter 2015: Industrial Hardware Segment Security Products Segment Metal Products Segment Total Beginning balance $ 1,901,312 $ 13,059,042 $ — $ 14,960,354 Foreign exchange (162,797 ) — — (162,797 ) Ending balance $ 1,738,515 $ 13,059,042 $ — $ 14,797,557 |
Intangibles
Intangibles | 6 Months Ended |
Jul. 04, 2015 | |
Intangibles [Abstract] | |
Intangibles | Note H – Intangibles Patents are recorded at cost and are amortized using the straight-line method over the lives of the patents. Technology and licenses are recorded at cost and are generally amortized on a straight-line basis over periods ranging from 5 to The gross carrying amount and accumulated amortization of amortizable intangible assets: Industrial Hardware Segment Security Products Segment Metal Products Segment Total Weighted-Average Amortization Period (Years) 2015 Gross Amount Patents and developed technology $ 2,429,839 $ 1,042,307 $ -- $ 3,472,146 15.6 Customer relationships -- 449,706 -- 449,706 5.0 Non-compete agreements -- 407,000 -- 407,000 5.0 Intellectual property -- 307,370 -- 307,370 5.0 Total Gross Intangibles $ 2,429,839 $ 2,206,383 $ -- $ 4,636,222 12.6 2015 Accumulated Amortization Patents and developed technology $ 1,639,193 $ 566,382 $ -- $ 2,205,575 Customer relationships -- 44,971 -- 44,971 Non-compete agreements -- 40,700 -- 40,700 Intellectual property -- 30,737 -- 30,737 Accumulated Amortization $ 1,639,193 $ 682,790 $ -- $ 2,321,983 Net July per Balance Sheet $ 790,646 $ 1,523,593 $ -- $ 2,314,239 2014 Gross Amount Patents and developed technology $ 2,494,261 $ 1,025,303 $ -- $ 3,519,564 15.7 Customer relationships -- 449,706 -- 449,706 5.0 Non-compete agreements -- 407,000 -- 407,000 5.0 Intellectual property -- 307,370 -- 307,370 5.0 Total Gross Intangibles $ 2,494,261 $ 2,189,379 $ -- $ 4,683,640 12.7 2014 Accumulated Amortization Patents and developed technology $ 1,649,655 $ 535,415 $ -- $ 2,185,070 Customer relationships -- -- -- -- Non-compete agreements -- -- -- -- Intellectual property -- -- -- -- Accumulated Amortization $ 1,649,655 $ 535,415 $ -- $ 2,185,070 Net January per Balance Sheet $ 844,606 $ 1,653,964 $ -- $ 2,498,570 |
Retirement Benefit Plans
Retirement Benefit Plans | 6 Months Ended |
Jul. 04, 2015 | |
Retirement Benefit Plans [Abstract] | |
Retirement Benefit Plans | Note I – Retirement Benefit Plans The Company has non-contributory defined benefit pension plans covering certain U.S. employees. Plan benefits are generally based upon age at retirement, years of service and, for its salaried plan, the level of compensation. The Company also sponsors unfunded nonqualified supplemental retirement plans that provide certain current and former officers with benefits in excess of limits imposed by federal tax law. The Company also provides health care and life insurance for retired salaried employees in the United States who meet specific eligibility requirements. Significant disclosures relating to these benefit plans for the second quarter and first six months of fiscal 2015 and 2014 follow: Pension Benefits Six Months Ended Three Months Ended July 2015 June 28, 2014 July 2015 June 28, 2014 Service cost $ 1,929,975 $ 1,396,848 $ 964,988 $ 698,424 Interest cost 1,718,476 1,658,557 859,217 829,258 Expected return on plan assets (2,575,828 ) (2,405,262 ) (1,287,914 ) (1,202,630 ) Amortization of prior service cost 109,293 109,293 54,646 54,646 Amortization of the net loss 945,456 472,065 472,728 236,032 Net periodic benefit cost $ 2,127,372 $ 1,231,501 $ 1,063,665 $ 615,730 Postretirement Benefits Six Months Ended Three Months Ended July 2015 June 28, 2014 July 2015 June 28, 2014 Service cost $ 108,785 $ 86,951 $ 54,393 $ 44,951 Interest cost 77,458 78,741 38,729 38,491 Expected return on plan assets (45,968 ) (47,406 ) (22,984 ) (25,156 ) Amortization of prior service cost (11,944 ) (11,945 ) (5,972 ) (5,945 ) Amortization of the net loss 9,402 -- 4,701 -- Net periodic benefit cost $ 137,733 $ 106,341 $ 68,867 $ 52,341 The Company’s funding policy with respect to its qualified plans is to contribute at least the minimum amount required by applicable laws and regulations. In 2015, the Company expects to contribute $3.0 million into its pension plans and $150,000 The Company has a contributory savings plan under Section 401(k) of the Internal Revenue Code covering substantially all U.S. non-union employees. The plan allows participants to make voluntary contributions of up to 100% of their annual compensation on a pretax basis, subject to IRS limitations. The plan provides for contributions by the Company at its discretion. The Company made contributions of $55,660 and $107,926 in the second quarter and first six months of 2015, respectively and $50,964 and $103,455 in the second quarter and first six months of 2014, respectively. |
Stock Based Compensation and St
Stock Based Compensation and Stock Options | 6 Months Ended |
Jul. 04, 2015 | |
Stock Based Compensation and Stock Options [Abstract] | |
Stock Based Compensation and Stock Options | Note J – Stock Based Compensation and Stock Options The Company has a stock option plan for officers, other key employees, and non-employee directors. As of July 4, 2015 the 2010 plan had 500,000 shares reserved for future grant and issuance. Incentive stock options granted under the 2010 plan must have exercise prices that are not less than 100% of the fair market value of the stock on the dates the options are granted. Restricted stock awards may also be granted to participants under the 2010 plan with restrictions determined by the Compensation Committee of the Company’s Board of Directors. Under the 2010 plan, nonqualified stock options granted to participants will have exercise prices determined by the Compensation Committee of the Company’s Board of Directors. No options or restricted stock were granted in the first six months of 2015 or 2014. At July 4, 2015, there were no outstanding or exercisable options. |
Income Taxes
Income Taxes | 6 Months Ended |
Jul. 04, 2015 | |
Income Tax [Abstract] | |
Income Taxes | Note K – Income Taxes The Company files income tax returns in the U.S. federal jurisdiction, and various states and foreign jurisdictions. With few exceptions, the Company is no longer subject to U.S. federal, state and local income tax examinations by tax authorities for years before 2011 and non-U.S. income tax examinations by tax authorities prior to 2009. The Company repatriated approximately $1.2 million and $2.8 million in cash from its foreign subsidiaries in the first six months of 2015 and 2014, respectively. The impact on the effective tax rate was less than 1% in 2015 and approximately 2.4% in 2014. The total amount of unrecognized tax benefits could increase or decrease within the next twelve months for a number of reasons, including the closure of federal, state and foreign tax years by expiration of the statute of limitations and the recognition and measurement considerations under FASB Accounting Standards Codification (“ASC”) 740. There have been no significant changes to the amount of unrecognized tax benefits during the six months ended July 4, 2015. The Company believes that it is reasonably possible that the total amount of unrecognized tax benefits will not increase or decrease significantly over the next twelve months. |
