Document_and_Entity_Informatio
Document and Entity Information (USD $) | 12 Months Ended | ||
Sep. 30, 2014 | Dec. 10, 2014 | Mar. 29, 2014 | |
Document and Entity Information [Abstract] | |||
Entity Registrant Name | SEVCON, INC. | ||
Entity Central Index Key | 825411 | ||
Current Fiscal Year End Date | -21 | ||
Entity Well-known Seasoned Issuer | No | ||
Entity Voluntary Filers | No | ||
Entity Current Reporting Status | Yes | ||
Entity Filer Category | Smaller Reporting Company | ||
Entity Public Float | $29,290,000 | ||
Entity Common Stock, Shares Outstanding | 3,588,958 | ||
Document Fiscal Year Focus | 2014 | ||
Document Fiscal Period Focus | FY | ||
Document Type | 10-K | ||
Amendment Flag | FALSE | ||
Document Period End Date | 30-Sep-14 |
CONSOLIDATED_BALANCE_SHEETS
CONSOLIDATED BALANCE SHEETS (USD $) | Sep. 30, 2014 | Sep. 30, 2013 |
In Thousands, unless otherwise specified | ||
Current assets: | ||
Cash and cash equivalents | $11,238 | $2,062 |
Trade receivables net of allowances for doubtful accounts of $40 in 2014 and $61 in 2013 | 6,694 | 6,746 |
Other receivables | 183 | 357 |
Inventories | 6,258 | 5,723 |
Prepaid expenses and other current assets | 1,747 | 1,862 |
Total current assets | 26,120 | 16,750 |
Property, plant and equipment, at cost: | ||
Land and improvements | 23 | 23 |
Buildings and improvements | 741 | 737 |
Equipment | 10,918 | 10,992 |
Property, plant and equipment, at cost | 11,682 | 11,752 |
Less: accumulated depreciation | -9,577 | -9,783 |
Net property, plant and equipment | 2,105 | 1,969 |
Long-term deferred tax assets | 3,910 | 3,152 |
Goodwill | 1,435 | 1,435 |
Other long-term assets | 397 | 54 |
Total assets | 33,967 | 23,360 |
Current liabilities: | ||
Current portion of long-term debt | 28 | 46 |
Accounts payable | 4,405 | 3,880 |
Accrued expenses | 1,836 | 2,087 |
Accrued and deferred taxes on income | 7 | 47 |
Total current liabilities | 6,276 | 6,060 |
Liability for pension benefits | 9,529 | 8,354 |
Long-term debt | 1,700 | 1,728 |
Total liabilities | 17,505 | 16,142 |
Commitments and Contingencies (Note 6) | ||
Stockholders' equity: | ||
Preferred stock, par value $.10 per share - authorized - 1,000,000 shares; Outstanding - 460,769 shares at September 30, 2014 and 0 shares at September 30, 2013 | 46 | 0 |
Common stock, par value $.10 per share - authorized - 8,000,000 shares; Outstanding 3,588,958 shares at September 30, 2014 and 3,474,388 shares at September 30, 2013 | 359 | 347 |
Premium paid in on common stock | 6,040 | 5,699 |
Premium paid in on preferred stock | 9,231 | 0 |
Retained earnings | 9,495 | 8,591 |
Accumulated other comprehensive loss | -8,829 | -7,419 |
Total Sevcon, Inc. and subsidiaries stockholders' equity | 16,342 | 7,218 |
Non-controlling interest | 120 | 0 |
Total stockholders' equity | 16,462 | 7,218 |
Total liabilities and stockholders' equity | $33,967 | $23,360 |
CONSOLIDATED_BALANCE_SHEETS_Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) (USD $) | Sep. 30, 2014 | Sep. 30, 2013 |
In Thousands, except Share data, unless otherwise specified | ||
Current assets: | ||
Trade receivables, allowances for doubtful accounts | $40 | $61 |
Stockholders' equity: | ||
Preferred stock, par value (in dollars per share) | $0.10 | $0.10 |
Preferred stock, authorized (in shares) | 1,000,000 | 1,000,000 |
Preferred stock, outstanding (in shares) | 460,769 | 0 |
Common stock, par value (in dollars per share) | $0.10 | $0.10 |
Common stock, authorized (in shares) | 8,000,000 | 8,000,000 |
Common stock, outstanding (in shares) | 3,588,958 | 3,474,388 |
CONSOLIDATED_STATEMENTS_OF_OPE
CONSOLIDATED STATEMENTS OF OPERATIONS (USD $) | 12 Months Ended | |
In Thousands, except Per Share data, unless otherwise specified | Sep. 30, 2014 | Sep. 30, 2013 |
CONSOLIDATED STATEMENTS OF OPERATIONS [Abstract] | ||
Net sales | $37,923 | $32,203 |
Cost of sales | -23,133 | -20,404 |
Gross profit | 14,790 | 11,799 |
Selling, general and administrative expenses | -9,801 | -8,226 |
Research and development expenses | -3,964 | -3,916 |
Restructuring charge | 0 | -605 |
Operating income (loss) | 1,025 | -948 |
Interest expense | -136 | -101 |
Interest income | 10 | 16 |
Foreign currency loss | -83 | -430 |
Income (loss) before income tax | 816 | -1,463 |
Income tax (provision) benefit | -85 | 392 |
Net income (loss) | 731 | -1,071 |
Net loss attributable to non-controlling interests | 201 | 0 |
Net income (loss) attributable to Sevcon, Inc. and subsidiaries | 932 | -1,071 |
Preference share dividends | -23 | 0 |
Net income (loss) attributable to common stockholders | $909 | ($1,071) |
Basic income (loss) per share (in dollars per share) | $0.27 | ($0.32) |
Fully diluted income (loss) per share (in dollars per share) | $0.19 | ($0.32) |
Weighted average shares used in computation of earnings per share: | ||
Basic (in shares) | 3,398 | 3,357 |
Diluted (in shares) | 4,856 | 3,369 |
CONSOLIDATED_STATEMENTS_OF_COM
CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME (USD $) | 12 Months Ended | |
In Thousands, unless otherwise specified | Sep. 30, 2014 | Sep. 30, 2013 |
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) [Abstract] | ||
Net income (loss) attributable to Sevcon, Inc. and subsidiaries | $932 | ($1,071) |
Other comprehensive (loss) income | ||
Foreign currency translation adjustment | -99 | 344 |
Defined benefit pension plans: | ||
Actuarial loss net of $351 tax benefit (2013:Actuarial gain net of $410 tax charge) | -1,311 | 1,260 |
Comprehensive (loss) income | ($478) | $533 |
CONSOLIDATED_STATEMENTS_OF_COM1
CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME (Parenthetical) (USD $) | 12 Months Ended | |
In Thousands, unless otherwise specified | Sep. 30, 2014 | Sep. 30, 2013 |
Defined benefit pension plans: | ||
Actuarial (loss) gain tax benefit (charge) | $351 | ($410) |
CONSOLIDATED_STATEMENTS_OF_STO
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (USD $) | Preferred Stock [Member] | Common Stock [Member] | Premium Paid In On Common Stock [Member] | Retained Earnings [Member] | Noncontrolling Interest [Member] | Other comprehensive loss [Member] | Total |
In Thousands, except Share data | |||||||
Balance at Sep. 30, 2012 | $348 | $5,492 | $9,662 | ($9,023) | $6,479 | ||
Balance (in shares) at Sep. 30, 2012 | 3,475,306 | ||||||
Net income (loss) | -1,071 | -1,071 | |||||
Currency translation adjustment | 344 | 344 | |||||
Issuance of restricted stock | 2 | -2 | 0 | ||||
Issuance of restricted stock (in shares) | 16,800 | ||||||
Repurchase of shares | -3 | -68 | -71 | ||||
Repurchase of shares (in shares) | -17,718 | ||||||
Stock-based compensation | 277 | 277 | |||||
