Document And Entity Information
Document And Entity Information - USD ($) | 12 Months Ended | ||
Aug. 31, 2019 | Nov. 27, 2019 | May 31, 2019 | |
Document And Entity Information [Abstract] | |||
Document Type | 10-K | ||
Amendment Flag | false | ||
Document Period End Date | Aug. 31, 2019 | ||
Document Fiscal Year Focus | 2019 | ||
Document Fiscal Period Focus | FY | ||
Entity Registrant Name | EACO CORP | ||
Entity Central Index Key | 0000784539 | ||
Current Fiscal Year End Date | --08-31 | ||
Entity Filer Category | Non-accelerated Filer | ||
Trading Symbol | EACO | ||
Entity Public Float | $ 1,732,000 | ||
Entity Common Stock, Shares Outstanding | 4,861,590 | ||
Entity Voluntary Filers | No | ||
Entity Shell Company | false | ||
Entity Small Business | true | ||
Entity Current Reporting Status | Yes | ||
Entity Interactive Data Current | Yes | ||
Entity Well-known Seasoned Issuer | No | ||
Entity Emerging Growth Company | false | ||
Title of 12(g) Security | Common Stock | ||
Entity Address, State or Province | CA |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) | Aug. 31, 2019 | Aug. 31, 2018 |
Current Assets: | ||
Cash and cash equivalents | $ 4,692,000 | $ 2,705,000 |
Restricted cash, current | 655,000 | 933,000 |
Trade accounts receivable, net | 31,655,000 | 27,030,000 |
Inventory, net | 37,259,000 | 30,531,000 |
Marketable securities, trading | 1,873,000 | 2,846,000 |
Prepaid expenses and other current assets | 4,234,000 | 1,590,000 |
Total current assets | 80,368,000 | 65,635,000 |
Property, equipment and leasehold improvements: | ||
Held for use, net | 3,717,000 | 9,847,000 |
Held for sale, net | 6,855,000 | 0 |
Total property, equipment and leasehold improvements, net | 10,572,000 | 9,847,000 |
Other assets: | ||
Other assets, net | 1,938,000 | 1,570,000 |
Total assets | 92,878,000 | 77,052,000 |
Current Liabilities: | ||
Trade accounts payable | 21,138,000 | 17,678,000 |
Accrued expenses and other current liabilities | 8,297,000 | 8,205,000 |
Liability for short sales of trading securities | 655,000 | 933,000 |
Current portion of long-term debt | 5,484,000 | 146,000 |
Total current liabilities | 35,574,000 | 26,962,000 |
Non-current Liabilities: | ||
Long-term debt | 6,114,000 | 8,204,000 |
Total liabilities | 41,688,000 | 35,166,000 |
Commitments and Contingencies (Note 8) | ||
Shareholders' Equity: | ||
Convertible preferred stock, $0.01 par value per share; 10,000,000 shares authorized; 36,000 shares outstanding (liquidation value $900) | 1,000 | 1,000 |
Common stock, $0.01 par value per share; 8,000,000 shares authorized; 4,861,590 shares outstanding | 49,000 | 49,000 |
Additional paid-in capital | 12,378,000 | 12,378,000 |
Accumulated other comprehensive income | 876,000 | 928,000 |
Retained earnings | 37,886,000 | 28,530,000 |
Total shareholders' equity | 51,190,000 | 41,886,000 |
Total liabilities and shareholders' equity | $ 92,878,000 | $ 77,052,000 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - USD ($) | Aug. 31, 2019 | Aug. 31, 2018 |
Consolidated Balance Sheets | ||
Convertible preferred stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Convertible preferred stock, shares authorized | 10,000,000 | 10,000,000 |
Convertible preferred stock, shares outstanding | 36,000 | 36,000 |
Convertible preferred stock, liquidated (in dollars) | $ 900 | $ 900 |
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock, shares authorized | 8,000,000 | 8,000,000 |
Common stock, shares outstanding | 4,861,590 | 4,861,590 |
Consolidated Statements of Oper
Consolidated Statements of Operations - USD ($) | 12 Months Ended | |
Aug. 31, 2019 | Aug. 31, 2018 | |
Consolidated Statements of Operations | ||
Revenues | $ 221,241,000 | $ 193,284,000 |
Cost of revenues | 160,008,000 | 138,255,000 |
Gross margin | 61,233,000 | 55,029,000 |
Operating expenses: | ||
Selling, general and administrative expenses | 48,213,000 | 44,705,000 |
Income from operations | 13,020,000 | 10,324,000 |
Other (expense) income: | ||
Net gain on trading securities | 427,000 | 273,000 |
Interest and other expense | (475,000) | (477,000) |
Other expense, net | (48,000) | (204,000) |
Income before income taxes | 12,972,000 | 10,120,000 |
Provision for income taxes | 3,540,000 | 3,171,000 |
Net income | 9,432,000 | 6,949,000 |
Cumulative preferred stock dividend | (76,000) | (76,000) |
Net income attributable to common shareholders | $ 9,356,000 | $ 6,873,000 |
Basic and diluted earnings per common share: | $ 1.92 | $ 1.41 |
Basic and diluted weighted average common shares outstanding | 4,861,590 | 4,861,590 |
Consolidated Statements of Comp
Consolidated Statements of Comprehensive Income - USD ($) $ in Thousands | 12 Months Ended | |
Aug. 31, 2019 | Aug. 31, 2018 | |
Consolidated Statements of Comprehensive Income | ||
Net income | $ 9,432 | $ 6,949 |
Other comprehensive income, net of tax | ||
Foreign translation (loss) gain | (52) | 181 |
Total comprehensive income | $ 9,380 | $ 7,130 |
Consolidated Statements of Shar
Consolidated Statements of Shareholders' Equity - USD ($) $ in Thousands | Convertible Preferred Stock | Common Stock | Additional Paid-in Capital | Accumulated Other Comprehensive Income | Retained Earnings | Total |
Balance at Aug. 31, 2017 | $ 1 | $ 49 | $ 12,378 | $ 747 | $ 21,657 | $ 34,832 |
Balance (in Shares) at Aug. 31, 2017 | 36,000 | 4,861,590 | ||||
Preferred dividends | $ 0 | $ 0 | 0 | 0 | (76) | (76) |
Foreign translation gain | 0 | 0 | 0 | 181 | 0 | 181 |
Net income | 0 | 0 | 0 | 0 | 6,949 | 6,949 |
Balance at Aug. 31, 2018 | $ 1 | $ 49 | 12,378 | 928 | 28,530 | 41,886 |
Balance (in Shares) at Aug. 31, 2018 | 36,000 | 4,861,590 | ||||
Preferred dividends | $ 0 | $ 0 | 0 | 0 | (76) | (76) |
Foreign translation gain | 0 | 0 | 0 | (52) | 0 | (52) |
Net income | 0 | 0 | 0 | 0 | 9,432 | 9,432 |
Balance at Aug. 31, 2019 | $ 1 | $ 49 | $ 12,378 | $ 876 | $ 37,886 | $ 51,190 |
Balance (in Shares) at Aug. 31, 2019 | 36,000 | 4,861,590 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 12 Months Ended | |
Aug. 31, 2019 | Aug. 31, 2018 | |
Operating activities: | ||
Net income | $ 9,432 | $ 6,949 |
Adjustments to reconcile net income to net cash (used in) provided by operating activities: | ||
Depreciation and amortization | 1,047 | 1,009 |
Bad debt expense | 340 | 106 |
Inventory write-downs | 1,290 | 839 |
Net gain on trading securities | (427) | (273) |
(Increase) decrease in: | ||
Trade accounts receivable | (5,718) | (5,797) |
Inventory | (8,018) | (4,883) |
Prepaid expenses and other assets | (3,012) | (655) |
Increase (decrease) in: | ||
Trade accounts payable | 3,313 | 4,009 |
Accrued expenses and other current liabilities | 845 | 3,667 |
Net cash (used in) provided by operating activities | (908) | 4,971 |
Investing activities: | ||
Purchase of property, equipment and leasehold improvements | (1,772) | (1,600) |
Net sales (purchases) of marketable securities, trading | 1,400 | (977) |
Net change in liabilities for short sales of trading securities | (278) | 226 |
Net cash used in investing activities | (650) | (2,351) |
Financing activities: | ||
Borrowings (payments) on revolving credit facility, net | 3,153 | (3,853) |
Borrowings on construction loan | 342 | 0 |
Repayments on long-term debt | (247) | (128) |
Preferred stock dividend | (76) | (76) |
Bank overdraft | 147 | 317 |
Net cash provided by (used in) financing activities | 3,319 | (3,740) |
Effect of foreign currency exchange rate changes on cash and cash equivalents | (52) | 181 |
Net increase (decrease) in cash, cash equivalents, and restricted cash | 1,709 | (939) |
Cash, cash equivalents and restricted cash - beginning of period | 3,638 | 4,577 |
Cash, cash equivalents and restricted cash - end of period | 5,347 | 3,638 |
Supplemental disclosures of cash flow information: | ||
Cash paid for interest | 475 | 466 |
Cash paid for income taxes | $ 3,107 | $ 2,055 |
Organization and Basis of Prese
Organization and Basis of Presentation | 12 Months Ended |
Aug. 31, 2019 | |
Organization and Basis of Presentation | |
Organization and Basis of Presentation | Note 1. Organization and Basis of Presentation EACO Corporation (“EACO”), incorporated in Florida in September 1985, is a holding company, primarily comprised of its wholly-owned subsidiary, Bisco Industries, Inc. (“Bisco”) and Bisco’s wholly-owned Canadian subsidiary, Bisco Industries Limited. Substantially all of EACO’s operations are conducted through Bisco and Bisco Industries Limited. Bisco was incorporated in Illinois in 1974 and is a distributor of electronic components and fasteners with 49 sales offices and seven distribution centers located throughout the United States and Canada. Bisco supplies parts used in the manufacture of products in a broad range of industries, including the aerospace, circuit board, communication, computer, fabrication, instrumentation, industrial equipment and marine industries. |
Significant Accounting Policies
Significant Accounting Policies | 12 Months Ended |
Aug. 31, 2019 | |
Significant Accounting Policies | |
Significant Accounting Policies | Note 2. Significant Accounting Policies Principles of Consolidation The consolidated financial statements for all periods presented include the accounts of EACO, Bisco and Bisco Industries Limited (which are collectively referred to herein as the “Company”, “we”, “us” and “our”). All significant intercompany transactions and balances have been eliminated in consolidation. Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. These estimates include allowance for doubtful trade accounts receivable, provisions for slow moving and obsolete inventory, recoverability of the carrying value and estimated useful lives of long-lived assets, and the valuation allowance against deferred tax assets. Actual results could differ from those estimates. Cash and Cash Equivalents The Company considers all highly liquid investments with an original maturity of three months or less when purchased to be cash equivalents. Trade Accounts Receivable Trade accounts receivable are carried at original invoice amount, less an estimate for an allowance for doubtful accounts. Management determines the allowance for doubtful accounts by identifying probable credit losses in the Company’s accounts receivable and reviewing historical data to estimate the collectability on items not yet specifically identified as problem accounts. Trade accounts receivable are written off when deemed uncollectible. Recoveries of trade accounts receivable previously written off are recorded when received. A trade account receivable is considered past due if any portion of the receivable balance is outstanding for more than 30 days. The Company does not charge interest on past due balances. The allowance for doubtful accounts was approximately $169,000 and $111,000 at August 31, 2019 and 2018, respectively. Inventories Inventories consist primarily of electronic fasteners and components, and are stated at the lower of cost or estimated net realizable value. Cost is determined using the average cost method. Inventories are adjusted for slow moving or obsolete items approximating $1,290,000 and $839,000 at August 31, 2019 and 2018, respectively. The adjustments to inventory costs are based upon management’s review of inventories on-hand over their expected future utilization and length of time held by the Company. Property, Equipment, and Leasehold Improvements Property, equipment, and leasehold improvements are stated at cost net of accumulated depreciation and amortization. Depreciation and amortization expense is determined using the straight-line method over the estimated useful lives of the assets. The depreciable life for buildings is thirty-five years and five to seven years for furniture, fixtures and equipment. Leasehold improvements are amortized over the estimated useful life of the asset or the remaining lease term, whichever is less. Maintenance and repairs are charged to expense as incurred. Renewals and improvements of a major nature are capitalized. At the time of retirement or disposition of the asset, the cost and accumulated depreciation or amortization are removed from the accounts and any gains or losses are reflected in earnings. Impairment of Long Lived Assets The Company’s policy is to review long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. For the purpose of the impairment review, assets are tested on an individual basis. The recoverability of the assets is measured by a comparison of the carrying value of each asset to the future net undiscounted cash flows expected to be generated by such assets. If such assets are considered impaired, the impairment to be recognized is measured by the amount by which the carrying value of the assets exceeds their estimated fair value. Marketable Trading Securities The Company invests in marketable trading securities, which include long and short positions in equity securities. Short positions represent securities sold, but not yet purchased. Short sales result in obligations to purchase securities at a later date and are separately presented as a liability in the Company’s consolidated balance sheets. As of August 31, 2019 and 2018, the Company’s total obligation for securities sold, but not yet purchased was approximately $655,000 and $933,000, respectively. Restricted cash to collateralize the Company’s obligation for short sales was $655,000 and $933,000 at August 31, 2019 and 2018, respectively. These securities are stated at fair value, which is determined using the quoted closing prices at each reporting date. Realized gains and losses on investment transactions are recognized as incurred in the consolidated statements of operations. Net unrealized gains and losses are reported in the statements of operations and represent the change in the market value of investment holdings during the period. See Note 10. Revenue Recognition We derive our revenue primarily from product sales. We determine revenue recognition through the following steps: (1) identification of the contract with a customer; (2) identification of the performance obligations in the contract; (3) determination of the transaction price; (4) allocation of the transaction price to the performance obligations in the contract; (5) recognition of revenue when, or as, we satisfy a performance obligation. The Company's performance obligations consist solely of product shipped to customers. Revenue from product sales is recognized upon transfer of control of promised products to customers in an amount that reflects the consideration we expect to receive in exchange for these products. Revenue is recognized net of returns and any taxes collected from customers. We offer industry standard contractual terms in our purchase orders. Freight revenue associated with product sales are recognized at point of shipment and when the criteria discussed above have been met. Freight revenues have represented less than 1% of total revenues for fiscal 2019 and fiscal 2018. Income Taxes Deferred taxes on income result from temporary differences between the reporting of income for financial statement and tax reporting purposes. A valuation allowance related to a deferred tax asset is recorded when it is more likely than not that some or all of the deferred tax asset will not be realized. In making such determination, the Company considers all available positive and negative evidence, including scheduled reversals of deferred tax liabilities, projected future taxable income (if any), tax planning strategies and recent financial performance. We provide tax contingencies, if any, for federal, state, local and international exposures relating to audit results, tax planning initiatives and compliance responsibilities. The development of these reserves requires judgments about tax issues, potential outcomes and timing. Although the outcome of these tax audits is uncertain, in management’s opinion adequate provisions for income taxes have been made for potential liabilities emanating from these reviews. If actual outcomes differ materially from these estimates, they could have a material impact on our results of operations. Freight and Shipping/Handling Shipping and handling expenses are included in cost of revenues, and were approximately $4,083,000 and $3,293,000 for the years ended August 31, 2019 and 2018, respectively. Advertising Costs Advertising costs are expensed as incurred. For fiscal 2019 and fiscal 2018, the Company spent approximately $392,000 and $403,000 on advertising, respectively. Liabilities of Discontinued Operations Prior to June 2005, EACO self-insured workers’ compensation claims losses up to certain limits. The liability for workers’ compensation represents an estimate of the present value of the ultimate cost of uninsured losses, which are unpaid as of the balance sheet dates. The Company pursues recovery of certain claims from an insurance carrier. Recoveries, if any, are recognized when claims are approved. The outstanding liability for worker’s compensation at year end is not significant and is included in accrued expenses and other current liabilities at August 31, 2019 and 2018. Operating Leases Certain Company leases for its sales offices and distribution centers provide for minimum annual payments that adjust over the life of the lease. The aggregate minimum annual payments are expensed on the straight-line basis over the minimum lease term. The Company recognizes a deferred rent liability for rent escalations when the amount of straight-line rent exceeds the lease payments, and reduces the deferred rent liability when the lease payments exceed the straight-line rent expense. Earnings Per Common Share Basic earnings per common share for the years ended August 31, 2019 and 2018 were computed based on the weighted average number of common shares outstanding. Diluted earnings per share for those periods have been computed based on the weighted average number of common shares outstanding, giving effect to all potentially dilutive common shares that were outstanding during the respective periods. Potentially dilutive common shares represent 40,000 common shares issuable upon conversion of 36,000 shares of Series A convertible preferred stock, which were outstanding at August 31, 2019 and 2018. Such securities are excluded from the weighted average shares outstanding used to calculate diluted earnings per common share for the years ended August 31, 2019 and 2018 as their inclusion would be anti-dilutive since the conversion price was greater than the average market price of the Company’s common stock during these periods. Foreign Currency Translation and Transactions Assets and liabilities recorded in functional currencies other than the U.S. dollar (Canadian dollars for Bisco’s Canadian subsidiary) are translated into U.S. dollars at the period-end rate of exchange. The exchange rate for Canadian dollars at August 31, 2019 and 2018 was $0.75 and $0.77, respectively. The resulting balance sheet translation adjustments are charged or credited directly to accumulated other comprehensive income (loss). Revenue and expenses are transacted at the average exchange rates for the years ended August 31, 2019 and 2018. The average exchange rates for the years ended August 31, 2019 and 2018 were $0.75 and $0.79, respectively. The percentage of total assets held outside the United States, in Canada, was 4% as of August 31, 2019 and 2018. All foreign sales, excluding Canadian sales, are denominated in U.S. dollars and, therefore, are not subject to foreign currency risk exposure. Concentrations Financial instruments that subject the Company to credit risk include cash balances in excess of federal depository insurance limits and accounts receivable. Cash accounts maintained by the Company at U.S. and Canadian financial institutions are insured by the Federal Deposit Insurance Corporation and Canadian Deposit Insurance Corporation, respectively. A significant portion of the Company’s cash was held by its Canadian subsidiary. The Company has not experienced any losses in such accounts. Net sales to customers outside the United States and related trade accounts receivable were approximately 9% and 11%, respectively at August 31, 2018, and 9% and 12%, respectively at August 31, 2019. No single customer accounted for more than 10% of total revenues for either of the years ended August 31, 2019 or 2018. The following table presents our sales within geographic regions as a percentage of net revenue, which is based on the “bill-to” location of our customers: Years Ended August 31, 2019 2018 U.S. 91 % 91 % Canada 4 % 4 % Other 5 % 5 % Total 100 % 100 % Estimated Fair Value of Financial Instruments and Certain Nonfinancial Assets and Liabilities The Company’s financial instruments other than its marketable securities include cash and cash equivalents, trade accounts receivable, prepaid expenses, security deposits, trade accounts payable, line of credit, accrued expenses and long-term debt. Management believes that the fair value of these financial instruments approximate their carrying amounts based on their relatively short-term nature and current market indicators, such as prevailing interest rates. The Company’s marketable securities are measured at fair value on a recurring basis. See Note 10. During the years ended August 31, 2019 and 2018, the Company did not have any nonfinancial assets or liabilities that were measured at estimated fair value on a recurring or nonrecurring basis. Significant Recent Accounting Pronouncements In May 2014, the Financial Accounting Standards Board ("FASB")issued Accounting Standards