Document_and_Entity_Informatio
Document and Entity Information (USD $) | 12 Months Ended | ||
Oct. 31, 2014 | Jan. 15, 2015 | Apr. 30, 2014 | |
Document And Entity Information | |||
Entity Registrant Name | International Baler Corporation | ||
Entity Central Index Key | 781902 | ||
Document Type | 10-K | ||
Document Period End Date | 31-Oct-14 | ||
Amendment Flag | FALSE | ||
Current Fiscal Year End Date | -21 | ||
Is Entity a Well-known Seasoned Issuer? | No | ||
Is Entity a Voluntary Filer? | No | ||
Is Entity's Reporting Status Current? | Yes | ||
Entity Filer Category | Smaller Reporting Company | ||
Entity Public Float | $4,007,843 | ||
Entity Common Stock, Shares Outstanding | 5,183,895 | ||
Document Fiscal Period Focus | FY | ||
Document Fiscal Year Focus | 2014 |
Balance_Sheets
Balance Sheets (USD $) | Oct. 31, 2014 | Oct. 31, 2013 |
Current assets: | ||
Cash and cash equivalents | $2,803,698 | $1,877,256 |
Accounts receivable, net of allowance for doubtful accounts of $29,412 at October 31, 2014 and $45,764 at October 31, 2013 | 3,732,637 | 2,466,887 |
Inventories | 4,788,881 | 5,960,365 |
Prepaid expense and other current assets | 183,725 | 98,792 |
Deferred income taxes | 217,676 | 245,431 |
Total current assets | 11,726,617 | 10,648,731 |
Property, plant and equipment, at cost: | 3,243,153 | 3,096,560 |
Less: accumulated depreciation | 2,115,740 | 1,972,631 |
Net property, plant and equipment | 1,127,413 | 1,123,929 |
Other assets: | ||
Other assets | 1,256 | 1,256 |
TOTAL ASSETS | 12,855,286 | 11,773,916 |
Current liabilities: | ||
Revolving promissory note | 644,345 | 1,648,649 |
Notes payable-current portion | 9,879 | |
Accounts payable | 923,391 | 1,439,777 |
Accrued liabilities | 1,512,985 | 659,096 |
Customer deposits | 1,667,932 | 677,954 |
Total current liabilities | 4,758,532 | 4,425,476 |
Deferred income taxes | 171,480 | 165,808 |
Notes payable-long term | 28,223 | |
Total liabilities | 4,958,235 | 4,591,284 |
Stockholders' equity: | ||
Preferred stock, par value $.0001, 10,000,000 shares authorized, none issued | ||
Common stock, par value $.01, 25,000,000 shares authorized; 6,429,875 shares issued at October 31, 2014 and October 31, 2013 | 64,299 | 64,299 |
Additional paid-in capital | 6,419,687 | 6,419,687 |
Retained earnings | 2,094,475 | 1,380,056 |
Total stockholders' equity before treasury stock | 8,578,461 | 7,864,042 |
Less: Treasury stock, 1,245,980 shares at October 31, 2014 and October 31, 2013, at cost | -681,410 | -681,410 |
Total stockholders' equity | 7,897,051 | 7,182,632 |
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | $12,855,286 | $11,773,916 |
Balance_Sheets_Parenthetical
Balance Sheets (Parenthetical) (USD $) | Oct. 31, 2014 | Oct. 31, 2013 |
Current Assets: | ||
Accounts receivable, net of allowance for doubtful accounts | $29,412 | $45,764 |
Stockholders' equity: | ||
Preferred stock, par value | $0.00 | $0.00 |
Preferred stock, share authorized | 10,000,000 | 10,000,000 |
Preferred stock, shares issued | 0 | 0 |
Common stock, par value | $0.01 | $0.01 |
Common stock, shares authorized | 25,000,000 | 25,000,000 |
Common stock, shares issued | 6,429,875 | 6,429,875 |
Treasury stock, shares | 1,245,980 | 1,245,980 |
Statements_of_Income
Statements of Income (USD $) | 12 Months Ended | |
Oct. 31, 2014 | Oct. 31, 2013 | |
Net sales: | ||
Equipment | $16,969,452 | $13,728,599 |
Parts and service | 2,816,051 | 2,354,339 |
Total net sales | 19,785,503 | 16,082,938 |
Cost of sales | 15,577,846 | 13,045,001 |
Gross profit | 4,207,657 | 3,037,937 |
Operating expense: | ||
Selling expense | 999,018 | 971,387 |
Administrative expense | 2,027,640 | 1,019,347 |
Total operating expense | 3,026,658 | 1,990,734 |
Operating income | 1,180,999 | 1,047,203 |
Other income (expense): | ||
Interest income | 6,706 | 959 |
Interest expense | -35,816 | -12,671 |
Total other income (expense) | -29,110 | -11,712 |
Income before income taxes | 1,151,889 | 1,035,491 |
Income tax provision | 437,470 | 352,297 |
Net income | $714,419 | $683,194 |
Income per share, basic and diluted | $0.14 | $0.13 |
Weighted average number of shares outstanding | 5,183,895 | 5,183,895 |
Statements_of_Stockholders_Equ
Statements of Stockholders Equity (USD $) | Common Stock [Member] | Additional Paid-In Capital [Member] | Retained Earnings (Deficit) [Member] | Treasury Stock [Member] | Total |
Beginning Balance, Value at Oct. 31, 2012 | $64,299 | $6,419,687 | $696,862 | ($681,410) | $6,499,438 |
Beginning Balace, Shares at Oct. 31, 2012 | 6,429,875 | 1,245,980 | |||
Net Income | 683,194 | 683,194 | |||
End Balance, Value at Oct. 31, 2013 | 64,299 | 6,419,687 | 1,380,056 | -681,410 | 7,182,632 |
End Balance, Shares at Oct. 31, 2013 | 6,429,875 | 1,245,980 | |||
Net Income | 714,419 | 714,419 | |||
End Balance, Value at Oct. 31, 2014 | $64,299 | $6,419,687 | $2,094,475 | ($681,410) | $7,897,051 |
End Balance, Shares at Oct. 31, 2014 | 6,429,875 | 1,245,980 |
Statements_of_Cash_Flows
Statements of Cash Flows (USD $) | 12 Months Ended | |
Oct. 31, 2014 | Oct. 31, 2013 | |
Cash flow from operating activities: | ||
Net income | $714,419 | $683,194 |
Adjustments to reconcile net income to net cash provided by (used in) operating activities: | ||