Non-Controlling interest | 0 | ||||||
Pension liability adjustment, net of tax (charge) benefit | 1,260 | 1,260 | |||||
Balance at Sep. 30, 2013 | 347 | 5,699 | 8,591 | -7,419 | 7,218 | ||
Balance (in shares) at Sep. 30, 2013 | 3,474,388 | 3,474,388 | |||||
Net income (loss) | 932 | 932 | |||||
Currency translation adjustment | -99 | -99 | |||||
Issuance of restricted stock | 11 | -11 | 0 | ||||
Issuance of restricted stock (in shares) | 108,600 | ||||||
Repurchase of shares | -1 | -62 | -63 | ||||
Repurchase of shares (in shares) | -8,223 | ||||||
Stock-based compensation | 320 | 320 | |||||
Issuance of preferred stock | 47 | 9,326 | -28 | 9,345 | |||
Issuance of preferred stock (in shares) | 465,500 | ||||||
Conversion of preferred stock to common stock | -1 | 2 | -1 | 0 | |||
Conversion of preferred stock to common stock (in shares) | -4,731 | 14,193 | |||||
Non-Controlling interest | 120 | 120 | |||||
Pension liability adjustment, net of tax (charge) benefit | -1,311 | -1,311 | |||||
Balance at Sep. 30, 2014 | $46 | $359 | $15,271 | $9,615 | $120 | ($8,829) | $16,462 |
Balance (in shares) at Sep. 30, 2014 | 460,769 | 3,588,958 | 3,588,958 |
CONSOLIDATED_STATEMENTS_OF_STO1
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (Parenthetical) (USD $) | 12 Months Ended | |
In Thousands, unless otherwise specified | Sep. 30, 2014 | Sep. 30, 2013 |
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY [Abstract] | ||
Pension liability adjustment, tax benefit (charge) | $351 | ($410) |
CONSOLIDATED_STATEMENTS_OF_CAS
CONSOLIDATED STATEMENTS OF CASH FLOWS (USD $) | 12 Months Ended | |
In Thousands, unless otherwise specified | Sep. 30, 2014 | Sep. 30, 2013 |
Cash flow from operating activities: | ||
Net income (loss) | $731 | ($1,071) |
Adjustments to reconcile net income (loss) to net cash generated from (used by) operating activities: | ||
Depreciation | 608 | 601 |
Gain on sale of property, plant and equipment | 0 | -3 |
Stock-based compensation | 320 | 262 |
Pension contributions greater than pension expense | -477 | -216 |
Deferred tax charge (benefit) | 260 | -514 |
Increase (decrease) in cash resulting from changes in operating assets and liabilities: | ||
Trade receivables | -84 | -1,332 |
Other receivables | 197 | 212 |
Inventories | -544 | 637 |
Prepaid expenses and other assets | -906 | -114 |
Accounts payable | 506 | 642 |
Accrued expenses | -218 | 253 |
Accrued and deferred taxes on income | -53 | 234 |
Net cash generated from (used by) operating activities | 340 | -409 |
Cash flow used by generated from investing activities: | ||
Acquisition of property, plant and equipment | -744 | -435 |
Proceeds from sale of fixed assets | 0 | 4 |
Investment in joint venture, net of cash required | 321 | 0 |
Net cash used by investing activities | -423 | -431 |
Cash flow generated from (used by) financing activities: | ||
Repayment of long term debt | -47 | -41 |
Repurchase of common stock | -63 | -71 |
Proceeds from issuance of preferred stock, net of costs | 9,345 | 0 |
Net cash generated from (used by) financing activities | 9,235 | -112 |
Effect of exchange rate changes on cash | 24 | 191 |
Net increase (decrease) in cash | 9,176 | -761 |
Beginning balance - cash and cash equivalents | 2,062 | 2,823 |
Ending balance - cash and cash equivalents | 11,238 | 2,062 |
Supplemental disclosure of cash flow information: | ||
Cash paid for income taxes, net of refunds | 3 | 41 |
Cash paid for interest | $136 | $101 |
SUMMARY_OF_SIGNIFICANT_ACCOUNT
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 12 Months Ended | ||||||||
Sep. 30, 2014 | |||||||||
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES [Abstract] | |||||||||
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | (1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | ||||||||
A. Basis of presentation | |||||||||
Sevcon, Inc. is a Delaware corporation organized on December 22, 1987 to carry on the electronic controls business previously performed by Tech/Ops. Through wholly-owned subsidiaries located in the United States, England, France, South Korea, Japan and a 50% owned joint venture company located in China, the Company designs and sells, under the Sevcon name, controls for zero emission and hybrid electric vehicles. The controls are used to vary the speed and movement of vehicles, to integrate specialized functions and to prolong the shift life of vehicles' power source. The Company's customers are manufacturers of on-road, off-road and industrial vehicles including automobiles, motorcycles, buses, fork lift trucks, aerial lifts, mining vehicles, airport ground support vehicles, utility vehicles, sweepers and other battery powered vehicles. Through another wholly-owned subsidiary located in Wales, Sevcon manufactures special metalized film capacitors that are used as components in the power electronics, signaling and audio equipment markets. | |||||||||
Accounting for wholly-owned subsidiaries | |||||||||
The accompanying consolidated financial statements include the accounts of the Company's wholly-owned subsidiaries; Sevcon USA, Inc., Sevcon Limited and subsidiary, Sevcon SAS, Sevcon Asia Limited and Sevcon Japan KK, in accordance with the provisions required by the Consolidation Topic 810 of the FASB Accounting Standards Codification ("ASC"). All material intercompany transactions have been eliminated. | |||||||||
Accounting for joint-venture subsidiary | |||||||||
For the Company's less than wholly owned subsidiary, Sevcon New Energy Technology (Hubei) Company Limited, the Company first analyzes whether this joint venture subsidiary is a variable interest entity (a "VIE") in accordance with ASC 810 and if so, whether the Company is the primary beneficiary requiring consolidation. A VIE is an entity that has (i) insufficient equity to permit it to finance its activities without additional subordinated financial support or (ii) equity holders that lack the characteristics of a controlling financial interest. VIEs are consolidated by the primary beneficiary, which is the entity that has both the power to direct the activities that most significantly impact the entity's economic performance and the obligation to absorb losses or the right to receive benefits from the entity that potentially could be significant to the entity. Variable interests in a VIE are contractual, ownership, or other financial interests in a VIE that change with changes in the fair value of the VIE's net assets. The Company continuously re-assesses at each level of the joint venture whether the entity is (i) a VIE, and (ii) if the Company is the primary beneficiary of the VIE. If it is determined that the entity in which the Company holds its interest qualifies as a VIE and the Company is the primary beneficiary, it is consolidated. | |||||||||