Update ("ASU") 2014-09, Revenue from Contracts with Customers (Topic 606) as modified by subsequently issued ASUs 2015-14, 2016-08, 2016-10, 2016-12 and 2016-20 (collectively "new revenue standard"). The core principle of the ASU, among other changes, is that an entity should recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The Company has elected the modified retrospective method and adopted the new revenue guidance effective September 1, 2018, with no impact to the opening retained earnings. In July 2015, the FASB issued ASU 2015‑11 “Simplifying the Measurement of Inventory”. The guidance is part of the “Simplification Initiative” to identify and re-evaluate areas where the generally accepted accounting principles may be complex and cumbersome to apply. The guidance will require that inventory be stated at the lower of cost and net realizable value as opposed to the lower of cost or market. Net realizable value is the estimated selling price for the inventory less completion, disposal and transportation costs. The guidance becomes effective for fiscal years beginning after December 15, 2016. The guidance became effective for the Company beginning September 1, 2017 and did not have a material impact on our consolidated financial position, results of operations or cash flows. In February 2016, the FASB issued ASU 2016-02, "Leases (Topic 842)," which will require lessees to recognize almost all leases on their balance sheet as a right-of-use asset and a lease liability. For income statement purposes, the FASB retained a dual model, requiring leases to be classified as either operating or finance. Classification will be based on criteria that are largely similar to those applied in current lease accounting, but without explicit bright lines. Lessor accounting is similar to the current model, but updated to align with certain changes to the lessee model and the new revenue recognition standard. This ASU is effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. The Company will adopt ASU 2016-02 on September 1, 2019 and apply the package of practical expedients included therein, as well as utilize the transition method included in ASU 2018-11. By applying ASU 2016-02 at the adoption date, as opposed to at the beginning of the earliest period presented, the presentation of financial information for periods prior to September 1, 2019 will remain unchanged and in accordance with Leases (Topic 840). On September 1, 2019, the Company expects to recognize right of use assets of approximately $13.7 million (net of the reversal of the current deferred rent liability) and lease liabilities of approximately $13.9 million in the consolidated balance sheet. In June 2016, the FASB issued ASU 2016‑13, “Financial Instruments – Credit Losses”, which will require the measurement of all expected credit losses for financial assets held at the reporting date based on historical experience, current conditions, and reasonable and supportable forecasts. The guidance is effective for annual reporting periods beginning after December 15, 2019 and interim periods within those fiscal years. In November 2019, FASB deferred the effective dates of the new credit losses standard for all entities except SEC filers that are not smaller reporting companies to fiscal year beginning after December 15, 2022, including interim periods within those fiscal years. The Company is currently evaluating this statement and its impact on its results of operations or financial position. In November 2016, the FASB issued ASU 2016‑18, “Statement of Cash Flows - Restricted Cash a consensus of the FASB Emerging Issues Task Force.” This standard requires restricted cash and cash equivalents to be included with cash and cash equivalents on the statement of cash flows under a retrospective transition approach. The guidance will become effective for fiscal years beginning after December 15, 2017 and interim periods within those fiscal years with early adoption permitted. The Company has elected to adopt the new cash flow guidance effective September 1, 2018, with an immaterial impact to the statements of cash flows. |
Property, Equipment and Leaseho
Property, Equipment and Leasehold Improvements | 12 Months Ended |
Aug. 31, 2019 | |
Property, Equipment and Leasehold Improvements | |
Property, Equipment and Leasehold Improvements | Note 3. Property, Equipment and Leasehold Improvements Property, equipment and leasehold improvements are summarized as follows: August 31, 2019 2018 Held for use: Machinery and equipment $ 8,739,000 $ 7,903,000 Furniture and fixtures 1,112,000 1,013,000 Vehicles 155,000 155,000 Leasehold improvements 2,514,000 2,495,000 Land — 1,717,000 Building — 5,490,000 Construction in progress 820,000 — Total held for use 13,340,000 18,773,000 Less: accumulated depreciation and amortization (9,623,000) (8,926,000) Total property, equipment, and leasehold improvements held for use, net 3,717,000 9,847,000 Held for sale: Land 1,716,000 — Building 5,489,000 — Total held for sale 7,205,000 — Less: accumulated depreciation and amortization (350,000) — Total property, equipment, and leasehold improvements held for sale, net 6,855,000 — Total property, equipment, and leasehold improvements, net $ 10,572,000 $ 9,847,000 On May 19, 2017, the Company purchased the Lakeview Property from the Glen F. Ceiley and Barbara A. Ceiley Revocable Trust (the “Trust”), which is the grantor trust of Glen Ceiley, the Company’s Chief Executive Officer, Chairman of the Board and majority shareholder. The total purchase price of the Lakeview Property was $7,200,000, which was the market price at the time of purchase supported by an independent appraiser. The purchase of the property was financed through borrowings on the line of credit of $1,800,000 and a term loan with the Bank. See Notes 4 and 11. During fiscal 2019, the Company started construction of leasehold improvements on the Hunter Property, which will serve as the Company's new corporate headquarters. The Company entered into a loan agreement with the Bank to borrow up to $5 million from the Construction Loan for the primary purpose of financing tenant improvements on the Hunter Property. Interest incurred during the construction of the leasehold improvements was capitalized as part of the cost of the leasehold improvements and recorded on the balance sheet, See Note 4. The Company plans to move its corporate headquarters during January 2020 to the Hunter Facility, which is significantly larger than our current headquarters. The Company expects to incur higher capital expenses during the first and second quarter of fiscal year 2020 for capital costs for tenant improvements to modify this facility to meet the Company's requirements. For the years ended August 31, 2019 and 2018, depreciation and amortization expense was $1,047,000 and $1,009,000, respectively. |
Long-Term Debt
Long-Term Debt | 12 Months Ended |
Aug. 31, 2019 | |
Long-Term Debt | |
Long-Term Debt | Note 4. Long-Term Debt The Company currently has a $10,000,000 line of credit agreement with the Bank. On July 18, 2019, the Company entered into a Change in Terms Agreement dated July 12, 2019 with the Bank (the “Amendment”). The Amendment modifies the Company’s $10,000,000 line of credit between the Company and the Bank to: (i) extend the expiration date of the line of credit under the agreement from August 20, 2020 to July 5, 2021; (ii) change the monthly payment date to the fifth of every month; (iii) modify the variable interest rate on the line of credit, which is subject to change from time to time based on changes in the Lender's bank prime rate index; (iv) modify the interest rate option that the Company may select (subject to the requirements in the Amendment and provided that the Company is not in default under the line of credit agreement): to (A) The default variable interest index rate, which is Citizens Business Bank Prime Rate of Interest, which is the prime rate (5.25% at August 31, 2019) less 0.500%; or (B) One Hundred Eighty (180) day Libor Rate plus a margin of 1.550%; and (v) replace the preferred rate of interest with a discounted rate. The amounts outstanding under this line of credit as of August 31, 2019 is currently all under the default variable interest index rate of 4.75%. The line of credit agreement contains financial and other covenants that have not been modified by the Amendment. Borrowings under this agreement bear interest at the bank’s reference rate, which is the Prime Rate (5.25% at August 31, 2019 and 5.00% at August 31, 2018) less .500%. Borrowings are secured by substantially all of the assets of the Company and its subsidiary. The amounts outstanding under this line of credit as of August 31, 2019 and 2018 were $6,114,000 and $3,113,000, respectively. The line of credit agreement contains certain nonfinancial and financial covenants, including the maintenance of certain financial ratios. As of August 31, 2019 and August 31, 2018, the Company was in compliance with all such covenants. The Company also entered into a new Loan Agreement with the Bank to borrow up to $5 million (the "Construction Loan") for the primary purpose of financing tenant improvements at the Hunter Property, which will serve as the Company's new corporate headquarters. The Hunter Property is owned by a trust beneficially owned and controlled by Mr. Glen F. Ceiley, the Chief Executive Officer, Chairman of the Board and majority stockholder of EACO. The Construction Loan is a line of credit evidenced by a Promissory Note in the principal amount of up to $5,000,000 with a maturity date of May 15, 2027. The terms of the Construction Note provide that the Company may only request advances through July 15, 2020, and thereafter, the Construction Loan will convert to a term loan. Interest on the Construction Note is payable monthly, subject to variable interest rate based on the Bank's internal prime rate (5.25% at August 31, 2019). The balance of the Construction Loan at August 31, 2019 was $342,000. On May 15, 2017, the Company entered into a $5,400,000 loan agreement with the Bank. The proceeds of the loan were used to purchase the building that houses the Company’s corporate headquarters and distribution center located in Anaheim, California. This loan is payable in 35 regular monthly payments of $27,142 and one irregular last payment of $5,001,607 due on the maturity of the loan on May 16,2020. The loan is secured by a deed of trust to the Lakeview Property and a variable interest rate, which is 1.70% plus one year LIBOR (2.0% at August 31, 2019 and 2.8% at August 31, 2018). This rate can be periodically reset based on the one year LIBOR rate no more than once in any 12 month period at the election of the Bank. At August 31, 2018, the outstanding balance of this loan was $5,237,000. EACO has entered into a commercial guaranty agreement, pursuant to which EACO is the guarantor for the $5,400,000 loan. In September 2019, Bisco entered into the Purchase Agreement to sell the Lakeview Property for a cash purchase price of $7,075,000, which recently closed on November 19, 2019. Upon the closing, Bisco used the proceeds from the sale to repay all of the outstanding principal and accrued interest on the Lakeview Loan. See Note 11. EACO has also entered into a business loan agreement (and related $100,000 promissory note) with the Bank in order to obtain a $100,000 letter of credit as security for the Company’s workers compensation requirements. |