Depreciation and amortization | 143,109 | 133,221 |
Provision for doubtful accounts | -16,352 | -20,000 |
Deferred income tax | 33,427 | 71,878 |
Changes in operating assets and liabilities: | ||
Accounts receivable | -1,249,398 | -1,011,094 |
Inventories | 1,171,484 | -1,764,814 |
Prepaid expenses and other assets | -84,933 | 26,128 |
Accounts payable | -516,386 | 733,522 |
Accrued liabilities and deferred taxes | 853,889 | 185,572 |
Customer deposits | 989,978 | -307,008 |
Net cash provided by (used in) operating activities | 2,039,237 | -1,269,401 |
Cash flows from investing activities: | ||
Proceeds from notes receivable from former Director | 3,673 | |
Purchase of property and equipment | -105,338 | -224,805 |
Net cash used in investing activities | -105,338 | -221,132 |
Cash flows from financing activities | ||
Payments on notes payable | -3,153 | |
Advances from revolving promissory note | 400,000 | 1,648,649 |
Payments on revolving promissory note | -1,404,304 | |
Net cash (used in) provided by financing activities | -1,007,457 | 1,648,649 |
Net increase in cash and cash equivalents | 926,442 | 158,116 |
Cash and cash equivalents at beginning of period | 1,877,256 | 1,719,140 |
Cash and cash equivalents at end of period | 2,803,698 | 1,877,256 |
Cash paid during period for Interest | 35,816 | 9,195 |
Cash paid during the period for Income taxes | 572,729 | |
Supplemental noncash investing activities: | ||
Purchase of property, plant and equipment, total | 146,593 | |
Vehicle purchased under note payable | 41,255 | |
Cash paid for property, plant and equipment | $105,338 | $0 |
Nature_of_Business
Nature of Business | 12 Months Ended |
Oct. 31, 2014 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Nature of Business: | (1) Nature of Business |
International Baler Corporation (the “Company”) is a manufacturer of baling equipment which utilizes technical, hydraulic and electrical mechanisms to compress a variety of materials into bales for easier handling, shipping, disposal, storage, and for recycling. Materials commonly baled include scrap metal, corrugated boxes, newsprint, aluminum cans, plastic bottles, and other solid waste. More sophisticated applications include baling of textile materials, fibers and synthetic rubber. The Company offers a wide variety of balers, standard models as well as custom models to meet specific customer requirements. | |
The Company’s customers include recycling facilities, paper mills, textile mills, and the companies which generate the materials for baling and recycling. |
Summary_of_Significant_Account
Summary of Significant Accounting Policies | 12 Months Ended | ||||||||
Oct. 31, 2014 | |||||||||
Accounting Policies [Abstract] | |||||||||
Summary of Significant Accounting Policies | (2) Summary of Significant Accounting Policies | ||||||||
(a) | Use of Estimates | ||||||||
The preparation of the financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Significant items subject to such estimates and assumptions include allowances for doubtful accounts, valuation of deferred tax assets, valuation of inventory, and estimates for warranty claims. Actual results could differ from those estimates. | |||||||||
(b) | Cash and Cash Equivalents | ||||||||
For purposes of the statements of cash flows, cash and cash equivalents include cash on hand, bank demand accounts and money market accounts having original maturities of less than three months. | |||||||||
(c) | Accounts Receivable and Allowance for Doubtful Accounts | ||||||||
Trade accounts receivable are recorded at the invoiced amount and do not bear interest. The Company maintains an allowance for doubtful accounts for estimated losses inherent in its accounts receivable. The Company reviews its allowance for doubtful accounts monthly including the analysis of historical trends, customer credit worthiness and the aging of receivables. In addition, past due balances are reviewed individually for collectibility. Account balances are charged off against the allowance after all means of collection have been exhausted and the potential for recovery is considered remote. | |||||||||
(d) | Inventories | ||||||||
Inventories are stated at the lower of cost or market. Cost is determined by a method that approximates the first-in, first-out method. Work in process and finished goods are valued based on underlying costs to manufacture balers which include direct materials, direct and indirect labor, and overhead. The Company reviews inventory for obsolescence on a regular basis. | |||||||||
(e) | Property, Plant, and Equipment | ||||||||
Property, plant and equipment are stated at cost net of accumulated depreciation. The cost of property, plant, and equipment is depreciated over the estimated useful lives of the related assets. Depreciation is computed primarily using the straight-line method over the estimated lives of 5-20 years for machinery and equipment and 31-40 years for buildings. | |||||||||