Based on the Company's analysis for its 50% owned joint venture, the Company has determined that it is a VIE and that the Company is the primary beneficiary. While the Company owns 50% of the equity interest in this subsidiary, the other 50% is owned by a local unrelated third party, and the joint venture agreement with that third party provides the Company with greater voting rights. Accordingly, the Company consolidates its joint venture under the VIE rules and reflects the third party's 50% interest in the consolidated financial statements as a non-controlling interest. The Company records this non-controlling interest at its initial fair value, adjusting the basis prospectively for their share of the respective consolidated investments' net income or loss or equity contributions and distributions. This non-controlling interest is not redeemable by the equity holders and is presented as part of permanent equity. Income and losses are allocated to the non-controlling interest holder based on its economic ownership percentage. | |||||||||
B. Revenue recognition | |||||||||
Revenue from the sales of products is recognized at the time title and risks and rewards of ownership pass to the customer (either when the products reach the free-on-board shipping point or destination depending on the contractual terms), there is persuasive evidence of an arrangement, the sales price is fixed and determinable and collection is reasonably assured. Shipping, handling, purchasing, receiving, inspecting, warehousing, and other costs of distribution are presented in cost of sales in the consolidated statements of operations. The Company classifies amounts charged to its customers for shipping and handling in net sales in its consolidated statement of operations. The Company’s only post-shipment obligation relates to warranty in the normal course of business for which ongoing reserves, which management believes to be adequate, are maintained. The movement in warranty reserves was as follows: | |||||||||
(in thousands of dollars) | |||||||||
2014 | 2013 | ||||||||
Warranty reserves at beginning of year | 138 | 89 | |||||||
Decrease in beginning balance for warranty obligations settled during the year | - | (70 | ) | ||||||
Foreign currency translation adjustment | (4 | ) | 2 | ||||||
Net increase in warranty reserves for products sold during the year | 19 | 117 | |||||||
Warranty reserves at end of year | $ | 153 | $ | 138 | |||||
Infrequently the Company enters into fixed-price non-recurring engineering contracts. Revenue from these contracts is recognized in accordance with the proportional performance method of accounting. | |||||||||
C. Research and development | |||||||||
The cost of research and development programs is charged against income as incurred and amounted to approximately $3,964,000 in 2014 and $3,916,000 in 2013, net of U.K. government grants received. This expense is included in selling, research and administrative expense in the accompanying consolidated statements of operations. Research and development expense, net of grants received, was 10% of sales in 2014 and 12% of sales in 2013. | |||||||||
In recent years the Company has received several awards of research and development grants by the Technology Strategy Board, a public body established by the U.K. government to stimulate technology-enabled innovation. | |||||||||
In 2011, the Company was awarded a research and development grant by the Technology Strategy Board to lead a collaborative project with Cummins Generator Technologies and Newcastle University in the U.K. to develop an innovative electric drive system for electric vehicles using advanced switched reluctance motor technology. The Company recorded grant income from this Technology Strategy Board project of $84,000 in 2014 associated with research and development expense of $251,000. The Company recorded grant income of $133,000 associated with research and development expense of $395,000 in respect of this Technology Strategy Board grant in 2013. | |||||||||
In 2013, the Company was awarded a research and development grant by the Technology Strategy Board as one of a consortium of organizations in the U.K to research and design ultra-efficient systems for electric and hybrid vehicles. The Company recorded grant income from this Technology Strategy Board project of $6,000 in 2014 associated with research and development expense of $25,000. The Company recorded grant income from this Technology Strategy Board project of $2,000 in 2013 associated with research and development expense of $9,000. | |||||||||
In July 2013, the Company was awarded a grant of approximately $480,000 by the Low Emission Transport Collaborative Projects Fund, a U.K. government body. The grant is to develop next-generation controls for high-voltage, low-power applications. This grant will defray part of the research and development expense associated with this project over the period ending March 2015. The Company recorded grant income from this Technology Strategy Board project of $410,000 in 2014 associated with research and development expense of $1,683,000. The Company recorded grant income from this Technology Strategy Board project of $14,000 in 2013 associated with research and development expense of $58,000. | |||||||||
In 2014, the Company participated in a U.K. government research and development arrangement which allows U.K. companies to record an additional available tax credit to the income statement above operating income as an "above the line credit" subject to meeting certain qualifying conditions. The credit is a percentage, which currently ranges from 10% to 14.5% depending on circumstances, of qualifying research and development expenditure in the period. The credit discharges income tax the Company would have to pay or allows companies without an income tax liability to receive a refund payment from the U.K. government. In 2014, the Company recorded an income statement credit of $261,000 and had an income tax receivable balance of $227,000 at September 30, 2014 from this initiative. The company did not record a credit to the income statement or have an income tax receivable balance in respect of this arrangement in 2013. | |||||||||
D. Depreciation and maintenance | |||||||||
Property, plant and equipment are depreciated on a straight-line basis over their estimated useful lives, which are primarily fifty years for buildings, seven years for equipment and four years for computer equipment and software. Maintenance and repairs are charged to expense and renewals and betterments are capitalized. | |||||||||