Shareholders' Equity
Shareholders' Equity | 12 Months Ended |
Aug. 31, 2019 | |
Shareholders' Equity | |
Shareholders' Equity | Note 5. Shareholders’ Equity Earnings Per Common Share (“EPS”) The following is a reconciliation of the numerators and denominators used in the basic and diluted computations of earnings per common share: Years Ended August 31, (In thousands, except per share information) 2019 2018 EPS – basic and diluted: Net income $ 9,432 $ 6,949 Less: cumulative preferred stock dividend (76) (76) Net income attributable to common shareholders for basic and diluted EPS computation 9,356 6,873 Weighted average common shares outstanding for basic and diluted EPS computation 4,861,590 4,861,590 Earnings per common share – basic and diluted $ 1.92 $ 1.41 For the years ended August 31, 2019 and 2018, 40,000 potential common shares (issuable upon conversion of 36,000 shares of the Company’s Series A cumulative convertible preferred stock) have been excluded from the computation of diluted earnings per share because their inclusion would be anti-dilutive since the conversion price was greater than the average market price of the common stock. Preferred Stock The Company’s Board of Directors is authorized to establish the various rights and preferences for the Company’s preferred stock, including voting, conversion, dividend and liquidation rights and preferences, at the time shares of preferred stock are issued. In September 2004, the Company sold 36,000 shares of its Series A cumulative convertible preferred stock (the “Preferred Stock”) to the Company’s CEO, with an 8.5% dividend rate at a price of $25 per share for a total cash purchase price of $900,000. The holders of the Preferred Stock have the right at any time to convert the Preferred Stock and accrued but unpaid dividends into shares of the Company’s common stock at the conversion price of $22.50 per share. In the event of a liquidation or dissolution of the Company, the holder of the Preferred Stock is entitled to be paid out of the assets of the Company available for distribution to shareholders at $25.00 per share plus all unpaid dividends before any payments are made to the holders of common stock. |
Profit Sharing Plan
Profit Sharing Plan | 12 Months Ended |
Aug. 31, 2019 | |
Profit Sharing Plan | |
Profit Sharing Plan | Note 6. Profit Sharing Plan The Company has a defined contribution 401(k) profit sharing plan (“401(k) plan”) for all eligible employees. Employees are eligible to contribute to the 401(k) plan after six months of employment. Under this plan, employees may contribute up to 15% of their compensation. The Company has the discretion to match 50% of the employee contributions up to 4% of employees’ compensation. The Company’s contributions are subject to a five-year vesting period beginning the second year of service. The Company’s contribution expense was approximately $401,000 and $282,000 for the years ended August 31, 2019 and 2018, respectively. |
Income Taxes
Income Taxes | 12 Months Ended |
Aug. 31, 2019 | |
Income Taxes | |
Income Taxes | Note 7. Income Taxes The following summarizes the Company’s provision for income taxes on income from operations: Years Ended August 31, 2019 2018 Current: Federal $ 2,911,000 $ 2,249,000 State 803,000 660,000 Foreign 271,000 (35,000) 3,985,000 2,874,000 Deferred: Federal (378,000) 401,000 State (89,000) (82,000) Foreign 22,000 (22,000) (445,000) 297,000 Total $ 3,540,000 $ 3,171,000 Income taxes for the years ended August 31, 2019 and 2018 differ from the amounts computed by applying the federal blended and statutory corporate rates of 21% for 2019 and 25% for 2018 to the pre-tax income. The differences are reconciled as follows: Years Ended August 31, 2019 2018 Current: Expected income tax provision at statutory rate % % Increase (decrease) in taxes due to: State tax, net of federal benefit % % Permanent differences % % Change in deferred tax asset valuation allowance % — Other, net % % Income tax expense % % The components of deferred taxes at August 31, 2019 and 2018 are summarized below: August 31, 2019 2018 Deferred tax assets (liabilities): Net operating loss $ 421,000 $ 508,000 Allowance for doubtful accounts 3,000 (5,000) Accrued expenses 270,000 209,000 Accrued workers’ compensation 1,000 7,000 Inventory adjustments 887,000 708,000 Unrealized losses on investment 92,000 (7,000) Excess of tax over book depreciation (206,000) (235,000) Other 71,800 26,500 Total deferred tax assets 1,539,800 1,211,500 Valuation allowance (421,000) (509,000) Total deferred tax assets $ 1,118,500 $ 702,500 The Company records net deferred tax assets to the extent management believes these assets will more likely than not be realized. In making such determination, the Company considers all available positive and negative evidence, including scheduled reversals of deferred tax liabilities, projected future taxable income (if any), tax planning strategies and recent financial performance. Net deferred tax assets are included in other assets in the noncurrent assets in the accompanying consolidated balance sheets. In 2010, management concluded that certain deferred tax assets would not be realized, primarily the pre-merger net operating loss carryforwards (“NOLs”) of the Company. Management reviewed the positive and negative evidence available at August 31, 2019 and 2018 and determined that the capital losses, unrealized losses and EACO’s state net operating losses did not meet the more likely than not threshold required to be recognized. As such, a valuation allowance was retained on these deferred tax assets. On January 1, 2007, the Company adopted ASC 740 “Income Taxes” formerly FASB Interpretation No. 48, an interpretation of FASB Statement No. 109 (“ASC 740”). ASC 740 clarifies the accounting for uncertainty in income taxes recognized in a company’s financial statements. ASC 740 prescribes a recognition threshold and measurement attribute for financial statement recognition and measurement of a tax position taken or expected to be taken in the tax return. The Company did not recognize any additional liability for unrecognized tax benefit as a result of the implementation. The Company has no liability for unrecognized tax benefit related to tax positions for either fiscal 2019 or fiscal 2018. The Company will recognize interest and penalty related to unrecognized tax benefits and penalties as income tax expense. As of August 31, 2019, the Company has not recognized liabilities for penalty and interest as the Company does not have any liability for unrecognized tax benefits. The 2018 Tax Cuts and Jobs Act (TCJA) shifted the US international tax regime from a worldwide system to a quasi-territorial system. Besides introducing a new federal corporate tax rate of 21%, the TCJA imposed an income inclusion for federal income tax purposes under IRC Section 951A on net “intangible” income derived from “specified foreign corporations”, also known as Global Intangible Low-Taxed Income (GILTI). Beginning for tax year 2018 until 2025, a deduction under IRC Section 250 is allowed for the lesser of 50% of the GILTI inclusion or U.S. federal taxable income, whichever is less. This deduction effectively taxes GILTI inclusions at an effective tax rate 10.5% for federal purposes, before claiming allowable indirect foreign tax credits against GILTI inclusions. GILTI inclusions generally apply where “specified foreign corporation” income is taxed at an effective rate below 90% of the U.S. federal tax rate (i.e., an 18.9% effective tax rate). After tax year 2025, the allowable deduction under IRC Section 250 will be reduced to 37.5% of the GILTI inclusion after tax year 2025. For the tax year ended August 31, 2019 (i.e., tax year 2018), the Company's GILTI inclusion was calculated to be approximately $1.1 million; however, with the Section 250 deduction of about $546,000, and $206,000 of allowable indirect foreign tax credit, the net effect of the GILTI was offset for the 2018 tax year. It should also be noted that new high tax exception to GILTI was not considered since the IRS issued new regulations in late June 2019, which were not finalized yet by August 2019. The Company is making an election to treat GILTI as period cost. The TCJA provided for an additional deduction of 37.5% of U.S. export sales under IRC Section 250, which is for Foreign-Derived Intangible Income (FDII). The deduction is only allowable for U.S. C-Corporations and effectively taxes export sales at an effective rate of 13.125% from tax years 2018 through 2025. After 2025, the FDII deduction is reduced to 21.875%. For the tax year ended August 31, 2019, EACO’s FDII deduction was calculated to be approximately $61,500 based on the Company’s direct export sales, which is a permanent deduction that reduces the current year federal taxable income. It should also be noted that the provisions mentioned above do not apply generally to state income taxation, only for federal income tax purposes. The Company is subject to taxation in the US, Canada and various states. The Company’s tax years for 2015, 2016, 2017 and 2018 are subject to examination by the taxing authorities. With few exceptions, the Company is no longer subject to state, local or foreign examinations by taxing authorities for years before 2015. The Internal Revenue Service concluded the examination for the Company's federal tax return for the year ending in August 31, 2016 year. The Internal Revenue Service concluded and issued a no change report for the August 31, 2016 federal tax return dated February 13, 2019. Accordingly, for federal returns, the Company is generally not subject to examination for years 2016 and before. |
Commitments and Contingencies
Commitments and Contingencies | 12 Months Ended |
Aug. 31, 2019 | |
Commitments and Contingencies | |