Financial Instruments and Fair
Financial Instruments and Fair Value Measurements | 6 Months Ended |
Jul. 04, 2015 | |
Financial Instruments and Fair Value Measurements [Abstract] | |
Financial Instruments and Fair Value Measurements | Note L - Financial Instruments and Fair Value Measurements Financial Risk Management Objectives and Policies The Company is exposed primarily to credit, interest rate and currency exchange rate risks which arise in the normal course of business. Credit Risk Credit risk is the potential financial loss resulting from the failure of a customer or counterparty to settle its financial and contractual obligations to the Company, as and when they become due. The primary credit risk for the Company is its receivable accounts with customers. The Company has established credit limits for customers and monitors their balances to mitigate the risk of loss. At July 4, 2015 and January 3, 2015, there were no significant concentrations of credit risk. No one customer represented more than 10% of the Company’s net trade receivables at July 4, 2015 or at January 3, 2015. The maximum exposure to credit risk is primarily represented by the carrying amount of the Company’s accounts receivable. Interest Rate Risk On July 4, 2015, the Company has no exposure to the risk of changes in market interest rates as the interest rate on the outstanding debt is fixed at 4.98% and 3.90%. Fair Value Measurements Assets and liabilities that require fair value measurement are recorded at fair value using market and income valuation approaches and considering the Company’s and counterparty’s credit risk. The Company uses the market approach and the income approach to value assets and liabilities as appropriate. There are no assets or liabilities requiring fair value measurements on July 4, 2015 or January 3, 2015. |
Earnings Per Share (Tables)
Earnings Per Share (Tables) | 6 Months Ended |
Jul. 04, 2015 | |
Earnings Per Share [Abstract] | |
Denominators used in the earnings per share computations | The denominators used in the earnings per share computations follow: Six Months Ended Three Months Ended July June July June Basic: Weighted average shares outstanding 6,244,250 6,222,444 6,244,451 6,222,676 Diluted: Weighted average shares outstanding 6,244,250 6,222,444 6,244,451 6,222,676 Dilutive stock options - 17,063 - 17,190 Denominator for diluted earnings per share 6,244,250 6,239,507 6,244,451 6,239,866 |
Inventories (Tables)
Inventories (Tables) | 6 Months Ended |
Jul. 04, 2015 | |
Inventories [Abstract] | |
Components of inventories | The components of inventories follow: July January Raw material and component parts $ 9,354,057 $ 9,219,341 Work in process 7,190,058 7,074,950 Finished goods 18,359,081 18,107,906 $ 34,903,196 $ 34,402,197 |
Segment Information (Tables)
Segment Information (Tables) | 6 Months Ended |
Jul. 04, 2015 | |
Segment Information [Abstract] | |