The Company reviews long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to estimated undiscounted future cash flows expected to be generated by the assets. If the carrying amount of an asset exceeds its estimated future cash flows, an impairment charge is recognized by the amount by which the carrying amount of the asset exceeds the fair value of the asset. Assets to be disposed of by sale are reported at the lower of the carrying amount or fair value less costs to sell, and depreciation ceases. | |||||||||
(f) | Income Taxes | ||||||||
Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. | |||||||||
The Company recognizes the effect of income tax positions only if those positions are more likely than not of being sustained. Recognized income tax positions are measured at the largest amount that is greater than 50% likely of being realized. Changes in recognition or measurement are reflected in the period in which the change in judgment occurs. | |||||||||
The Company records interest related to unrecognized tax benefits in interest expense and penalties in selling, general, and administrative expenses. | |||||||||
(g) | Revenue Recognition | ||||||||
The Company recognizes revenue when finished products and/or parts are shipped and the customer takes ownership and assumes the risk of loss. Revenue from installation services is recognized on completion of the service. The Company recognizes revenue from repair services in the period in which the service is provided. | |||||||||
(h) | Warranties and Service | ||||||||
The Company typically warrants its products for one (1) year from the date of sale as to materials and six (6) months as to labor, and offers services for other required repairs and maintenance. Service is rendered by repairing or replacing parts at the Company’s Jacksonville, Florida, facility, by on-site service provided by Company personnel who are based in Jacksonville, Florida, or by local service agents who are engaged as needed. The Company maintains an accrued liability for expected warranty claims. The warranty accrual is based on historical warranty costs, the quantity and type of balers currently under warranty, and known warranty issues. | |||||||||
Following is a tabular reconciliation of the changes in the warranty accrual: | |||||||||
2014 | 2013 | ||||||||
Beginning balance | $ | 60,000 | $ | 60,000 | |||||
Warranty service provided | (175,728 | ) | (203,656 | ) | |||||
New product warranties | 169,695 | 205,929 | |||||||
Changes to pre-existing warranty accruals | 11,033 | (2,273 | ) | ||||||
Ending balance | $ | 65,000 | $ | 60,000 | |||||
(i) | Earnings Per Share | ||||||||
Basic earnings per share is calculated using the weighted average number of common shares outstanding during each year. Diluted earnings per share includes the net number of shares that would be issued upon the exercise of stock options using the treasury stock method. Options are not considered in loss years as they would be anti-dilutive. There were no stock options outstanding for the years ended October 31, 2014 and 2013, respectively. | |||||||||
(j) | Business Reporting Segments | ||||||||
The Company operates in one segment based on the information monitored by the Company’s operating decision makers to manage the business. | |||||||||
(k) | Fair Value of Financial Instruments | ||||||||
The carrying amounts of the Company’s financial instruments, including cash and cash equivalents, accounts receivable, accounts payable, accrued liabilities, and customer deposits, approximate their fair value due to the short-term nature of these assets and liabilities. | |||||||||
(L) | Recent Accounting Pronouncements | ||||||||
In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606). This guidance supersedes the revenue recognition requirements in ASC Topic 605, Revenue Recognition, and most industry-specific guidance throughout the topic. The guidance requires an entity to recognize revenue that depicts the transfer of promised goods or services to customers in an amount that reflects the considerations to which the company expects to be entitled in exchange for those goods or services. The standard is effective for public entities for fiscal years and interim periods beginning December 15, 2016. The Company is currently assessing the impact of the adoption of this guidance on its financial position, results of operations or disclosures. | |||||||||
(M) | Reclassification | ||||||||
Certain amounts in the prior year's financial statements have been reclassified to conform with current year presentation. | |||||||||
Related_Party_Transactions
Related Party Transactions | 12 Months Ended |
Oct. 31, 2014 | |
Related Party Transactions [Abstract] | |
Related Party Transactions | (3) Related Party Transactions |
Leland E. Boren, a shareholder and director of the Company, is the owner of Avis Industrial Corporation (Avis). Mr. Boren controls over 50% of the outstanding shares of the Company. Avis owns 100% of The American Baler Company, a competitor of the Company. On January 1, 2014, Avis acquired The Harris Waste Management Group, Inc., also a competitor of the Company. On July 31, 2014 Harris acquired the assets of IPS Balers, Inc. in Baxley, Georgia, another competitor of the Company. These baler companies operate independent of each other. The Company had no equipment sales to, or purchases from these companies in the years ending October 31, 2014 and 2013. |