Commitments and Contingencies | Note 8. Commitments and Contingencies Legal Matters From time to time, we may be subject to legal proceedings and claims that arise in the normal course of our business. Any such matters and disputes could be costly and time consuming, subject us to damages or equitable remedies, and divert our management and key personnel from our business operations. We currently are not a party to any material legal proceedings, the adverse outcome of which, in management’s opinion, individually or in the aggregate, would have a material adverse effect on our consolidated results of operations, financial position or cash flows. Operating Lease Obligations The Company leases its facilities and automobiles under operating lease agreements (three leased facilities are leased from the Trust, which is beneficially owned by the Company’s Chief Executive Officer, Chairman of the Board and majority shareholder – see Note 9), which expire on various dates through September 2029 and require minimum rental payments ranging from $1,000 to $67,000 per month. Certain of the leases contain options for renewal under varying terms. Minimum future rental payments under operating leases are as follows: Years Ending August 31: 2020 2,989,000 2021 2,433,000 2022 1,886,000 2023 1,618,000 2024 1,565,000 Thereafter 5,748,000 $ 16,239,000 Rental expense for all operating leases for the years ended August 31, 2019 and 2018 was approximately $2,557,000 and $2,024,000, respectively. |
Related Party Transactions
Related Party Transactions | 12 Months Ended |
Aug. 31, 2019 | |
Related Party Transactions | |
Related Party Transactions | Note 9. Related Party Transactions On November 21, 2017, the Company entered into a Commercial and Industrial Lease Agreement (the “Chicago Lease”) with the Trust, which is the grantor trust of Glen Ceiley, our Chief Executive Officer, Chairman of the Board and the Company’s majority shareholder, for the lease of a facility in Glendale Heights, Illinois. The Company relocated its Chicago sales office and distribution center to this facility in December 2017. The Chicago Lease is a ten year lease with an initial monthly rental rate of $22,600, which is subject to annual rent increases of approximately 2.5% as set forth in the Chicago Lease. The foregoing description of the Chicago Lease does not purport to be complete and is qualified in the entirety by reference to the Chicago Lease as filed as Exhibit 10.13 hereto and incorporated herein by reference. The Company leases various other buildings under operating lease agreements with the Trust, which is a grantor trust of Glen Ceiley, the Company’s Chief Executive Officer, Chairman of the Board and majority shareholder. During fiscal 2019 and fiscal 2018, the Company incurred approximately $277,000 and $271,000, respectively, of rental expense related to all leases with the Trust. On July 26, 2019, the Company entered into a Commercial and Industrial Lease Agreement with the Trust, for the future lease of the Hunter Property, which will house the Company's new corporate headquarters. The term of the Lease commenced on September 2, 2019 and ends on August 31, 2029 with an initial monthly rental rate of $66,300, which is subject to annual rent increases of approximately 2.5% as set forth in the lease. The foregoing description of the Lease does not purport to be complete and is qualified in the entirety by reference to the lease as filed as Exhibit 10.14 hereto and incorporated herein by reference. |
Fair Value of Financial Instrum
Fair Value of Financial Instruments | 12 Months Ended |
Aug. 31, 2019 | |
Fair Value of Financial Instruments | |
Fair Value of Financial Instruments | Note 10. Fair Value of Financial Instruments Management estimates the fair value of its assets or liabilities measured at fair value based on the three levels of the fair-value hierarchy are described as follows: Level 1: Quoted prices (unadjusted) in active markets for identical assets and liabilities. For the Company, Level 1 inputs include marketable securities and liabilities for short sales of trading securities that are actively traded. Level 2: Inputs other than Level 1 are observable, either directly or indirectly. The Company does not hold any Level 2 financial instruments. Level 3: Unobservable inputs. The Company does not hold any Level 3 financial instruments. Marketable Trading Securities – The Company holds marketable trading securities, which include long and short positions that are all publicly traded securities with quoted prices in active markets. These securities are stated at fair value, which is determined using the quoted closing prices at each reporting date. Short positions represent securities sold, but not yet purchased. Short sales result in obligations to purchase securities at a later date and are separately presented as a liability in the Company’s consolidated balance sheets. The fair value of the marketable trading securities and short positions are considered to be Level 1 measurements. The following table sets forth by level, within the fair value hierarchy, certain assets at estimated fair value as of August 31, 2019 and 2018: Quoted Prices in Significant Other Significant Active Markets for Observable Unobservable Identical Assets Inputs Inputs (Level 1) (Level 2) (Level 3) Total August 31, 2019 Marketable securities $ 1,873,000 — — $ 1,873,000 Liability for short sales of trading securities (655,000) — — (655,000) August 31, 2018 Marketable securities $ 2,846,000 $ — $ — $ 2,846,000 Liability for short sales of trading securities (933,000) — — (933,000) |
Subsequent Events
Subsequent Events | 12 Months Ended |
Aug. 31, 2019 | |
Subsequent Events | |
Subsequent Events | Note 11. Subsequent Events Management has evaluated events subsequent to August 31, 2019, through the date that these consolidated financial statements are being filed with the Securities and Exchange Commission, for transactions and other events that may require adjustment of and/or disclosure in such financial statements. Subsequent to August 31, 2019, the Company has made additional advances on the Construction Loan for tenant improvements on the Hunter Property for the amount of $1,809,000 and a total balance of the Real Estate Loan of $2,151,000. In September 2019, the Company entered into a Standard, Offer, Agreement and Escrow Instructions for the Lakeview Purchase Agreement, with a third party, Charles Alemi or his assignee, pursuant to which Bisco agreed to sell the Lakeview Property to a third party, for a cash purchase price of $7,075,000, which closed on November 19, 2019. Cash received from the sale of the Lakeview Property will be used to retire the entire related Bank loan balance and to pay down the line of credit with the Bank. Pursuant to this agreement, Bisco will lease back the Lakeview Property until January 31, 2020 at rental rate of $30,000 per month on a gross basis. |
Significant Accounting Polici_2
Significant Accounting Policies (Policies) | 12 Months Ended |
Aug. 31, 2019 | |
Significant Accounting Policies | |
Principles of Consolidation | Principles of Consolidation The consolidated financial statements for all periods presented include the accounts of EACO, Bisco and Bisco Industries Limited (which are collectively referred to herein as the “Company”, “we”, “us” and “our”). All significant intercompany transactions and balances have been eliminated in consolidation. |
Use of Estimates | Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. These estimates include allowance for doubtful trade accounts receivable, provisions for slow moving and obsolete inventory, recoverability of the carrying value and estimated useful lives of long-lived assets, and the valuation allowance against deferred tax assets. Actual results could differ from those estimates. |
Cash and Cash Equivalents | Cash and Cash Equivalents The Company considers all highly liquid investments with an original maturity of three months or less when purchased to be cash equivalents. |
Trade Accounts Receivable | Trade Accounts Receivable Trade accounts receivable are carried at original invoice amount, less an estimate for an allowance for doubtful accounts. Management determines the allowance for doubtful accounts by identifying probable credit losses in the Company’s accounts receivable and reviewing historical data to estimate the collectability on items not yet specifically identified as problem accounts. Trade accounts receivable are written off when deemed uncollectible. Recoveries of trade accounts receivable previously written off are recorded when received. A trade account receivable is considered past due if any portion of the receivable balance is outstanding for more than 30 days. The Company does not charge interest on past due balances. The allowance for doubtful accounts was approximately $169,000 and $111,000 at August 31, 2019 and 2018, respectively. |
Inventories | Inventories Inventories consist primarily of electronic fasteners and components, and are stated at the lower of cost or estimated net realizable value. Cost is determined using the average cost method. Inventories are adjusted for slow moving or obsolete items approximating $1,290,000 and $839,000 at August 31, 2019 and 2018, respectively. The adjustments to inventory costs are based upon management’s review of inventories on-hand over their expected future utilization and length of time held by the Company. |
Property, Equipment, and Leasehold Improvements | Property, Equipment, and Leasehold Improvements Property, equipment, and leasehold improvements are stated at cost net of accumulated depreciation and amortization. Depreciation and amortization expense is determined using the straight-line method over the estimated useful lives of the assets. The depreciable life for buildings is thirty-five years and five to seven years for furniture, fixtures and equipment. Leasehold improvements are amortized over the estimated useful life of the asset or the remaining lease term, whichever is less. Maintenance and repairs are charged to expense as incurred. Renewals and improvements of a major nature are capitalized. At the time of retirement or disposition of the asset, the cost and accumulated depreciation or amortization are removed from the accounts and any gains or losses are reflected in earnings. |
Impairment of Long Lived Assets | Impairment of Long Lived Assets The Company’s policy is to review long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. For the purpose of the impairment review, assets are tested on an individual basis. The recoverability of the assets is measured by a comparison of the carrying value of each asset to the future net undiscounted cash flows expected to be generated by such assets. If such assets are considered impaired, the impairment to be recognized is measured by the amount by which the carrying value of the assets exceeds their estimated fair value. |