Segment financial information | Segment financial information follows: Six Months Ended Three Months Ended July June July June Revenues: Sales to unaffiliated customers: Industrial Hardware $ 29,906,612 $ 29,195,398 $ 15,119,946 $ 15,064,647 Security Products 29,536,240 24,967,882 15,435,324 12,420,846 Metal Products 14,471,687 16,465,619 6,482,427 7,294,280 $ 73,914,539 $ 70,628,899 $ 37,037,697 $ 34,779,773 Income before income taxes: Industrial Hardware $ 1,369,091 $ 2,566,403 $ 637,546 $ 1,470,569 Security Products 1,436,293 1,445,451 650,002 890,165 Metal Products (577,879 ) 1,073,203 (431,526 ) 427,206 Operating Profit 2,227,505 5,085,057 856,022 2,787,940 Interest expense (100,570 ) (133,195 ) (47,745 ) (64,626 ) Other income 26,967 23,966 19,960 16,683 $ 2,153,902 $ 4,975,828 $ 828,237 $ 2,739,997 |
Goodwill (Tables)
Goodwill (Tables) | 6 Months Ended |
Jul. 04, 2015 | |
Goodwill [Abstract] | |
Roll-forward of goodwill | The following is a roll-forward of goodwill from year-end 2014 to the end of the second quarter 2015: Industrial Hardware Segment Security Products Segment Metal Products Segment Total Beginning balance $ 1,901,312 $ 13,059,042 $ — $ 14,960,354 Foreign exchange (162,797 ) — — (162,797 ) Ending balance $ 1,738,515 $ 13,059,042 $ — $ 14,797,557 |
Intangibles (Tables)
Intangibles (Tables) | 6 Months Ended |
Jul. 04, 2015 | |
Intangibles [Abstract] | |
Gross carrying amount and accumulated amortization of amortizable intangible assets | The gross carrying amount and accumulated amortization of amortizable intangible assets: Industrial Hardware Segment Security Products Segment Metal Products Segment Total Weighted-Average Amortization Period (Years) 2015 Gross Amount Patents and developed technology $ 2,429,839 $ 1,042,307 $ -- $ 3,472,146 15.6 Customer relationships -- 449,706 -- 449,706 5.0 Non-compete agreements -- 407,000 -- 407,000 5.0 Intellectual property -- 307,370 -- 307,370 5.0 Total Gross Intangibles $ 2,429,839 $ 2,206,383 $ -- $ 4,636,222 12.6 2015 Accumulated Amortization Patents and developed technology $ 1,639,193 $ 566,382 $ -- $ 2,205,575 Customer relationships -- 44,971 -- 44,971 Non-compete agreements -- 40,700 -- 40,700 Intellectual property -- 30,737 -- 30,737 Accumulated Amortization $ 1,639,193 $ 682,790 $ -- $ 2,321,983 Net July per Balance Sheet $ 790,646 $ 1,523,593 $ -- $ 2,314,239 2014 Gross Amount Patents and developed technology $ 2,494,261 $ 1,025,303 $ -- $ 3,519,564 15.7 Customer relationships -- 449,706 -- 449,706 5.0 Non-compete agreements -- 407,000 -- 407,000 5.0 Intellectual property -- 307,370 -- 307,370 5.0 Total Gross Intangibles $ 2,494,261 $ 2,189,379 $ -- $ 4,683,640 12.7 2014 Accumulated Amortization Patents and developed technology $ 1,649,655 $ 535,415 $ -- $ 2,185,070 Customer relationships -- -- -- -- Non-compete agreements -- -- -- -- Intellectual property -- -- -- -- Accumulated Amortization $ 1,649,655 $ 535,415 $ -- $ 2,185,070 Net January per Balance Sheet $ 844,606 $ 1,653,964 $ -- $ 2,498,570 |
Retirement Benefit Plans (Table
Retirement Benefit Plans (Tables) | 6 Months Ended |
Jul. 04, 2015 | |
Retirement Benefit Plans [Abstract] | |
Significant disclosures relating to benefit plans | Significant disclosures relating to these benefit plans for the second quarter and first six months of fiscal 2015 and 2014 follow: Pension Benefits Six Months Ended Three Months Ended July 2015 June 28, 2014 July 2015 June 28, 2014 Service cost $ 1,929,975 $ 1,396,848 $ 964,988 $ 698,424 Interest cost 1,718,476 1,658,557 859,217 829,258 Expected return on plan assets (2,575,828 ) (2,405,262 ) (1,287,914 ) (1,202,630 ) Amortization of prior service cost 109,293 109,293 54,646 54,646 Amortization of the net loss 945,456 