E. Stock based compensation plans | |||||||||
The Company’s 1996 Equity Incentive Plan (the “Equity Plan”) provides for the granting of stock options, restricted stock and other equity-based awards to officers, key employees, consultants and non-employee directors of the Company. | |||||||||
The fair value of each option grant is estimated on the date of grant using the Black-Scholes option pricing model. The Company has not granted stock options since 2003. | |||||||||
Since 2004, the Company has granted restricted stock to certain officers, key employees and non-employee directors in exchange for services provided to the Company over the vesting period of the stock. The vesting period of the restricted stock (i.e. when the restrictions lapse) is normally five years in respect of officers and key employees and one year in respect of non-employee directors. For officers and key employees, the Company recognizes compensation expense in respect of restricted stock grants on a straight line basis over the vesting period of the restricted stock based on the closing stock price on the grant date and an expected forfeiture rate of awards of 4%. For non-employee directors, the Company recognizes compensation expense in respect of restricted stock grants on a straight line basis over the vesting period of the restricted stock based on the closing stock price on the grant date. | |||||||||
F. Income taxes | |||||||||
The Company uses the liability method of accounting for income taxes. Under the liability method, deferred tax assets and liabilities reflect the impact of temporary differences between amounts of assets and liabilities for financial reporting purposes and such amounts as measured under enacted tax laws. A valuation allowance is required to offset any net deferred tax assets if, based upon the available evidence, it is more likely than not that some or all of the deferred tax asset will not be realized. | |||||||||
Sevcon, Inc. files tax returns in the respective countries in which it operates. The financial statements reflect the current and deferred tax consequences of all events recognized in the financial statements or tax returns. We account for income tax uncertainties according to guidance on the recognition, de-recognition and measurement of potential tax benefits associated with tax positions. We recognize interest and penalties relating to income tax matters as a component of income tax expense. See Note 4. | |||||||||
G. Inventories | |||||||||
Inventories are valued at the lower of cost or market. Inventory costs include materials, direct labor and overhead, and are relieved from inventory on a first-in, first-out basis. The Company's reported financial condition includes a provision for estimated slow-moving and obsolete inventory that is based on a comparison of inventory levels with forecasted future demand. Such demand is estimated based on many factors, including management judgments, relating to each customer's business and to economic conditions. The Company reviews in detail all significant inventory items with holdings in excess of estimated normal requirements. It also considers the likely impact of changing technology. It makes an estimate of the provision for slow moving and obsolete stock on an item-by-item basis based on a combination of likely usage based on forecasted customer demand, potential sale or scrap value and possible alternative use. This provision represents the difference between original cost and market value at the end of the financial period. In cases where there is no estimated future use for the inventory item and there is no estimated scrap or resale value, a 100% provision is recorded. Where the Company estimates that only part of the total holding of an inventory item will not be used, or there is an estimated scrap, resale or alternate use value, then a proportionate provision is recorded. Once an item has been written down, it is not subsequently revalued upwards. The reserve for slow moving and obsolete inventories at September 30, 2014 was $485,000 and at September 30, 2013, the reserve was $658,000. | |||||||||
Inventories were comprised of: | |||||||||
(in thousands of dollars) | |||||||||
2014 | 2013 | ||||||||
Raw materials | $ | 2,095 | $ | 2,201 | |||||
Work-in-process | 102 | 11 | |||||||
Finished goods | 4,061 | 3,511 | |||||||
$ | 6,258 | $ | 5,723 | ||||||
H. Accounts receivable | |||||||||
In the normal course of business, the Company provides credit to customers, performs credit evaluations of these customers, monitors payment performance, and maintains reserves for potential credit losses in the allowance for doubtful accounts which, when realized, have historically been within the range of the Company's reserves. An account receivable is considered past due if any portion has been outstanding for greater than 60 days. | |||||||||
I. Translation of foreign currencies | |||||||||
Sevcon, Inc. translates the assets and liabilities of its foreign subsidiaries at the current rate of exchange, and statement of operations accounts at the average exchange rates in effect during the period. Gains or losses from foreign currency translation are credited or charged to the cumulative translation adjustment included in the statement of comprehensive (loss) income and as a component of accumulated other comprehensive loss in stockholders' equity in the consolidated balance sheets. Foreign currency transaction gains and losses are shown in the consolidated statement of operations. | |||||||||
J. Derivative instruments and hedging | |||||||||
The Company sells to customers throughout the industrialized world. In the controls segment the majority of the Company’s product is produced in three separate plants in Poland, Mexico and China. Approximately 49% of the Company’s sales are made in U.S. Dollars, 25% are made in British Pounds and 26% are made in Euros. Approximately 18% of the Company’s cost of sales is incurred in British Pounds and 73% is incurred in Euros. This results in the Company’s sales and margins being exposed to fluctuations due to the change in the exchange rates of U.S. Dollar, the British Pound and the Euro. | |||||||||
The Company had no foreign currency derivative financial instruments during the years ended September 30, 2014 and 2013. | |||||||||
K. Cash equivalents and short-term investments | |||||||||
The Company considers all highly liquid investments with a maturity of 90 days or less to be cash equivalents. Highly liquid investments with maturities greater than 90 days and less than one year are classified as short-term investments. | |||||||||