Marketable Trading Securities | Marketable Trading Securities The Company invests in marketable trading securities, which include long and short positions in equity securities. Short positions represent securities sold, but not yet purchased. Short sales result in obligations to purchase securities at a later date and are separately presented as a liability in the Company’s consolidated balance sheets. As of August 31, 2019 and 2018, the Company’s total obligation for securities sold, but not yet purchased was approximately $655,000 and $933,000, respectively. Restricted cash to collateralize the Company’s obligation for short sales was $655,000 and $933,000 at August 31, 2019 and 2018, respectively. These securities are stated at fair value, which is determined using the quoted closing prices at each reporting date. Realized gains and losses on investment transactions are recognized as incurred in the consolidated statements of operations. Net unrealized gains and losses are reported in the statements of operations and represent the change in the market value of investment holdings during the period. See Note 10. |
Revenue Recognition | Revenue Recognition We derive our revenue primarily from product sales. We determine revenue recognition through the following steps: (1) identification of the contract with a customer; (2) identification of the performance obligations in the contract; (3) determination of the transaction price; (4) allocation of the transaction price to the performance obligations in the contract; (5) recognition of revenue when, or as, we satisfy a performance obligation. The Company's performance obligations consist solely of product shipped to customers. Revenue from product sales is recognized upon transfer of control of promised products to customers in an amount that reflects the consideration we expect to receive in exchange for these products. Revenue is recognized net of returns and any taxes collected from customers. We offer industry standard contractual terms in our purchase orders. Freight revenue associated with product sales are recognized at point of shipment and when the criteria discussed above have been met. Freight revenues have represented less than 1% of total revenues for fiscal 2019 and fiscal 2018. |
Income Taxes | Income Taxes Deferred taxes on income result from temporary differences between the reporting of income for financial statement and tax reporting purposes. A valuation allowance related to a deferred tax asset is recorded when it is more likely than not that some or all of the deferred tax asset will not be realized. In making such determination, the Company considers all available positive and negative evidence, including scheduled reversals of deferred tax liabilities, projected future taxable income (if any), tax planning strategies and recent financial performance. We provide tax contingencies, if any, for federal, state, local and international exposures relating to audit results, tax planning initiatives and compliance responsibilities. The development of these reserves requires judgments about tax issues, potential outcomes and timing. Although the outcome of these tax audits is uncertain, in management’s opinion adequate provisions for income taxes have been made for potential liabilities emanating from these reviews. If actual outcomes differ materially from these estimates, they could have a material impact on our results of operations. |
Freight and Shipping/Handling | Freight and Shipping/Handling Shipping and handling expenses are included in cost of revenues, and were approximately $4,083,000 and $3,293,000 for the years ended August 31, 2019 and 2018, respectively. |
Advertising Costs | Advertising Costs Advertising costs are expensed as incurred. For fiscal 2019 and fiscal 2018, the Company spent approximately $392,000 and $403,000 on advertising, respectively. |
Liabilities of Discontinued Operations | Liabilities of Discontinued Operations Prior to June 2005, EACO self-insured workers’ compensation claims losses up to certain limits. The liability for workers’ compensation represents an estimate of the present value of the ultimate cost of uninsured losses, which are unpaid as of the balance sheet dates. The Company pursues recovery of certain claims from an insurance carrier. Recoveries, if any, are recognized when claims are approved. The outstanding liability for worker’s compensation at year end is not significant and is included in accrued expenses and other current liabilities at August 31, 2019 and 2018. |
Operating Leases | Operating Leases Certain Company leases for its sales offices and distribution centers provide for minimum annual payments that adjust over the life of the lease. The aggregate minimum annual payments are expensed on the straight-line basis over the minimum lease term. The Company recognizes a deferred rent liability for rent escalations when the amount of straight-line rent exceeds the lease payments, and reduces the deferred rent liability when the lease payments exceed the straight-line rent expense. |
Earnings Per Common Share | Earnings Per Common Share Basic earnings per common share for the years ended August 31, 2019 and 2018 were computed based on the weighted average number of common shares outstanding. Diluted earnings per share for those periods have been computed based on the weighted average number of common shares outstanding, giving effect to all potentially dilutive common shares that were outstanding during the respective periods. Potentially dilutive common shares represent 40,000 common shares issuable upon conversion of 36,000 shares of Series A convertible preferred stock, which were outstanding at August 31, 2019 and 2018. Such securities are excluded from the weighted average shares outstanding used to calculate diluted earnings per common share for the years ended August 31, 2019 and 2018 as their inclusion would be anti-dilutive since the conversion price was greater than the average market price of the Company’s common stock during these periods. |
Foreign Currency Translation and Transactions | Foreign Currency Translation and Transactions Assets and liabilities recorded in functional currencies other than the U.S. dollar (Canadian dollars for Bisco’s Canadian subsidiary) are translated into U.S. dollars at the period-end rate of exchange. The exchange rate for Canadian dollars at August 31, 2019 and 2018 was $0.75 and $0.77, respectively. The resulting balance sheet translation adjustments are charged or credited directly to accumulated other comprehensive income (loss). Revenue and expenses are transacted at the average exchange rates for the years ended August 31, 2019 and 2018. The average exchange rates for the years ended August 31, 2019 and 2018 were $0.75 and $0.79, respectively. The percentage of total assets held outside the United States, in Canada, was 4% as of August 31, 2019 and 2018. All foreign sales, excluding Canadian sales, are denominated in U.S. dollars and, therefore, are not subject to foreign currency risk exposure. |
Concentrations | Concentrations Financial instruments that subject the Company to credit risk include cash balances in excess of federal depository insurance limits and accounts receivable. Cash accounts maintained by the Company at U.S. and Canadian financial institutions are insured by the Federal Deposit Insurance Corporation and Canadian Deposit Insurance Corporation, respectively. A significant portion of the Company’s cash was held by its Canadian subsidiary. The Company has not experienced any losses in such accounts. Net sales to customers outside the United States and related trade accounts receivable were approximately 9% and 11%, respectively at August 31, 2018, and 9% and 12%, respectively at August 31, 2019. No single customer accounted for more than 10% of total revenues for either of the years ended August 31, 2019 or 2018. The following table presents our sales within geographic regions as a percentage of net revenue, which is based on the “bill-to” location of our customers: Years Ended August 31, 2019 2018 U.S. 91 % 91 % Canada 4 % 4 % Other 5 % 5 % Total 100 % 100 % |
Estimated Fair Value of Financial Instruments and Certain Nonfinancial Assets and Liabilities | Estimated Fair Value of Financial Instruments and Certain Nonfinancial Assets and Liabilities The Company’s financial instruments other than its marketable securities include cash and cash equivalents, trade accounts receivable, prepaid expenses, security deposits, trade accounts payable, line of credit, accrued expenses and long-term debt. Management believes that the fair value of these financial instruments approximate their carrying amounts based on their relatively short-term nature and current market indicators, such as prevailing interest rates. The Company’s marketable securities are measured at fair value on a recurring basis. See Note 10. During the years ended August 31, 2019 and 2018, the Company did not have any nonfinancial assets or liabilities that were measured at estimated fair value on a recurring or nonrecurring basis. |
Significant Recent Accounting Pronouncements | Significant Recent Accounting Pronouncements In May 2014, the Financial Accounting Standards Board ("FASB")issued Accounting Standards Update ("ASU") 2014-09, Revenue from Contracts with Customers (Topic 606) as modified by subsequently issued ASUs 2015-14, 2016-08, 2016-10, 2016-12 and 2016-20 (collectively "new revenue standard"). The core principle of the ASU, among other changes, is that an entity should recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The Company has elected the modified retrospective method and adopted the new revenue guidance effective September 1, 2018, with no impact to the opening retained earnings. In July 2015, the FASB issued ASU 2015‑11 “Simplifying the Measurement of Inventory”. The guidance is part of the “Simplification Initiative” to identify and re-evaluate areas where the generally accepted accounting principles may be complex and cumbersome to apply. The guidance will require that inventory be stated at the lower of cost and net realizable value as opposed to the lower of cost or market. Net realizable value is the estimated selling price for the inventory less completion, disposal and transportation costs. The guidance becomes effective for fiscal years beginning after December 15, 2016. The guidance became effective for the Company beginning September 1, 2017 and did not have a material impact on our consolidated financial position, results of operations or cash flows. In February 2016, the FASB issued ASU 2016-02, "Leases (Topic 842)," which will require lessees to recognize almost all leases on their balance sheet as a right-of-use asset and a lease liability. For income statement purposes, the FASB retained a dual model, requiring leases to be classified as either operating or finance. Classification will be based