472,065 472,728 236,032 Net periodic benefit cost $ 2,127,372 $ 1,231,501 $ 1,063,665 $ 615,730 Postretirement Benefits Six Months Ended Three Months Ended July 2015 June 28, 2014 July 2015 June 28, 2014 Service cost $ 108,785 $ 86,951 $ 54,393 $ 44,951 Interest cost 77,458 78,741 38,729 38,491 Expected return on plan assets (45,968 ) (47,406 ) (22,984 ) (25,156 ) Amortization of prior service cost (11,944 ) (11,945 ) (5,972 ) (5,945 ) Amortization of the net loss 9,402 -- 4,701 -- Net periodic benefit cost $ 137,733 $ 106,341 $ 68,867 $ 52,341 |
Earnings Per Share (Details)
Earnings Per Share (Details) - shares | 3 Months Ended | 6 Months Ended | ||
Jul. 04, 2015 | Jun. 28, 2014 | Jul. 04, 2015 | Jun. 28, 2014 | |
Basic [Abstract] | ||||
Weighted average shares outstanding (in shares) | 6,244,451 | 6,222,676 | 6,244,250 | 6,222,444 |
Diluted [Abstract] | ||||
Weighted average shares outstanding (in shares) | 6,244,451 | 6,222,676 | 6,244,250 | 6,222,444 |
Dilutive stock options (in shares) | 0 | 17,190 | 0 | 17,063 |
Denominator for diluted earnings per share (in shares) | 6,244,451 | 6,239,866 | 6,244,250 | 6,239,507 |
Inventories (Details)
Inventories (Details) - USD ($) | Jul. 04, 2015 | Jan. 03, 2015 |
Components of inventories [Abstract] | ||
Raw material and component parts | $ 9,354,057 | $ 9,219,341 |
Work in process | 7,190,058 | 7,074,950 |
Finished goods | 18,359,081 | 18,107,906 |
Inventories | $ 34,903,196 | $ 34,402,197 |
Segment Information (Details)
Segment Information (Details) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jul. 04, 2015 | Jun. 28, 2014 | Jul. 04, 2015 | Jun. 28, 2014 | |
Segment Reporting Information [Line Items] | ||||
Revenues, sales to unaffiliated customers | $ 37,037,697 | $ 34,779,773 | $ 73,914,539 | $ 70,628,899 |
Operating Profit | 856,022 | 2,787,940 | 2,227,505 | 5,085,057 |
Interest expense | (47,745) | (64,626) | (100,570) | (133,195) |
Other income | 19,960 | 16,683 | 26,967 | 23,966 |
Income before income taxes | 828,237 | 2,739,997 | 2,153,902 | 4,975,828 |
Industrial Hardware [Member] | Operating Segments [Member] | ||||
Segment Reporting Information [Line Items] | ||||
Revenues, sales to unaffiliated customers | 15,119,946 | 15,064,647 | 29,906,612 | 29,195,398 |
Operating Profit | 637,546 | 1,470,569 | 1,369,091 | 2,566,403 |
Security Products [Member] | Operating Segments [Member] | ||||
Segment Reporting Information [Line Items] | ||||
Revenues, sales to unaffiliated customers | 15,435,324 | 12,420,846 | 29,536,240 | 24,967,882 |
Operating Profit | 650,002 | 890,165 | 1,436,293 | 1,445,451 |
Metal Products [Member] | Operating Segments [Member] | ||||
Segment Reporting Information [Line Items] | ||||
Revenues, sales to unaffiliated customers | 6,482,427 | 7,294,280 | 14,471,687 | 16,465,619 |
Operating Profit | $ (431,526) | $ 427,206 | $ (577,879) | $ 1,073,203 |
Debt (Details)
Debt (Details) | Jan. 25, 2012USD ($) | Jul. 04, 2015USD ($)Ratio | Jan. 01, 2011USD ($) | Jan. 29, 2010USD ($) |
Debt Instrument [Line Items] | ||||
Minimum tangible net worth | $ 55,000,000 | $ 43,000,000 | ||
Tangible net worth (in hundredths) | 50.00% | |||
Revolving Credit Line [Member] | ||||
Debt Instrument [Line Items] | ||||
Maximum borrowing capacity | $ 10,000,000 | $ 10,000,000 | ||
Maturity date of loan | Jul. 1, 2016 | |||
Revolving Credit Line [Member] | LIBOR [Member] | ||||
Debt Instrument [Line Items] | ||||
Basis spread on variable rate (in hundredths) | 2.25% | 2.25% | ||