Such investments are generally money market funds, bank certificates of deposit, U.S. Treasury bills and short-term bank deposits in Europe. | |||||||||
L. Earnings per share | |||||||||
Basic earnings per share is computed by dividing the net income or loss for the period by the weighted average number of shares of common stock outstanding during the period. The computation of diluted earnings per share is similar to the computation of basic earnings per share, except that the denominator is increased for the assumed exercise of dilutive options and other potentially dilutive securities, including convertible preferred stock, using the treasury stock method unless the effect is anti-dilutive. | |||||||||
Basic and diluted net income (loss) per common share for the two years ended September 30, 2014 is calculated as follows: | |||||||||
(in thousands except per share data) | |||||||||
2014 | 2013 | ||||||||
Net income (loss) | $ | 909 | $ | (1,071 | ) | ||||
Weighted average shares outstanding | 3,398 | 3,357 | |||||||
Basic income (loss) per share | $ | 0.27 | $ | (0.32 | ) | ||||
Common stock equivalents | 1,458 | - | |||||||
Average common and common equivalent shares outstanding | 4,856 | 3,357 | |||||||
Diluted income (loss) per share | $ | 0.19 | $ | (0.32 | ) | ||||
In 2013 common stock equivalents of 12,000 were excluded from the calculation of diluted earnings per share as their effect on the calculation would have been anti-dilutive. | |||||||||
M. Use of estimates in the preparation of financial statements | |||||||||
The presentation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities as of the date of the financial statements and the reported amounts of income and expenses during the reporting periods. The most significant estimates and assumptions made by management include bad debt, inventory and warranty reserves, goodwill impairment assessment, pension plan assumptions and income tax assumptions. Operating results in the future could vary from the amounts derived from management's estimates and assumptions. | |||||||||
N. Fair value measurements | |||||||||
The FASB has issued authoritative guidance, which defines fair value, establishes a framework for measuring fair value in generally accepted accounting principles, and expands disclosures about fair value measurements. This guidance does not require any new fair value measurements, but provides guidance on how to measure fair value by providing a fair value hierarchy used to classify the source of the information. In accordance with this guidance, financial assets and liabilities have been categorized, based on the priority of the inputs to the valuation technique, into a three-level fair value hierarchy as set forth below. If the inputs used to measure the financial instruments fall within different levels of the hierarchy, the categorization is based on the lowest level input that is significant to the fair value measurement of the instrument. | |||||||||
The three levels of the hierarchy are defined as follows: | |||||||||
Level 1 - Unadjusted quoted prices in active markets for identical assets or liabilities. | |||||||||
Level 2 - Observable inputs other than quoted prices included in Level 1. Level 2 inputs include quoted prices for identical assets or liabilities in non-active markets, quoted prices for similar assets or liabilities in active markets and inputs other than quoted prices that are observable for substantially the full term of the asset or liability. The Company currently does not have any Level 2 financial assets or liabilities. | |||||||||
Level 3 - Unobservable inputs reflecting management’s own assumptions about the input used in pricing the asset or liability. The Company currently does not have any Level 3 financial assets or liabilities. | |||||||||
At September 30, 2014, the fair value measurements affect only the Company’s consideration of pension plan assets as disclosed in Note 7, Employee Benefit Plans and debt as disclosed in Note 9. | |||||||||
O. Fair value of financial instruments | |||||||||
The Company's financial instruments consist mainly of cash and cash equivalents, short-term investments, accounts receivable and accounts payable. The carrying amount of these financial instruments as of September 30, 2014 approximates fair value due to the short-term nature of these instruments. The fair value of the Company’s long term debt at September 30, 2014 approximated $1,700,000 (the carrying value on the consolidated balance sheet at September 30, 2014) based on recent financial market pricing. The long term debt represented a level 2 liability in accordance with the fair value hierarchy outlined above. | |||||||||
P. Goodwill | |||||||||
The amount by which the cost of purchased businesses included in the accompanying financial statements exceeded the fair value of net assets at the date of acquisition has been recorded as goodwill. | |||||||||
In accordance with FASB accounting guidance regarding goodwill and other intangible assets, the Company performs an assessment of goodwill impairment annually or more frequently if events or changes in circumstances indicate that the value has been impaired. The Company has designated September 30 as the date it performs the annual review of goodwill impairment. Goodwill impairment testing is performed at the segment (or “reporting unit”) level. | |||||||||
In evaluating goodwill for impairment, the reporting unit’s fair value was first compared to its carrying value. The fair value of the reporting unit was estimated by considering (1) market capitalization, (2) market multiple and recent transaction values of similar companies and (3) projected discounted future cash flows, if reasonably estimable. Key assumptions in the estimation of projected discounted future cash flows include the use of an appropriate discount rate, estimated future cash flows and estimated run rates of sales, gross profit and operating expenses. In estimating future cash flows, the Company incorporates expected growth rates, as well as other factors into its revenue and expense forecasts. If the reporting unit’s fair value exceeds its carrying value, no further testing is required. If, however, the reporting unit’s carrying value exceeds its fair value, the amount of the impairment charge is determined, if any. An impairment charge is recognized if the carrying value of the reporting unit’s goodwill exceeds its implied fair value. At each of September 30, 2014 and 2013, there was $1,435,000 of goodwill on the balance sheet of the Company which related wholly to one business segment, the controls segment, and the estimated fair value of the reporting unit significantly exceeded its carrying value under each method of calculation performed. | |||||||||