on criteria that are largely similar to those applied in current lease accounting, but without explicit bright lines. Lessor accounting is similar to the current model, but updated to align with certain changes to the lessee model and the new revenue recognition standard. This ASU is effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. The Company will adopt ASU 2016-02 on September 1, 2019 and apply the package of practical expedients included therein, as well as utilize the transition method included in ASU 2018-11. By applying ASU 2016-02 at the adoption date, as opposed to at the beginning of the earliest period presented, the presentation of financial information for periods prior to September 1, 2019 will remain unchanged and in accordance with Leases (Topic 840). On September 1, 2019, the Company expects to recognize right of use assets of approximately $13.7 million (net of the reversal of the current deferred rent liability) and lease liabilities of approximately $13.9 million in the consolidated balance sheet. In June 2016, the FASB issued ASU 2016‑13, “Financial Instruments – Credit Losses”, which will require the measurement of all expected credit losses for financial assets held at the reporting date based on historical experience, current conditions, and reasonable and supportable forecasts. The guidance is effective for annual reporting periods beginning after December 15, 2019 and interim periods within those fiscal years. In November 2019, FASB deferred the effective dates of the new credit losses standard for all entities except SEC filers that are not smaller reporting companies to fiscal year beginning after December 15, 2022, including interim periods within those fiscal years. The Company is currently evaluating this statement and its impact on its results of operations or financial position. In November 2016, the FASB issued ASU 2016‑18, “Statement of Cash Flows - Restricted Cash a consensus of the FASB Emerging Issues Task Force.” This standard requires restricted cash and cash equivalents to be included with cash and cash equivalents on the statement of cash flows under a retrospective transition approach. The guidance will become effective for fiscal years beginning after December 15, 2017 and interim periods within those fiscal years with early adoption permitted. The Company has elected to adopt the new cash flow guidance effective September 1, 2018, with an immaterial impact to the statements of cash flows. |
Significant Accounting Polici_3
Significant Accounting Policies (Tables) | 12 Months Ended |
Aug. 31, 2019 | |
Significant Accounting Policies | |
Schedule of Sales within Geographic Regions as Percentage of Net Revenue | The following table presents our sales within geographic regions as a percentage of net revenue, which is based on the “bill-to” location of our customers: Years Ended August 31, 2019 2018 U.S. 91 % 91 % Canada 4 % 4 % Other 5 % 5 % Total 100 % 100 % |
Property, Equipment and Lease_2
Property, Equipment and Leasehold Improvements (Tables) | 12 Months Ended |
Aug. 31, 2019 | |
Property, Equipment and Leasehold Improvements | |
Schedule Of Property, Equipment and Leasehold Improvements | Property, equipment and leasehold improvements are summarized as follows: August 31, 2019 2018 Held for use: Machinery and equipment $ 8,739,000 $ 7,903,000 Furniture and fixtures 1,112,000 1,013,000 Vehicles 155,000 155,000 Leasehold improvements 2,514,000 2,495,000 Land — 1,717,000 Building — 5,490,000 Construction in progress 820,000 — Total held for use 13,340,000 18,773,000 Less: accumulated depreciation and amortization (9,623,000) (8,926,000) Total property, equipment, and leasehold improvements held for use, net 3,717,000 9,847,000 Held for sale: Land 1,716,000 — Building 5,489,000 — Total held for sale 7,205,000 — Less: accumulated depreciation and amortization (350,000) — Total property, equipment, and leasehold improvements held for sale, net 6,855,000 — Total property, equipment, and leasehold improvements, net $ 10,572,000 $ 9,847,000 |
Shareholders' Equity (Tables)
Shareholders' Equity (Tables) | 12 Months Ended |
Aug. 31, 2019 | |
Shareholders' Equity | |
Schedule of Earnings Per Share | The following is a reconciliation of the numerators and denominators used in the basic and diluted computations of earnings per common share: Years Ended August 31, (In thousands, except per share information) 2019 2018 EPS – basic and diluted: Net income $ 9,432 $ 6,949 Less: cumulative preferred stock dividend (76) (76) Net income attributable to common shareholders for basic and diluted EPS computation 9,356 6,873 Weighted average common shares outstanding for basic and diluted EPS computation 4,861,590 4,861,590 Earnings per common share – basic and diluted $ 1.92 $ 1.41 |
Income Taxes (Tables)
Income Taxes (Tables) | 12 Months Ended |
Aug. 31, 2019 | |
Income Taxes | |
Schedule of Components of Income Tax Expense (Benefit) | The following summarizes the Company’s provision for income taxes on income from operations: Years Ended August 31, 2019 2018 Current: Federal $ 2,911,000 $ 2,249,000 State 803,000 660,000 Foreign 271,000 (35,000) 3,985,000 2,874,000 Deferred: Federal (378,000) 401,000 State (89,000) (82,000) Foreign 22,000 (22,000) (445,000) 297,000 Total $ 3,540,000 $ 3,171,000 |
Schedule of Effective Income Tax Rate Reconciliation | Income taxes for the years ended August 31, 2019 and 2018 differ from the amounts computed by applying the federal blended and statutory corporate rates of 21% for 2019 and 25% for 2018 to the pre-tax income. The differences are reconciled as follows: Years Ended August 31, 2019 2018 Current: Expected income tax provision at statutory rate % % Increase (decrease) in taxes due to: State tax, net of federal benefit % % Permanent differences % % Change in deferred tax asset valuation allowance % — Other, net % % Income tax expense % % |
Schedule of Deferred Tax Assets and Liabilities | The components of deferred taxes at August 31, 2019 and 2018 are summarized below: August 31, 2019 2018 Deferred tax assets (liabilities): Net operating loss $ 421,000 $ 508,000 Allowance for doubtful accounts 3,000 (5,000) Accrued expenses 270,000 209,000 Accrued workers’ compensation 1,000 7,000 Inventory adjustments 887,000 708,000 Unrealized losses on investment 92,000 (7,000) Excess of tax over book depreciation (206,000) (235,000) Other 71,800 26,500 Total deferred tax assets 1,539,800 1,211,500 Valuation allowance (421,000) (509,000) Total deferred tax assets $ 1,118,500 $ 702,500 |
Commitments and Contingencies (
Commitments and Contingencies (Tables) | 12 Months Ended |
Aug. 31, 2019 | |
Commitments and Contingencies | |
Schedule of Future Minimum Rental Payments for Operating Leases | Minimum future rental payments under operating leases are as follows: Years Ending August 31: 2020 2,989,000 2021 2,433,000 2022 1,886,000 2023 1,618,000 2024 1,565,000 Thereafter 5,748,000 $ 16,239,000 |
Fair Value of Financial Instr_2
Fair Value of Financial Instruments (Tables) | 12 Months Ended |
Aug. 31, 2019 | |
Fair Value of Financial Instruments | |
Schedule of Fair Value, Assets Measured on Recurring and Nonrecurring Basis | The following table sets forth by level, within the fair value hierarchy, certain assets at estimated fair value as of August 31, 2019 and 2018: Quoted Prices in Significant Other Significant Active Markets for Observable Unobservable Identical Assets Inputs Inputs (Level 1) (Level 2) (Level 3) Total August 31, 2019 Marketable securities $ 1,873,000 — — $ 1,873,000 Liability for short sales of trading securities (655,000) — — (655,000) August 31, 2018 Marketable securities $ 2,846,000 $ — $ — $ 2,846,000 Liability for short sales of trading securities (933,000) — — (933,000) |
Significant Accounting Polici_4
Significant Accounting Policies (Details) | 12 Months Ended | |
Aug. 31, 2019 | Aug. 31, 2018 | |
Concentration Risk, Percentage | 100.00% | 100.00% |
Sales Revenue, Net [Member] | ||
Concentration Risk, Percentage | 9.00% | 9.00% |
U.S. [Member] | Sales Revenue, Net [Member] | ||
Concentration Risk, Percentage | 91.00% | 91.00% |
Canada [Member] | Sales Revenue, Net [Member] | ||
Concentration Risk, Percentage | 4.00% | 4.00% |
Other [Member] | Sales Revenue, Net [Member] | ||
Concentration Risk, Percentage | 5.00% | 5.00% |
Significant Accounting Polici_5
Significant Accounting Policies - Additional Information (Details) | 12 Months Ended | ||||
Aug. 31, 2019USD ($)¥ / sharesshares | Aug. 31, 2019USD ($)$ / sharesshares | Aug. 31, 2018USD ($)¥ / sharesshares | Aug. 31, 2018USD ($)$ / sharesshares | Sep. 01, 2019USD ($) | |
Significant Accounting Policies [Line Items] | |||||
Allowance for Doubtful Accounts Receivable | $ 169,000 | $ 169,000 | $ 111,000 | $ 111,000 | |
Inventory Valuation Reserves | 1,290,000 | $ 1,290,000 | 839,000 | $ 839,000 | |
Percentage of Revenue Per Entity, Maximum | 10.00% | 10.00% | |||
Fair Value Estimate Not Practicable Securities Sold Not Yet Purchasess | 655,000 | $ 655,000 | 933,000 | $ 933,000 | |
Restricted Cash and Cash Equivalents, Current | $ 655,000 | 655,000 | $ 933,000 | 933,000 | |
Shipping Handling And Transportation Cost | 4,083,000 | 3,293,000 | |||
Advertising Expense | $ 392,000 | $ 403,000 | |||
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount | shares | 40,000 | 40,000 | |||
Convertible Preferred Stock, Shares Issued upon Conversion | shares | 36,000 | 36,000 | 36,000 | 36,000 | |
Exchange Rate On Foreign Currency Translation And Transactions | (per share) | $ 0.75 | $ 0.75 | $ 0.77 | $ 0.79 | |
Concentration Risk, Percentage | 100.00% | 100.00% | |||
Maximum percentage of freight revenues | 1.00% | 1.00% | |||
Accounting Standards Update 2016-02 [Member] | Restatement Adjustment [Member] | |||||
Significant Accounting Policies [Line Items] | |||||
Operating Lease, Right-of-Use Asset | $ 13,700,000 | ||||
Operating Lease, Liability | $ 13,900,000 | ||||
Sales Revenue, Net [Member] | |||||
Significant Accounting Policies [Line Items] | |||||
Concentration Risk, Percentage | 9.00% | 9.00% | |||
Sales Revenue, Net [Member] | Canada [Member] | |||||
Significant Accounting Policies [Line Items] | |||||
Concentration Risk, Percentage | 4.00% | 4.00% | |||
Accounts Receivable [Member] | |||||
Significant Accounting Policies [Line Items] | |||||
Concentration Risk, Percentage | 12.00% | 11.00% | |||
Building [Member] | |||||
Significant Accounting Policies [Line Items] | |||||
Property, Plant and Equipment, Useful Life | 35 years | ||||
Furniture, Fixtures And Equipment [Member] | Minimum [Member] | |||||
Significant Accounting Policies [Line Items] | |||||
Property, Plant and Equipment, Useful Life | 5 years | ||||
Furniture, Fixtures And Equipment [Member] | Maximum [Member] | |||||
Significant Accounting Policies [Line Items] | |||||