Revolving Credit Line [Member] | People's Prime Rate [Member] | ||||
Debt Instrument [Line Items] | ||||
Basis spread on variable rate (in hundredths) | 2.25% | |||
Revolving Credit Line [Member] | Floor Rate [Member] | ||||
Debt Instrument [Line Items] | ||||
Floor rate of loan (in hundredths) | 3.25% | |||
Loan Agreement [Member] | ||||
Debt Instrument [Line Items] | ||||
Fixed charge coverage ratio as multiple, minimum | Ratio | 1.1 | |||
Leverage ratio as multiple, maximum | Ratio | 1.75 | |||
Term Loan [Member] | ||||
Debt Instrument [Line Items] | ||||
Maximum borrowing capacity | $ 5,000,000 | $ 5,000,000 | ||
Fixed rate of interest (in hundredths) | 4.98% | |||
2012 Term Loan [Member] | ||||
Debt Instrument [Line Items] | ||||
Maximum borrowing capacity | $ 5,000,000 | $ 5,000,000 | ||
Fixed rate of interest (in hundredths) | 3.90% |
Goodwill (Details)
Goodwill (Details) | 6 Months Ended |
Jul. 04, 2015USD ($) | |
Goodwill [Roll Forward] | |
Beginning balance | $ 14,960,354 |
Foreign exchange | (162,797) |
Ending balance | 14,797,557 |
Industrial Hardware Segment [Member] | |
Goodwill [Roll Forward] | |
Beginning balance | 1,901,312 |
Foreign exchange | (162,797) |
Ending balance | 1,738,515 |
Security Products Segment [Member] | |
Goodwill [Roll Forward] | |
Beginning balance | 13,059,042 |
Foreign exchange | 0 |
Ending balance | 13,059,042 |
Metal Products Segment [Member] | |
Goodwill [Roll Forward] | |
Beginning balance | 0 |
Foreign exchange | 0 |
Ending balance | $ 0 |
Intangibles (Details)
Intangibles (Details) - USD ($) | 6 Months Ended | 12 Months Ended |
Jul. 04, 2015 | Jan. 03, 2015 | |
Gross carrying amount and accumulated amortization of amortizable intangible assets [Abstract] | ||
Gross Amount | $ 4,636,222 | $ 4,683,640 |
Accumulated Amortization | 2,321,983 | 2,185,070 |
Net as per Balance Sheet | $ 2,314,239 | $ 2,498,570 |
Weighted Average Amortization Period | 12 years 7 months 6 days | 12 years 8 months 12 days |
Industrial Hardware Segment [Member] | ||
Gross carrying amount and accumulated amortization of amortizable intangible assets [Abstract] | ||
Gross Amount | $ 2,429,839 | $ 2,494,261 |
Accumulated Amortization | 1,639,193 | 1,649,655 |
Net as per Balance Sheet | 790,646 | 844,606 |
Security Products Segment [Member] | ||
Gross carrying amount and accumulated amortization of amortizable intangible assets [Abstract] | ||
Gross Amount | 2,206,383 | 2,189,379 |
Accumulated Amortization | 682,790 | 535,415 |
Net as per Balance Sheet | 1,523,593 | 1,653,964 |
Metal Products Segment [Member] | ||
Gross carrying amount and accumulated amortization of amortizable intangible assets [Abstract] | ||
Gross Amount | 0 | 0 |
Accumulated Amortization | 0 | 0 |
Net as per Balance Sheet | $ 0 | 0 |
Technology and Licenses [Member] | Minimum [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Useful lives of intangible assets | 5 years | |
Technology and Licenses [Member] | Maximum [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Useful lives of intangible assets | 17 years | |
Patents and Developed Technology [Member] | ||
Gross carrying amount and accumulated amortization of amortizable intangible assets [Abstract] | ||
Gross Amount | $ 3,472,146 | 3,519,564 |
Accumulated Amortization | $ 2,205,575 | $ 2,185,070 |
Weighted Average Amortization Period | 15 years 7 months 6 days | 15 years 8 months 12 days |
Patents and Developed Technology [Member] | Industrial Hardware Segment [Member] | ||