Q. New Accounting Pronouncements | |||||||||
In May 2014, the FASB issued ASU 2014-09, "Revenue from Contracts with Customers (Topic 606)", requiring an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers. The updated standard will replace most existing revenue recognition guidance in U.S. GAAP when it becomes effective and permits the use of either a full retrospective or retrospective with cumulative effect transition method. Early adoption is not permitted. The updated standard becomes effective for the Company in the first quarter of fiscal 2018. The Company has not yet selected a transition method and is currently evaluating the effect that the updated standard will have on the consolidated financial statements. | |||||||||
In July 2013, the FASB issued Accounting Standards Update (ASU) No. 2013-11, "Income Taxes (Topic 740): Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a similar Tax Loss, or a Tax Credit Carryforward Exists." ASU No. 2013-11 clarifies that companies should present, in certain cases, an unrecognized tax benefit as a reduction to a deferred tax asset for a net operating loss carryforward, a similar tax loss or a tax credit carryforward when such items exist in the same jurisdiction. This guidance is effective for fiscal years, and interim periods within those years, beginning after December 15, 2013, our fiscal year ended September 30, 2015. The Company is currently assessing the impact on its consolidated statement of financial position; however we do not anticipate the adoption of ASU 2013-11 will have a material effect on our financial position, results of operations or cash flows. | |||||||||
In March 2013, the FASB issued ASU No. 2013-05, "Foreign Currency Matters (Topic 830): Parent's Accounting for the Cumulative Translation Adjustment upon Derecognition of Certain Subsidiaries or Groups of Assets within a Foreign Entity or of an Investment in a Foreign Entity." ASU No. 2013-05 clarifies when companies should release the cumulative translation adjustment (CTA) into net income when a parent either sells a part or all of its investment in a foreign entity or no longer holds a controlling financial interest in a subsidiary or group of assets within a foreign entity. Additionally, ASU No. 2013-05 states that CTA should be released into net income upon an acquirer obtaining control of an acquiree in which it held an equity interest immediately before the acquisition date (step acquisition). This guidance is effective for fiscal years, and interim periods within those years, beginning after December 15, 2013, our fiscal year ended September 30, 2015. The Company is currently assessing the impact on its consolidated statement of financial position; however we do not anticipate the adoption of ASU 2013-05 will have a material effect on our financial position, results of operations or cash flows. | |||||||||
In August 2014, the FASB issued ASU 2014-15, "Presentation of Financial Statements — Going Concern (Subtopic 205-40)" ("ASU 2014-15"). ASU 2014-15 requires management to assess an entity's ability to continue as a going concern by incorporating and expanding upon certain principles of current U.S. auditing standards. Specifically, the amendments (1) provide a definition of the term "substantial doubt", (2) require an evaluation every reporting period, including interim periods, (3) provide principles for considering the mitigating effect of management's plans, (4) require certain disclosures when substantial doubt is alleviated as a result of consideration of management's plans, (5) require an express statement and other disclosures when substantial doubt is still present, and (6) require an assessment for a period of one year after the date that the financial statements are issued (or available to be issued). ASU 2014-15 is effective for annual reporting periods ending after December 15, 2016 and interim periods thereafter. The Company does not believe that this pronouncement will have an impact on its consolidated financial statements. | |||||||||
R. Employee Benefit Plans | |||||||||
Sevcon, Inc. recognizes its pension plans’ over-funded or under-funded status in its balance sheets and recognizes the change in a plan’s funded status in comprehensive income in the year which the changes occur. |
CAPITAL_STOCK
CAPITAL STOCK | 12 Months Ended |
Sep. 30, 2014 | |
CAPITAL STOCK [Abstract] | |
CAPITAL STOCK | (2) CAPITAL STOCK |
Sevcon, Inc. has two classes of authorized capital stock, preferred and common. There are authorized 1,000,000 shares of preferred stock, $.10 par value and 8,000,000 shares of common stock, $.10 par value. |
STOCKBASED_COMPENSATION_PLANS
STOCK-BASED COMPENSATION PLANS | 12 Months Ended | ||||||||||||||||
Sep. 30, 2014 | |||||||||||||||||
STOCK-BASED COMPENSATION PLANS [Abstract] | |||||||||||||||||
STOCK-BASED COMPENSATION PLANS | (3) STOCK-BASED COMPENSATION PLANS | ||||||||||||||||
Under the Company’s 1996 Equity Incentive Plan there were 219,557shares reserved and available for grant at September 30, 2014. There were 137,000 shares reserved and available for grant at September 30, 2013. There were no options exercised in 2014 or in 2013. In the second quarter of 2014 stockholders approved an increase of 150,000 in the number of the shares of common stock authorized for issuance under the Plan. | |||||||||||||||||
Recipients of grants of options must execute a standard form of non-competition agreement. The plan provides for the grant of Restricted Stock, Restricted Stock Units, Options, and Stock Appreciation Rights (“SAR”s). SARs may be awarded either separately, or in relation to options granted, and for the grant of bonus shares. Options granted are exercisable at a price not less than fair market value on the date of grant. | |||||||||||||||||
Option transactions under the plans for the two years ended September 30, 2014 were as follows: | |||||||||||||||||
Shares under | Weighted | Weighted | Aggregate | ||||||||||||||
option | average | average | Intrinsic | ||||||||||||||
exercise | remaining | value | |||||||||||||||
price | contractual life | ||||||||||||||||
(years) | |||||||||||||||||
Outstanding at September 30, 2012 | 36,000 | $ | 4.51 | 0.6 years | $ | 11,800 | |||||||||||
Exercised in 2013 | - | $ | - | - | - | ||||||||||||
Cancelled in 2013 | (31,000 | ) | $ | 4.37 | - | - | |||||||||||
Outstanding at September 30, 2013 | 5,000 | $ | 5.4 | 0.1 years | $ | - | |||||||||||