Inventories
Inventories | 12 Months Ended | |||
Oct. 31, 2014 | ||||
Inventory Disclosure [Abstract] | ||||
Inventories | (4) Inventories | |||
Inventories consisted of the following: | 2014 | 2013 | ||
Raw materials | $1,715,772 | $1,796,661 | ||
Work in process | 2,584,378 | 3,964,544 | ||
Finished goods | 488,731 | 199,160 | ||
$4,788,881 | $5,960,365 | |||
Property_Plant_and_Equipment
Property, Plant, and Equipment | 12 Months Ended | |||
Oct. 31, 2014 | ||||
Property, Plant and Equipment [Abstract] | ||||
Property, Plant, and Equipment | (5) Property, Plant, and Equipment | |||
The following is a summary of property, plant, and equipment, at cost, less accumulated depreciation and amortization: | ||||
2014 | 2013 | |||
Land | $ 82,304 | $ 82,304 | ||
Building and Improvements | 1,078,950 | 1,074,636 | ||
Machinery and Equipment | 1,980,778 | 1,884,754 | ||
Vehicles | 101,121 | 54,866 | ||
3,243,153 | 3,096,560 | |||
Less accumulated depreciation | 2,115,740 | 1,972,631 | ||
$ 1,127,413 | $ 1,123,929 | |||
Depreciation expense was $143,109 and $129,617 during the years ended October 31, 2014 and 2013, respectively. | ||||
Debt
Debt | 12 Months Ended | |||||
Oct. 31, 2014 | ||||||
Debt Disclosure [Abstract] | ||||||
Debt | (6) Debt | |||||
The Company has a $1,650,000 line of credit agreement with First Merchants Bank of Muncie Indiana that was entered into on January 7, 2013. The line of credit allows the Company to borrow at an interest rate equal to the sum of the LIBOR Rate applicable to each interest period plus 2.39%. The line of credit is secured by all assets of the Company and has a term of two years. The credit agreement has been modified to extend the termination date to March 15, 2015. The line of credit had an outstanding balance of $644,345 at October 31, 2014 and $1,648,649 at October 31, 2013. | ||||||
In July 2014 the Company financed a service truck by entering into a loan agreement with Ford Credit for $41,254. The note has a term of forty-eight months at an interest rate of 3.8%. Principal payments for fiscal years ending October 31, are scheduled as follows: | ||||||
2015 | $ | 9,879 | ||||
2016 | 10,255 | |||||
2017 | 10,646 | |||||
2018 | 7,322 | |||||
Total | $ | 38,102 |
Commitments_and_Contingencies
Commitments and Contingencies | 12 Months Ended |
Oct. 31, 2014 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | (7) Commitments and Contingencies |
The Company in the ordinary course of business, is subject to claims made under, and from time to time is named as a defendant in legal proceedings relating to the operations of its business, including the sale of its products. The Company believes that the reserves reflected in its financial statements are adequate to pay losses and loss adjustment expenses which may result from such claims and proceedings; however, such estimates may be more or less than the amount ultimately paid when the claims are settled. In the opinion of management, the ultimate disposition of these matters will not have a material adverse effect on the Company’s financial position, results of operations, or liquidity. | |
On August 26, 2010, the Company was served with a wrongful death lawsuit filed by the Estate of a former employee who was fatally injured in a workplace accident while an employee of the Company. The accident occurred in September 2008. The Plaintiff demanded $2,500,000 to settle this claim. A motion to dismiss the Complaint was granted without prejudice in January 2012, allowing the Plaintiff the ability to file an amended Complaint. In July 2014, the Company filed a Motion for Summary Judgment to have the complaint dismissed. On December 1, 2014, the Company and its insurance company agreed to settle this claim for $150,000. The Company will be responsible for $75,000, one-half of the total settlement amount. During the fourth quarter of fiscal 2014, the Company accrued an additional $50,000 for a total accrued liability of $75,000 related to this settlement. | |
On December 26, 2013 the Company was served with a civil action filed by Georgetown Paper Stock of Rockville, Inc. for breach of warranties. In November 2014, a jury returned a verdict in favor of the Plaintiff, Georgetown Paper Stock of Rockville, Inc. in the amount of $368,248. The Company was responsible for $277,968 of this amount and its dealer, BE Equipment, Inc., was responsible for $90,280. The baler involved in this claim will be returned to the Company. The Company recorded an accrued liability of $285,000 and an asset in transit of $85,000 resulting in net expense of $200,000 in the fourth quarter of fiscal 2014. | |
In November 2014, the Company agreed to a Consent Order with the Florida Department of Environmental Protection to remove contaminated solid waste sand blasting material from its property. The Company recorded an accrued liability of $291,000 as of October 31, 2014, for the cost of the removal of this material. |
Income_Taxes
Income Taxes | 12 Months Ended | ||||||||
Oct. 31, 2014 | |||||||||
Income Tax Disclosure [Abstract] | |||||||||
Income Taxes | (8) Income Taxes | ||||||||