Gross carrying amount and accumulated amortization of amortizable intangible assets [Abstract] | ||
Gross Amount | $ 2,429,839 | $ 2,494,261 |
Accumulated Amortization | 1,639,193 | 1,649,655 |
Patents and Developed Technology [Member] | Security Products Segment [Member] | ||
Gross carrying amount and accumulated amortization of amortizable intangible assets [Abstract] | ||
Gross Amount | 1,042,307 | 1,025,303 |
Accumulated Amortization | 566,382 | 535,415 |
Patents and Developed Technology [Member] | Metal Products Segment [Member] | ||
Gross carrying amount and accumulated amortization of amortizable intangible assets [Abstract] | ||
Gross Amount | 0 | 0 |
Accumulated Amortization | 0 | 0 |
Customer Relationships [Member] | ||
Gross carrying amount and accumulated amortization of amortizable intangible assets [Abstract] | ||
Gross Amount | 449,706 | 449,706 |
Accumulated Amortization | $ 44,971 | $ 0 |
Weighted Average Amortization Period | 5 years | 5 years |
Customer Relationships [Member] | Industrial Hardware Segment [Member] | ||
Gross carrying amount and accumulated amortization of amortizable intangible assets [Abstract] | ||
Gross Amount | $ 0 | $ 0 |
Accumulated Amortization | 0 | 0 |
Customer Relationships [Member] | Security Products Segment [Member] | ||
Gross carrying amount and accumulated amortization of amortizable intangible assets [Abstract] | ||
Gross Amount | 449,706 | 449,706 |
Accumulated Amortization | 44,971 | 0 |
Customer Relationships [Member] | Metal Products Segment [Member] | ||
Gross carrying amount and accumulated amortization of amortizable intangible assets [Abstract] | ||
Gross Amount | 0 | 0 |
Accumulated Amortization | 0 | 0 |
Non-compete Agreements [Member] | ||
Gross carrying amount and accumulated amortization of amortizable intangible assets [Abstract] | ||
Gross Amount | 407,000 | 407,000 |
Accumulated Amortization | $ 40,700 | $ 0 |
Weighted Average Amortization Period | 5 years | 5 years |
Non-compete Agreements [Member] | Industrial Hardware Segment [Member] | ||
Gross carrying amount and accumulated amortization of amortizable intangible assets [Abstract] | ||
Gross Amount | $ 0 | $ 0 |
Accumulated Amortization | 0 | 0 |
Non-compete Agreements [Member] | Security Products Segment [Member] | ||
Gross carrying amount and accumulated amortization of amortizable intangible assets [Abstract] | ||
Gross Amount | 407,000 | 407,000 |
Accumulated Amortization | 40,700 | 0 |
Non-compete Agreements [Member] | Metal Products Segment [Member] | ||
Gross carrying amount and accumulated amortization of amortizable intangible assets [Abstract] | ||
Gross Amount | 0 | 0 |
Accumulated Amortization | 0 | 0 |
Intellectual Property [Member] | ||
Gross carrying amount and accumulated amortization of amortizable intangible assets [Abstract] | ||
Gross Amount | 307,370 | 307,370 |
Accumulated Amortization | $ 30,737 | $ 0 |
Weighted Average Amortization Period | 5 years | 5 years |
Intellectual Property [Member] | Industrial Hardware Segment [Member] | ||
Gross carrying amount and accumulated amortization of amortizable intangible assets [Abstract] | ||
Gross Amount | $ 0 | $ 0 |
Accumulated Amortization | 0 | 0 |
Intellectual Property [Member] | Security Products Segment [Member] | ||
Gross carrying amount and accumulated amortization of amortizable intangible assets [Abstract] | ||
Gross Amount | 307,370 | 307,370 |
Accumulated Amortization | 30,737 | 0 |
Intellectual Property [Member] | Metal Products Segment [Member] | ||