Exercisable at September 30, 2013 | 5,000 | $ | 5.4 | 0.1 years | $ | - | |||||||||||
Exercised in 2014 | - | $ | - | - | - | ||||||||||||
Cancelled in 2014 | 5,000 | $ | 5.4 | - | - | ||||||||||||
Outstanding at September 30, 2014 | N/A | $ | N/A | N/A | $ | N/A | |||||||||||
Exercisable at September 30, 2014 | N/A | $ | N/A | N/A | $ | N/A | |||||||||||
There were no options outstanding at September 30, 2014. At September 30, 2013 there were 5,000 options outstanding at $5.40 with a weighted average remaining contractual life of 0.1 years | |||||||||||||||||
In December 2013, the Company granted 80,000 shares of restricted stock to seven employees, which will vest in five equal annual installments so long as the employee is then employed by the Company, or as determined by the Compensation Committee. The estimated fair value of the stock measured on the date of grant was $354,000, based on the fair market value of the stock on the date of issue. The unvested compensation is being charged to income on a straight line basis over five years. The charge to income for this employee restricted stock in 2014 was $53,000 and the subsequent charge will be approximately $18,000 on a quarterly basis. | |||||||||||||||||
In February 2014, the Company granted 28,600 shares of restricted stock to eleven non-employee directors, which will vest on the day before the 2015 annual meeting providing that the grantee remains a director of the Company, or as otherwise determined by the Compensation Committee. The aggregate fair value of the stock measured on the date of grant was $213,000, based on the closing sale price of the stock on the date of grant. Compensation expense is being charged to income on a straight line basis over the twelve month requisite service period during which the forfeiture conditions lapse. The charge to income for these restricted stock grants in 2014 was $124,000 and the subsequent charge will be approximately $53,000 on a quarterly basis. | |||||||||||||||||
For the purposes of calculating average issued shares for basic earnings per share these shares are only considered to be outstanding when the forfeiture conditions lapse and the shares vest. | |||||||||||||||||
Restricted stock transactions under the plans for the two years ended September 30, 2014 were as follows: | |||||||||||||||||
(in thousands of shares) | |||||||||||||||||
2014 | 2013 | ||||||||||||||||
Beginning Balance – Non-vested | 103.8 | 144.2 | |||||||||||||||
Granted to employees – 5 year vesting | 80 | - | |||||||||||||||
Granted to non-employee directors – 1 year vesting | 28.6 | 16.8 | |||||||||||||||
Vested | (43.8 | ) | (57.2 | ) | |||||||||||||
Forfeited | - | - | |||||||||||||||
Ending Balance – Non-vested | 168.6 | 103.8 | |||||||||||||||
Weighted-average fair value for shares granted during the year | $ | 5.23 | $ | 4.26 | |||||||||||||
Weighted-average fair value for shares vested during the year | $ | 4.63 | $ | 5.24 | |||||||||||||
Weighted-average fair value for ending balance - non-vested | $ | 5.27 | $ | 5.05 | |||||||||||||
As of September 30, 2014, there was $619,000 of compensation expense related to non-vested awards not yet recognized, which is expected to be recognized over a weighted average period of 3.0 years. | |||||||||||||||||
Stock-based compensation expense was $320,000 and $262,000 for the years ended September 30, 2014 and 2013, respectively. |
INCOME_TAXES
INCOME TAXES | 12 Months Ended | ||||||||||||||||||||
Sep. 30, 2014 | |||||||||||||||||||||
INCOME TAXES [Abstract] | |||||||||||||||||||||
INCOME TAXES | (4) INCOME TAXES | ||||||||||||||||||||
The domestic and foreign components of income (loss) before income taxes are as follows: | |||||||||||||||||||||
(in thousands of dollars) | |||||||||||||||||||||
2014 | 2013 | ||||||||||||||||||||
Domestic | $ | 430 | $ | (1 | ) | ||||||||||||||||
Foreign | 386 | (1,462 | ) | ||||||||||||||||||
$ | 816 | $ | (1,463 | ) | |||||||||||||||||
The components of the provision (benefit) for income taxes and deferred taxes for the years ended September 30, 2014 and 2013 are as follows: | |||||||||||||||||||||
(in thousands of dollars) | |||||||||||||||||||||
2014 | |||||||||||||||||||||
Current | Deferred | ||||||||||||||||||||
Federal | $ | - | $ | 134 | |||||||||||||||||
State | 44 | 87 | |||||||||||||||||||
Foreign | (97 | ) | (83 | ) | |||||||||||||||||
$ | (53 | ) | $ | 138 | |||||||||||||||||
2013 | |||||||||||||||||||||
Current | Deferred | ||||||||||||||||||||
Federal | $ | 30 | $ | (4 | ) | ||||||||||||||||
State | 7 | 9 | |||||||||||||||||||
Foreign | 85 | (519 | ) | ||||||||||||||||||
$ | 122 | $ | (514 | ) | |||||||||||||||||
The provision (benefit) for income taxes in each period differs from that which would be computed by applying the statutory U.S. Federal income tax rate to the income before income taxes. The following is a summary of the major items affecting the provision: | |||||||||||||||||||||
(in thousands of dollars) | |||||||||||||||||||||
2014 | 2013 | ||||||||||||||||||||
Statutory Federal income tax rate | 34 | % | 34 | % | |||||||||||||||||
Computed tax provision at statutory rate | $ | 275 | $ | (491 | ) | ||||||||||||||||
Increases (decreases) resulting from: | |||||||||||||||||||||
Foreign tax rate differentials | (122 | ) | 167 | ||||||||||||||||||
State taxes net of federal tax benefit | 71 | 10 | |||||||||||||||||||
Foreign research incentives | (213 | ) | (567 | ) | |||||||||||||||||
U.K. rate change | 27 | 444 | |||||||||||||||||||
Other | 47 | 45 | |||||||||||||||||||
Income tax provision in the consolidated statement of operations | $ | 85 | $ | (392 | ) | ||||||||||||||||
Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. | |||||||||||||||||||||
A reduction in the U.K. corporate tax rate from 23% to 21% and then to 20% was substantively enacted in 2013 with effect in 2014 and 2015; this rate reduction resulted in the write down in the value of the Company’s U.K. deferred tax assets of $444,000 in 2013 referred to in the table above. | |||||||||||||||||||||
The significant items comprising the domestic and foreign deferred tax accounts at September 30, 2014 and 2013 are as follows: | |||||||||||||||||||||
2014 | |||||||||||||||||||||
Domestic | Domestic | Foreign | Foreign | ||||||||||||||||||
current | long-term | current | long-term | Total | |||||||||||||||||
Assets: | |||||||||||||||||||||
Pension accruals | $ | - | $ | 186 | $ | 37 | $ | 1,805 | $ | 2,028 | |||||||||||
Inventory basis differences | 69 | - | - | - | 69 | ||||||||||||||||
Warranty reserves | 21 | - | - | - | 21 | ||||||||||||||||
Foreign tax credit carry forwards | - | 266 | - | - | 266 | ||||||||||||||||