Property, Plant and Equipment, Useful Life | 7 years |
Property, Equipment and Lease_3
Property, Equipment and Leasehold Improvements (Details) - USD ($) | Aug. 31, 2019 | Aug. 31, 2018 |
Held for use: | ||
Machinery and equipment | $ 8,739,000 | $ 7,903,000 |
Furniture and fixtures | 1,112,000 | 1,013,000 |
Vehicles | 155,000 | 155,000 |
Leasehold improvements | 2,514,000 | 2,495,000 |
Land | 0 | 1,717,000 |
Building | 0 | 5,490,000 |
Construction in progress | 820,000 | 0 |
Total held for use | 13,340,000 | 18,773,000 |
Less: accumulated depreciation and amortization | (9,623,000) | (8,926,000) |
Total property, equipment, and leasehold improvements held for use, net | 3,717,000 | 9,847,000 |
Held for sale: | ||
Land | 1,716,000 | 0 |
Building | 5,489,000 | 0 |
Total held for sale | 7,205,000 | 0 |
Less: accumulated depreciation and amortization | (350,000) | 0 |
Total property, equipment, and leasehold improvements held for sale, net | 6,855,000 | 0 |
Total property, equipment, and leasehold improvements, net | $ 10,572,000 | $ 9,847,000 |
Property, Equipment and Lease_4
Property, Equipment and Leasehold Improvements - Additional Information (Details) - USD ($) | 1 Months Ended | 12 Months Ended | |
May 19, 2017 | Aug. 31, 2019 | Aug. 31, 2018 | |
Payments to Acquire Property, Plant, and Equipment | $ 1,772,000 | $ 1,600,000 | |
Proceeds from Lines of Credit | $ 1,800,000 | ||
Construction Loan Payable [Member] | |||
Line of Credit Facility, Maximum Borrowing Capacity | 5,000,000 | ||
Lakeview Property [Member] | |||
Payments to Acquire Property, Plant, and Equipment | $ 7,200,000 | ||
Equipment and Leasehold Improvements [Member] | |||
Depreciation | $ 1,047,000 | $ 1,009,000 |
Long-Term Debt (Details)
Long-Term Debt (Details) - USD ($) | May 15, 2017 | Sep. 30, 2019 | Aug. 31, 2018 | Aug. 31, 2019 | Aug. 31, 2019 | May 31, 2017 |
Line of Credit Facility, Current Borrowing Capacity | $ 10,000,000 | $ 10,000,000 | ||||
Line of Credit Facility, Expiration Date | Aug. 20, 2020 | |||||
Long-term Line of Credit | $ 3,113,000 | 6,114,000 | $ 6,114,000 | |||
Debt Instrument, Maturity Date | May 16, 2020 | |||||
Line of Credit Facility, Interest Rate Description | Borrowings under this agreement bear interest at the bank's reference rate, which is the Prime Rate (5.25% at August 31, 2019 and 5.00% at August 31, 2018) less .500%. | |||||
Debt Instrument, Periodic Payment | $ 27,142 | |||||
Long-term Debt | $ 5,237,000 | |||||
Construction Loan | $ 342,000 | $ 342,000 | ||||
Proceeds from Issuance of Long-term Debt | 5,400,000 | |||||
Debt Instrument, Periodic Payment Terms, Balloon Payment to be Paid | $ 5,001,607 | |||||
Debt Instrument, Description of Variable Rate Basis | The loan is secured by a deed of trust to the Lakeview Property and | (A) The default variable interest index rate, which is Citizens Business Bank Prime Rate of Interest, which is the prime rate (5.25% at August 31, 2019) less 0.500% | (B) One Hundred Eighty (180) day Libor Rate plus a margin of 1.550% | |||
Default Variable Interest Rate | The amounts outstanding under this line of credit as of August 31, 2019 is currently all under the default variable interest index rate of 4.75%. | |||||
Long-term Debt, Percentage Bearing Variable Interest, Percentage Rate | 1.70% | |||||
Proceeds from Sale of Property, Plant, and Equipment | $ 7,075,000 | |||||
Prime Rate [Member] | ||||||
Long-term Debt, Percentage Bearing Variable Interest, Percentage Rate | 5.25% | 5.25% | ||||
One Year London Interbank Offered Rate (LIBOR) [Member] | ||||||
Long-term Debt, Percentage Bearing Variable Interest, Percentage Rate | 2.80% | 2.00% | 2.00% | |||
Construction Loan Payable [Member] | ||||||
Long-term Line of Credit | $ 5,000,000 | $ 5,000,000 | ||||
Line of Credit Facility, Maximum Borrowing Capacity | $ 5,000,000 | $ 5,000,000 | ||||
Community Bank [Member] | ||||||
Long-term Line of Credit | $ 100,000 | |||||
Letter of Credit [Member] | ||||||
Notes Payable, Noncurrent | 100,000 | |||||
Financial Guarantee [Member] | ||||||
Long-term Debt | $ 5,400,000 |
Shareholders' Equity (Details)
Shareholders' Equity (Details) - USD ($) $ / shares in Units, $ in Thousands | 12 Months Ended | |
Aug. 31, 2019 | Aug. 31, 2018 | |
EPS - basic and diluted: | ||
Net income | $ 9,432 | $ 6,949 |
Less: cumulative preferred stock dividend | (76) | (76) |
Net income attributable to common shareholders | $ 9,356 | $ 6,873 |
Weighted average common shares outstanding for basic and diluted EPS computation | 4,861,590 | 4,861,590 |
Earnings per common share - basic and diluted | $ 1.92 | $ 1.41 |
Shareholders' Equity - Addition
Shareholders' Equity - Additional Information (Details) - USD ($) | 12 Months Ended | |
Aug. 31, 2019 | Aug. 31, 2018 | |
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount | 40,000 | 40,000 |
Convertible Preferred Stock, Shares Issued upon Conversion | 36,000 | 36,000 |
Preferred Stock, Dividend Rate, Percentage | 8.50% | |
Preferred Stock, Dividend Rate, Per-Dollar-Amount | $ 25 | |
Dividends, Preferred Stock, Cash | $ 900,000 | |
Debt Instrument, Convertible, Conversion Price | $ 22.50 | |
Final Settlement To Holders Of Preferred Stock During Dissolution | $25.00 per share plus all unpaid dividends | |
Series A Cumulative Convertible Preferred Stock [Member] | ||
Convertible Preferred Stock, Shares Issued upon Conversion | 36,000 |
Profit Sharing Plan (Details)
Profit Sharing Plan (Details) - USD ($) | 12 Months Ended | |
Aug. 31, 2019 | Aug. 31, 2018 | |
Defined Contribution Plan, Employer Matching Contribution, Percent of Employees' Gross Pay | 50.00% | |
Defined Contribution Plan, Administrative Expense | $ 401,000 | $ 282,000 |
Defined Contribution Plan, Description | five-year | |
Employee Contributions [Member] | ||
Defined Contribution Plan, Employer Matching Contribution, Percent of Match | 4.00% | |
Deferred Profit Sharing [Member] | ||
Defined Contribution Plan, Employer Matching Contribution, Percent of Match | 15.00% |
Income Taxes (Details)
Income Taxes (Details) - USD ($) | 12 Months Ended | |
Aug. 31, 2019 | Aug. 31, 2018 | |
Current: | ||
Federal | $ 2,911,000 | $ 2,249,000 |
State | 803,000 | 660,000 |
Foreign | 271,000 | (35,000) |
Total current income tax expense | 3,985,000 | 2,874,000 |
Deferred: | ||
Federal | (378,000) | 401,000 |
State | (89,000) | (82,000) |
Foreign | 22,000 | (22,000) |
Total deferred income tax expense | (445,000) | 297,000 |
Total | $ 3,540,000 | $ 3,171,000 |
Income Taxes - Effective Income
Income Taxes - Effective Income Tax Rate Reconciliation (Details) | 12 Months Ended | |
Aug. 31, 2019 | Aug. 31, 2018 | |
Current: | ||
Expected income tax provision at statutory rate | 21.00% | 25.70% |
Increase (decrease) in taxes due to: | ||
State tax, net of federal benefit | 5.20% | 5.40% |
Permanent differences | 0.30% | 0.30% |
Change in deferred tax asset valuation allowance | (0.70%) | 0.00% |
Other, net | 1.40% | (0.10%) |
Income tax expense | 27.30% | 31.30% |
Income Taxes - Components of De
Income Taxes - Components of Deferred Taxes (Details) - USD ($) | Aug. 31, 2019 | Aug. 31, 2018 |
Deferred tax assets (liabilities): | ||
Net operating loss | $ 421,000 | $ 508,000 |
Allowance for doubtful accounts | 3,000 | (5,000) |
Accrued expenses | 270,000 | 209,000 |
Accrued workers' compensation | 1,000 | 7,000 |
Inventory adjustments | 887,000 | 708,000 |
Unrealized losses on investment | 92,000 | (7,000) |
Excess of tax over book depreciation | (206,000) | (235,000) |
Other | 71,800 | 26,500 |
Total deferred tax assets | 1,539,800 | 1,211,500 |
Valuation allowance | (421,000) | (509,000) |
Total deferred tax assets | $ 1,118,500 | $ 702,500 |
Income Taxes - Additional Infor
Income Taxes - Additional Information (Details) - USD ($) | 12 Months Ended | |
Aug. 31, 2019 | Aug. 31, 2018 | |
Income Taxes | ||
Effective Income Tax Rate Reconciliation, at Federal Statutory Income Tax Rate, Percent | 21.00% | 25.70% |
Deferred Income Tax Expense (Benefit) | $ (445,000) | $ 297,000 |
Effective Income Tax Rate Reconciliation, Percent | 27.30% | 31.30% |
Income Tax Expense (Benefit) | $ 3,540,000 | $ 3,171,000 |
GILTI inclusion amount | 1,100,000 | |
GILTI deduction amount | 546,000 | |
Allowable indirect foreign tax credit | 206,000 | |
FDII deduction amount | $ 61,500 |
Commitments and Contingencies_2
Commitments and Contingencies (Details) - Operating Lease Agreements [Member] | Aug. 31, 2019USD ($) |
Years Ending August 31: | |
2020 | $ 2,989,000 |
2021 | 2,433,000 |
2022 | 1,886,000 |
2023 | 1,618,000 |
2024 | 1,565,000 |
Thereafter | 5,748,000 |
Total | $ 16,239,000 |
Commitments and Contingencies -
Commitments and Contingencies - Additional Information (Details) - USD ($) | 12 Months Ended | |
Aug. 31, 2019 | Aug. 31, 2018 | |
Operating Leases, Rent Expense | $ 2,557,000 | $ 2,024,000 |
Lease Expiration Date | Sep. 30, 2022 | |
Minimum [Member] | ||
Monthly Operating Lease Rental Payment | $ 1,000 | |
Maximum [Member] | ||
Monthly Operating Lease Rental Payment | $ 67,000 |
Related Party Transactions (Det
Related Party Transactions (Details) - USD ($) | Jul. 26, 2019 | Nov. 21, 2017 | Aug. 31, 2019 | Aug. 31, 2018 |
Related Party Transaction [Line Items] | ||||
Operating Leases, Rent Expense | $ 2,557,000 | $ 2,024,000 | ||
Operating Leases, Rent Expense, Minimum Rentals | $ 22,600 | |||
Operating Leases of Lessee, Contingent Rentals, Basis Spread on Variable Rate | 2.50% | |||
Operating Leases Term | 10 years | |||
Related Party [Member] | ||||
Related Party Transaction [Line Items] | ||||
Operating Leases, Rent Expense | $ 277,000 | $ 271,000 | ||
Initial monthly rental rate | $ 66,300 | |||
Percentage of annual rent increases | 2.50% |
Fair Value of Financial Instr_3
Fair Value of Financial Instruments (Details) - USD ($) | Aug. 31, 2019 | Aug. 31, 2018 |
Marketable securities | $ 1,873,000 | $ 2,846,000 |
Liability for short sales of trading securities | (655,000) | (933,000) |
Fair Value, Inputs, Level 1 [Member] | ||
Marketable securities | 1,873,000 | 2,846,000 |
Liability for short sales of trading securities | (655,000) | (933,000) |
Fair Value, Inputs, Level 2 [Member] | ||
Marketable securities | 0 | 0 |
Liability for short sales of trading securities | 0 | 0 |
Fair Value, Inputs, Level 3 [Member] | ||
Marketable securities | 0 | 0 |
Liability for short sales of trading securities | $ 0 | $ 0 |
Subsequent Events (Details)
Subsequent Events (Details) - USD ($) | 1 Months Ended | |
Sep. 30, 2019 | Aug. 31, 2019 | |
Subsequent Event [Line Items] | ||
Tenant improvements | $ 1,809,000 | |
Total balance of the Real Estate Loan | $ 2,151,000 | |
Subsequent Event [Member] | Lakeview Property [Member] | ||
Subsequent Event [Line Items] | ||
Cash purchase price | $ 7,075,000 | |
Sale and lease back, rent per month | $ 30,000 |