Income tax benefit attributable to income from continuing operations consists of: | |||||||||
2014 | 2013 | ||||||||
Current income tax provision: | |||||||||
Federal | $ | 358,172 | $ | 256,596 | |||||
State | 45,871 | 23,823 | |||||||
404,043 | 280,419 | ||||||||
Deferred income tax provision: | |||||||||
Federal | 30,587 | 65,772 | |||||||
State | 2,840 | 6,106 | |||||||
33,427 | 71,878 | ||||||||
Income tax provision | $ | 437,470 | $ | 352,297 | |||||
The differences between income taxes as provided at the federal statutory tax rate of 34% and the Company’s actual income taxes are as follows: | |||||||||
2014 | 2013 | ||||||||
Expected federal income tax expense at | |||||||||
Statutory rate | $ | 391,642 | $ | 352,067 | |||||
State income tax expense, net of federal | |||||||||
income tax effect | 23,821 | 21,427 | |||||||
Other – meals and entertainment | 9,389 | 8,650 | |||||||
Other | 12,618 | (29,847 | ) | ||||||
Income tax provision | $ | 437,470 | $ | 352,297 | |||||
Tax assets are recognized in the balance sheet if it is more likely than not that they will be realized on future tax returns. As of October 31, 2014 and 2013, the net deferred tax assets were $46,196 and $79,623, respectively. The Company determined it is more likely than not that the results of future operations will generate sufficient taxable income to realize the deferred tax assets of October 31, 2014 and 2013 and no valuation allowance is deemed necessary. The realization of deferred tax assets will depend on the Company’s ability to continue to generate taxable income in the future. | |||||||||
The significant components of the net deferred income taxes at October 31, 2014 and 2013 are as follows: | |||||||||
2014 | 2013 | ||||||||
Deferred tax assets | |||||||||
Inventory reserve | $ | 70,238 | $ | 73,480 | |||||
Other reserves and allowances | 64,045 | 65,251 | |||||||
Capitalized inventory costs | 91,094 | 114,400 | |||||||
Total deferred tax assets | 225,377 | 253,131 | |||||||
Deferred tax liabilities | |||||||||
Property, plant, and equipment | (179,181 | ) | (173,508 | ) | |||||
Total gross deferred tax liabilities | (179,181 | ) | (173,508 | ) | |||||
Net deferred income taxes | $ | 46,196 | $ | 79,623 | |||||
For the years ended October 31, 2014 and 2013, the Company did not have any unrecognized tax benefits as a result of tax positions taken during a prior period or during the current period. No interest or penalties have been recorded as a result of tax uncertainties. Our evaluation was performed for the tax years ended October 31, 2006 through October 31, 2014, the tax years which remain subject to examination by tax jurisdictions as of October 31, 2014. |
Employees_Benefit_Plan
Employees' Benefit Plan | 12 Months Ended |
Oct. 31, 2014 | |
Compensation and Retirement Disclosure [Abstract] | |
Employees' Benefit Plan | (9) Employees’ Benefit Plan |
The Company has a defined contribution plan and profit sharing program for its employees. The Company made no contributions to the plan during the years ended October 31, 2014 or 2013. |
Business_and_Credit_Concentrat
Business and Credit Concentrations | 12 Months Ended |
Oct. 31, 2014 | |
Risks and Uncertainties [Abstract] | |
Business and Credit Concentrations | (10) Business and Credit Concentrations |
Export sales were approximately 49% and 43% of net sales for the years ended October 31, 2014 and 2013, respectively. The principal international markets served by the Company, include Canada, China, Mexico, United Kingdom, India, Korea, Japan, Russia, Saudi Arabia, and Brazil. In 2014, three customers accounted for 15.4%, 10.2% and 9.4% of net sales, respectively, while in 2013, three customers accounted for 17.3%, 13.6% and 13.2% of net sales, respectively. In 2014, 23.4% of the Company’s total sales were to Saudi Arabia and in 2013, 13.2% of the Company’s total sales were to Saudi Arabia. Two customers accounted for 40.2%, and 20.2% respectively, of the Company’s accounts receivable at October 31, 2014 and two customers accounted for 60.8%, and 17.1%, respectively, of the Company accounts receivable at October 31, 2013. | |
Summary_of_Significant_Account1
Summary of Significant Accounting Policies (Policies) | 12 Months Ended | ||||||||
Oct. 31, 2014 | |||||||||
Accounting Policies [Abstract] | |||||||||
Nature of Business | International Baler Corporation (the “Company”) is a manufacturer of baling equipment which utilizes technical, hydraulic and electrical mechanisms to compress a variety of materials into bales for easier handling, shipping, disposal, storage, and for recycling. Materials commonly baled include scrap metal, corrugated boxes, newsprint, aluminum cans, plastic bottles, and other solid waste. More sophisticated applications include baling of textile materials, fibers and synthetic rubber. The Company offers a wide variety of balers, standard models as well as custom models to meet specific customer requirements. | ||||||||
The Company’s customers include recycling facilities, paper mills, textile mills, and the companies which generate the materials for baling and recycling. | |||||||||
Use of Estimates | (a) | Use of Estimates | |||||||