Gross carrying amount and accumulated amortization of amortizable intangible assets [Abstract] | ||
Gross Amount | 0 | 0 |
Accumulated Amortization | $ 0 | $ 0 |
Retirement Benefit Plans (Detai
Retirement Benefit Plans (Details) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jul. 04, 2015 | Jun. 28, 2014 | Jul. 04, 2015 | Jun. 28, 2014 | |
Significant disclosures relating to benefit plans [Abstract] | ||||
Percentage of voluntary contributions allowed to participants, maximum (in hundredths) | 100.00% | |||
Contributions made by the Company under Section 401(k) | $ 55,660 | $ 50,964 | $ 107,926 | $ 103,455 |
Pension Benefits [Member] | ||||
Significant disclosures relating to benefit plans [Abstract] | ||||
Service cost | 964,988 | 698,424 | 1,929,975 | 1,396,848 |
Interest cost | 859,217 | 829,258 | 1,718,476 | 1,658,557 |
Expected return on plan assets | (1,287,914) | (1,202,630) | (2,575,828) | (2,405,262) |
Amortization of prior service cost | 54,646 | 54,646 | 109,293 | 109,293 |
Amortization of the net loss | 472,728 | 236,032 | 945,456 | 472,065 |
Net periodic benefit cost | 1,063,665 | 615,730 | 2,127,372 | 1,231,501 |
Contributions required by the Company in defined benefit plan | 3,000,000 | |||
Contributions made by Company | 1,200,000 | |||
Postretirement Benefits [Member] | ||||
Significant disclosures relating to benefit plans [Abstract] | ||||
Service cost | 54,393 | 44,951 | 108,785 | 86,951 |
Interest cost | 38,729 | 38,491 | 77,458 | 78,741 |
Expected return on plan assets | (22,984) | (25,156) | (45,968) | (47,406) |
Amortization of prior service cost | (5,972) | (5,945) | (11,944) | (11,945) |
Amortization of the net loss | 4,701 | 0 | 9,402 | 0 |
Net periodic benefit cost | $ 68,867 | $ 52,341 | 137,733 | $ 106,341 |
Contributions required by the Company in defined benefit plan | 150,000 | |||
Contributions made by Company | $ 57,000 |
Stock Based Compensation and 33
Stock Based Compensation and Stock Options (Details) - shares | 6 Months Ended | |
Jul. 04, 2015 | Jun. 28, 2014 | |
Restricted Stock [Member] | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Restricted stock granted (in shares) | 0 | 0 |
Stock Options [Member] | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Percentage of fair market value of stock on grant date for exercise price, minimum (in hundredths) | 100.00% | |
Options granted (in shares) | 0 | 0 |
Outstanding at end of period (in shares) | 0 | |
Options exercisable (in shares) | 0 | |
2010 Plan [Member] | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Shares available for future grant (in shares) | 500,000 |
Income Taxes (Details)
Income Taxes (Details) - USD ($) | 6 Months Ended | |
Jul. 04, 2015 | Jun. 28, 2014 | |
Income Tax Examination [Line Items] | ||
Repatriated amount from its foreign subsidiaries | $ 1,200,000 | $ 2,800,000 |
Significant changes to the amount of unrecognized tax benefits | $ 0 | |
Maximum [Member] | ||
Income Tax Examination [Line Items] | ||
Impact on the effective tax rate (in hundredths) | 1.00% | 2.40% |
Financial Instruments and Fai35
Financial Instruments and Fair Value Measurements (Details) - Customer | Jul. 04, 2015 | Jan. 03, 2015 |
Credit Risk [Abstract] | ||
Number of customers that represented more than 10% of trade receivables | 0 | 0 |
Term Loan [Member] | ||
Interest Rate Risk [Abstract] | ||
Fixed rate of interest (in hundredths) | 4.98% | |
2012 Term Loan [Member] | ||
Interest Rate Risk [Abstract] | ||
Fixed rate of interest (in hundredths) | 3.90% |