The preparation of the financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Significant items subject to such estimates and assumptions include allowances for doubtful accounts, valuation of deferred tax assets, valuation of inventory, and estimates for warranty claims. Actual results could differ from those estimates. | |||||||||
Cash and Cash Equivalents | |||||||||
(b) | Cash and Cash Equivalents | ||||||||
For purposes of the statements of cash flows, cash and cash equivalents include cash on hand, bank demand accounts and money market accounts having original maturities of less than three months. | |||||||||
Accounts Receivable and Allowance for Doubtful Accounts | |||||||||
(c) | Accounts Receivable and Allowance for Doubtful Accounts | ||||||||
Trade accounts receivable are recorded at the invoiced amount and do not bear interest. The Company maintains an allowance for doubtful accounts for estimated losses inherent in its accounts receivable. The Company reviews its allowance for doubtful accounts monthly including the analysis of historical trends, customer credit worthiness and the aging of receivables. In addition, past due balances are reviewed individually for collectibility. Account balances are charged off against the allowance after all means of collection have been exhausted and the potential for recovery is considered remote. | |||||||||
Inventories | (d) | Inventories | |||||||
Inventories are stated at the lower of cost or market. Cost is determined by a method that approximates the first-in, first-out method. Work in process and finished goods are valued based on underlying costs to manufacture balers which include direct materials, direct and indirect labor, and overhead. The Company reviews inventory for obsolescence on a regular basis. | |||||||||
Property, Plant, and Equipment | |||||||||
(e) | Property, Plant, and Equipment | ||||||||
Property, plant and equipment are stated at cost net of accumulated depreciation. The cost of property, plant, and equipment is depreciated over the estimated useful lives of the related assets. Depreciation is computed primarily using the straight-line method over the estimated lives of 5-20 years for machinery and equipment and 31-40 years for buildings. | |||||||||
The Company reviews long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to estimated undiscounted future cash flows expected to be generated by the assets. If the carrying amount of an asset exceeds its estimated future cash flows, an impairment charge is recognized by the amount by which the carrying amount of the asset exceeds the fair value of the asset. Assets to be disposed of by sale are reported at the lower of the carrying amount or fair value less costs to sell, and depreciation ceases. | |||||||||
Income Taxes | (f) | Income Taxes | |||||||
Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. | |||||||||
The Company recognizes the effect of income tax positions only if those positions are more likely than not of being sustained. Recognized income tax positions are measured at the largest amount that is greater than 50% likely of being realized. Changes in recognition or measurement are reflected in the period in which the change in judgment occurs. | |||||||||
The Company records interest related to unrecognized tax benefits in interest expense and penalties in selling, general, and administrative expenses. | |||||||||
Revenue Recognition | |||||||||
(g) | Revenue Recognition | ||||||||
The Company recognizes revenue when finished products and/or parts are shipped and the customer takes ownership and assumes the risk of loss. Revenue from installation services is recognized on completion of the service. The Company recognizes revenue from repair services in the period in which the service is provided. | |||||||||
Warranties and Service | |||||||||
(h) | Warranties and Service | ||||||||
The Company typically warrants its products for one (1) year from the date of sale as to materials and six (6) months as to labor, and offers services for other required repairs and maintenance. Service is rendered by repairing or replacing parts at the Company’s Jacksonville, Florida, facility, by on-site service provided by Company personnel who are based in Jacksonville, Florida, or by local service agents who are engaged as needed. The Company maintains an accrued liability for expected warranty claims. The warranty accrual is based on historical warranty costs, the quantity and type of balers currently under warranty, and known warranty issues. | |||||||||
Following is a tabular reconciliation of the changes in the warranty accrual: | |||||||||
2014 | 2013 | ||||||||
Beginning balance | $ | 60,000 | $ | 60,000 | |||||
Warranty service provided | (175,728 | ) | (203,656 | ) | |||||
New product warranties | 169,695 | 205,929 | |||||||
Changes to pre-existing warranty accruals | 11,033 | (2,273 | ) | ||||||
Ending balance | $ | 65,000 | $ | 60,000 | |||||
Earnings Per Share | |||||||||
(i) | Earnings Per Share | ||||||||
Basic earnings per share is calculated using the weighted average number of common shares outstanding during each year. Diluted earnings per share includes the net number of shares that would be issued upon the exercise of stock options using the treasury stock method. Options are not considered in loss years as they would be anti-dilutive. There were no stock options outstanding for the years ended October 31, 2014 and 2013, respectively. | |||||||||
Business Reporting Segments | (j) | Business Reporting Segments | |||||||
The Company operates in one segment based on the information monitored by the Company’s operating decision makers to manage the business. | |||||||||
Fair Value of Financial Instruments | |||||||||
(k) | Fair Value of Financial Instruments | ||||||||
The carrying amounts of the Company’s financial instruments, including cash and cash equivalents, accounts receivable, accounts payable, accrued liabilities, and customer deposits, approximate their fair value due to the short-term nature of these assets and liabilities. | |||||||||
Recent Accounting Pronouncements | |||||||||
(L) | Recent Accounting Pronouncements | ||||||||
In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606). This guidance supersedes the revenue recognition requirements in ASC Topic 605, Revenue Recognition, and most industry-specific guidance throughout the topic. The guidance requires an entity to recognize revenue that depicts the transfer of promised goods or services to customers in an amount that reflects the considerations to which the company expects to be entitled in exchange for those goods or services. The standard is effective for public entities for fiscal years and interim periods beginning December 15, 2016. The Company is currently assessing the impact of the adoption of this guidance on its financial position, results of operations or disclosures. | |||||||||
Reclassification | |||||||||
(M) | Reclassification | ||||||||
Certain amounts in the prior year's financial statements have been reclassified to conform with current year presentation. |
Summary_of_Significant_Account2
Summary of Significant Accounting Policies (Tables) | 12 Months Ended | ||||||||
Oct. 31, 2014 | |||||||||
Accounting Policies [Abstract] | |||||||||
Warranty Accrual | 2014 | 2013 | |||||||
Beginning balance | $ | 60,000 | $ | 60,000 | |||||
Warranty service provided | (175,728 | ) | (203,656 | ) | |||||
New product warranties | 169,695 | 205,929 | |||||||
Changes to pre-existing warranty accruals | 11,033 | (2,273 | ) | ||||||
Ending balance | $ | 65,000 | $ | 60,000 |
Inventories_Tables
Inventories (Tables) | 12 Months Ended | |||
Oct. 31, 2014 | ||||
Inventory Disclosure [Abstract] | ||||
Inventories | Inventories consisted of the following: | 2014 | 2013 | |
Raw materials | $1,715,772 | $1,796,661 | ||
Work in process | 2,584,378 | 3,964,544 | ||
Finished goods | 488,731 | 199,160 | ||
$4,788,881 | $5,960,365 |
Debt_Tables
Debt (Tables) | 12 Months Ended | |||||
Oct. 31, 2014 | ||||||
Debt Tables | ||||||
Debt | 2015 | $ | 9,879 | |||
2016 | 10,255 | |||||
2017 | 10,646 | |||||
2018 | 7,322 | |||||
Total | $ | 38,102 |
Property_Plant_and_Equipment_T
Property, Plant, and Equipment (Tables) | 12 Months Ended | |||
Oct. 31, 2014 | ||||
Property, Plant and Equipment [Abstract] | ||||
Property, plant and equipment | 2014 | 2013 | ||
Land | $ 82,304 | $ 82,304 | ||
Building and Improvements | 1,078,950 | 1,074,636 | ||
Machinery and Equipment | 1,980,778 | 1,884,754 | ||
Vehicles | 101,121 | 54,866 | ||
3,243,153 | 3,096,560 | |||
Less accumulated depreciation | 2,115,740 | 1,972,631 | ||
$ 1,127,413 | $ 1,123,929 |
Income_Taxes_Tables
Income Taxes (Tables) | 12 Months Ended | ||||||||
Oct. 31, 2014 | |||||||||
Income Taxes Tables | |||||||||
Income Tax Benefit | 2014 | 2013 | |||||||
Current income tax provision: | |||||||||
Federal | $ | 358,172 | $ | 256,596 | |||||
State | 45,871 | 23,823 | |||||||
404,043 | 280,419 | ||||||||
Deferred income tax provision: | |||||||||
Federal | 30,587 | 65,772 | |||||||
State | 2,840 | 6,106 | |||||||
33,427 | 71,878 | ||||||||
Income tax provision | $ | 437,470 | $ | 352,297 | |||||
Income tax provide by federal statutory rate | 2014 | 2013 | |||||||
Expected federal income tax expense at | |||||||||
Statutory rate | $ | 391,642 | $ | 352,067 | |||||
State income tax expense, net of federal | |||||||||
income tax effect | 23,821 | 21,427 | |||||||
Other – meals and entertainment | 9,389 | 8,650 | |||||||
Other | 12,618 | (29,847 | ) | ||||||
Income tax provision | $ | 437,470 | $ | 352,297 | |||||
Net Deferred Income Taxes | 2014 | 2013 | |||||||
Deferred tax assets | |||||||||
Inventory reserve | $ | 70,238 | $ | 73,480 | |||||
Other reserves and allowances | 64,045 | 65,251 | |||||||
Capitalized inventory costs | 91,094 | 114,400 | |||||||
Total deferred tax assets | 225,377 | 253,131 | |||||||
Deferred tax liabilities | |||||||||
Property, plant, and equipment | (179,181 | ) | (173,508 | ) | |||||
Total gross deferred tax liabilities | (179,181 | ) | (173,508 | ) | |||||
Net deferred income taxes | $ | 46,196 | $ | 79,623 |
Summary_of_Significant_Account3
Summary of Significant Accounting Policies - Warranty Accrual (Details) (USD $) | 12 Months Ended | |
Oct. 31, 2014 | Oct. 31, 2013 | |
Standard Product Warranty Accrual, Balance Sheet Classification [Abstract] | ||
Beginning balance | $60,000 | $60,000 |
Warranty service provided | -175,728 | -203,656 |
New product warranties | 169,695 | 205,929 |
Changes to pre-existing warranty accruals | 11,033 | -2,273 |
Ending balance | $65,000 | $60,000 |
Related_Party_Transactions_Det
Related Party Transactions (Details Narrative) | Oct. 31, 2014 |
Related Party Transactions [Abstract] | |
Ownership | 50.00% |
Inventories_Inventories_Detail
Inventories - Inventories (Details) (USD $) | Oct. 31, 2014 | Oct. 31, 2013 |
Inventory Disclosure [Abstract] | ||
Raw materials | $1,715,772 | $1,796,661 |
Work in process | 2,584,378 | 3,964,544 |
Finished goods | 488,731 | 199,160 |
Inventories | $4,788,881 | $5,960,365 |
Property_Plant_and_Equipment_D
Property, Plant, and Equipment (Details) (USD $) | Oct. 31, 2014 | Oct. 31, 2013 |
Property Plant And Equipment Details | ||
Land | $82,304 | $82,304 |
Building and Improvements | 1,078,950 | 1,074,636 |
Machinery and Equipment | 1,980,778 | 1,884,754 |
Vehicles | 101,121 | 54,866 |
Property, plant and equipment, at cost: | 3,243,153 | 3,096,560 |
Less: accumulated depreciation | 2,115,740 | 1,972,631 |
Net property, plant and equipment | $1,127,413 | $1,123,929 |
Property_Plant_and_Equipment_D1
Property, Plant, and Equipment (Details Narrative) (USD $) | 12 Months Ended | |
Oct. 31, 2014 | Oct. 31, 2013 | |
Property, Plant and Equipment [Abstract] | ||
Depreciation Expense | $143,109 | $129,617 |
Debt_Details
Debt (Details) (USD $) | Oct. 31, 2014 |
Debt Details | |
2015 | $9,879 |
2016 | 10,255 |
2017 | 10,646 |
2018 | 7,322 |
Total | $38,102 |
Debt_Details_Narrative
Debt (Details Narrative) (USD $) | 12 Months Ended | |
Oct. 31, 2014 | Oct. 31, 2013 | |
Short-term Debt [Line Items] | ||
Promissory note | $644,345 | $1,648,649 |
Line of Credit [Member] | ||
Short-term Debt [Line Items] | ||
Line of Credit Agreement | 1,650,000 | |
Interest Rate Terms | LIBOR Rate applicable to each interest period plus 2.39% | |
Auto Loan Agreement [Member] | ||
Short-term Debt [Line Items] | ||
Line of Credit Agreement | $41,254 | |
Interest Rate Terms | term of forty-eight months at an interest rate of 3.8% |
Commitment_and_Contingencies_D
Commitment and Contingencies (Details Narrative) (USD $) | 12 Months Ended |
Oct. 31, 2014 | |
Estate of a former employee [Member] | |
Loss Contingencies [Line Items] | |
Alleged Damages | $2,500,000 |
Claim settlement | 150,000 |
Settlement to be paid by company | 75,000 |
Settlement to be paid by third party | 75,000 |
Accrued settlement liability | 50,000 |
Georgetown Paper Stock of Rockville, Inc [Member] | |
Loss Contingencies [Line Items] | |
Alleged Damages | 368,248 |
Settlement to be paid by company | 277,968 |
Settlement to be paid by third party | 90,280 |
Accrued settlement liability | 285,000 |
Deferred settlement | 85,000 |
Net settlement paid | 200,000 |
Florida Department of Environmental Protection [Member] | |
Loss Contingencies [Line Items] | |
Accrued settlement liability | $291,000 |
Income_Taxes_Income_Tax_Benefi
Income Taxes - Income Tax Benefit (Details) (USD $) | 12 Months Ended | |
Oct. 31, 2014 | Oct. 31, 2013 | |
Current income tax provision: | ||
Federal | $358,172 | $256,596 |
State | 45,871 | 23,823 |
Current income tax provision | 404,043 | 280,419 |
Federal | 30,587 | 65,772 |
State | 2,840 | 6,106 |
Deferred income tax provision | 33,427 | 71,878 |
Income tax provision | $437,470 | $352,297 |
Income_Taxes_Income_tax_provid
Income Taxes - Income tax provide by federal statutory rate (Details) (USD $) | 12 Months Ended | |
Oct. 31, 2014 | Oct. 31, 2013 | |
Income Tax Disclosure [Abstract] | ||
Expected federal income tax expense Statutory rate | $391,642 | $352,067 |
State income tax expense, net federal income tax effect | 23,821 | 21,427 |
Other - meals and entertainment | 9,389 | 8,650 |
Other | 12,618 | -29,847 |
Income tax provision | $437,470 | $352,297 |
Income_Taxes_Net_Deferred_Inco
Income Taxes - Net Deferred Income Taxes (Details) (USD $) | Oct. 31, 2014 | Oct. 31, 2013 |
Deferred tax assets | ||
Inventory Reserve | $70,238 | $73,480 |
Other Reserves and allowences | 64,045 | 65,251 |
Capitalized inventory costs | 91,094 | 114,400 |
Total deferred tax assets | 225,377 | 253,131 |
Deferred tax liabilities | ||
Property, plant, and equipment | -179,181 | -173,508 |
Total gross deferred tax liabilities | -179,181 | -173,508 |
Net deferred income taxes | $46,196 | $79,623 |
Income_Taxes_Details_Narrative
Income Taxes (Details Narrative) | 12 Months Ended |
Oct. 31, 2014 | |
Components of Deferred Tax Assets [Abstract] | |
Federal Statutory Rate | 34.00% |
Business_and_Credit_Concentrat1
Business and Credit Concentrations (Details Narrative) | Oct. 31, 2014 | Oct. 31, 2013 |
Export Sales [Member] | ||
Concentration Risk [Line Items] | ||
Sales | 49.00% | 43.00% |
Customer #1 [Member] | ||
Concentration Risk [Line Items] | ||
Sales | 15.40% | 17.30% |
Accounts Receivable | 40.20% | 60.80% |
Customer #2 [Member] | ||
Concentration Risk [Line Items] | ||
Sales | 10.20% | 13.60% |
Accounts Receivable | 20.20% | 17.10% |
Customer #3 [Member] | ||
Concentration Risk [Line Items] | ||
Sales | 9.40% | 13.20% |
Saudi Arabia [Member] | ||
Concentration Risk [Line Items] | ||
Sales | 23.40% | 13.20% |