Accrued compensation expense | - | - | - | 58 | 58 | ||||||||||||||||
Net operating losses | 103 | 108 | 289 | 1,568 | 2,068 | ||||||||||||||||
Other (net) | - | 308 | 3 | - | 311 | ||||||||||||||||
193 | 868 | 329 | 3,431 | 4,821 | |||||||||||||||||
Liabilities: | |||||||||||||||||||||
Property basis asset (liability) | - | 12 | - | (130 | ) | (118 | ) | ||||||||||||||
Net asset | 193 | 880 | 329 | 3,301 | 4,703 | ||||||||||||||||
Valuation allowance | - | (159 | ) | - | (112 | ) | (271 | ) | |||||||||||||
Net deferred tax asset | $ | 193 | $ | 721 | $ | 329 | $ | 3,189 | $ | 4,432 | |||||||||||
2013 | |||||||||||||||||||||
Domestic | Domestic | Foreign | Foreign | ||||||||||||||||||
current | long-term | current | long-term | Total | |||||||||||||||||
Assets: | |||||||||||||||||||||
Pension accruals | $ | - | $ | 229 | $ | 30 | $ | 1,561 | $ | 1,820 | |||||||||||
Inventory basis differences | 61 | - | - | - | 61 | ||||||||||||||||
Warranty reserves | 21 | - | - | - | 21 | ||||||||||||||||
Foreign tax credit carry forwards | - | 277 | - | - | 277 | ||||||||||||||||
Accrued compensation expense | 7 | - | - | 51 | 58 | ||||||||||||||||
Net operating losses | 286 | 75 | 652 | 895 | 1,908 | ||||||||||||||||
Other (net) | - | 263 | 4 | - | 267 | ||||||||||||||||
375 | 844 | 686 | 2,507 | 4,412 | |||||||||||||||||
Liabilities: | |||||||||||||||||||||
Property basis asset (liability) | - | 35 | - | (75 | ) | (40 | ) | ||||||||||||||
Net asset | 375 | 879 | 686 | 2,432 | 4,372 | ||||||||||||||||
Valuation allowance | - | (159 | ) | - | - | (159 | ) | ||||||||||||||
Net deferred tax asset | $ | 375 | $ | 720 | $ | 686 | $ | 2,432 | $ | 4,213 | |||||||||||
The domestic valuation allowance at September 30, 2014 relates to the realizability of foreign tax credit carryforwards in the U.S; the foreign valuation allowance relates to net operating losses in the Company's Asian subsidiaries. In assessing the continuing need for a valuation allowance the Company has assessed the available means of recovering its deferred tax assets, including the ability to carryback net operating losses, the existence of reversing temporary differences, the availability of tax planning strategies, and available sources of future taxable income, including a revised estimate of future sources of pre-tax income. The Company has historically had profitable operations. The Company's current projections reflect future profitable operations. Since the majority of the Company's deferred tax assets relate to operations in countries where net operating losses have unlimited carryforwards, the Company has concluded that no valuation allowance is required on its deferred tax assets. | |||||||||||||||||||||
The Company has generated domestic federal and state net operating losses of $608,200 which will expire in 2028 and 2015, respectively. The Company has generated foreign net operating losses of approximately $9,201,000 which have an indefinite carry forward period. | |||||||||||||||||||||
During the year, the Company elected to receive a refundable tax credit of $261,000 related to certain research and development incentives in the U.K. These amounts have been recorded in operating income, as they are refunded without regard to actual tax liability. | |||||||||||||||||||||
At September 30, 2014, the Company has not provided United States income taxes or foreign withholding taxes on unremitted foreign earnings of approximately $10.9 million, as those amounts are considered indefinitely invested in light of the Company’s substantial non-U.S. operations. Due to the complexities of the U.S. tax law, including the effect of U.S. foreign tax credits, it is not practicable to estimate the amount of tax that might be payable on these earnings in the event they no longer are indefinitely reinvested. | |||||||||||||||||||||
Uncertain tax positions | |||||||||||||||||||||
Effective October 1, 2007, the Company adopted FASB authoritative guidance regarding the recognition and measurement of all tax positions taken or to be taken by the Company and its subsidiaries. The adoption of this guidance followed a review by the Company of all potential uncertain tax positions. As a consequence of that review, it was concluded that no provision was required in respect of the adoption of this guidance and consequently the Company has not recorded a liability for uncertain tax positions and the Company has recorded no cumulative effect to retained earnings pursuant to the adoption of this guidance. The Company’s tax returns are open to audit from 2011 and forward. |
ACCRUED_EXPENSES
ACCRUED EXPENSES | 12 Months Ended | ||||||||
Sep. 30, 2014 | |||||||||
ACCRUED EXPENSES [Abstract] | |||||||||
ACCRUED EXPENSES | (5) ACCRUED EXPENSES | ||||||||
The analysis of accrued expenses at September 30, 2014 and 2013 showing separately any items in excess of 5% of total current liabilities was as follows: | |||||||||
(in thousands of dollars) | |||||||||
2014 | 2013 | ||||||||
Accrued compensation and related costs | $ | 1,062 | $ | 1,015 | |||||
Other accrued expenses | 774 | 1,072 | |||||||
$ | 1,836 | $ | 2,087 |
COMMITMENTS_AND_CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 12 Months Ended |
Sep. 30, 2014 | |
COMMITMENTS AND CONTINGENCIES [Abstract] | |
COMMITMENTS AND CONTINGENCIES | (6) COMMITMENTS AND CONTINGENCIES |
The Company maintains a directors' retirement plan which provides for certain retirement benefits to non-employee directors. Effective January 1997 the plan was frozen and no further benefits are being accrued. While the cost of the plan has been fully charged to expense, the plan is not separately funded. The estimated maximum liability which has been recorded based on the cost of buying deferred annuities at September 30, 2014 was $162,000. | |
Minimum rental commitments under all non-cancelable leases are as follows for the years ended September 30: 2015 - $213,000; 2016 - $205,000; 2017 - $205,000; 2018 - $208,000; 2019 - $194,000and $3,405,000 thereafter. Net rentals of certain land, buildings and equipment charged to expense were $242,000 in 2014 and $212,000 in 2013. | |
The U.K. subsidiaries of the Company have given to a bank a security interest in certain leasehold and freehold property assets as security for overdraft facilities of $1,460,000. There were no amounts outstanding on the overdraft facilities at September 30, 2014 or 2013. The obligations under a secured revolving credit facility entered into in 2011 by the U.S. subsidiary of the Company, are guaranteed by the Company and are secured by all of the assets and a pledge of all of the capital stock, of Sevcon USA, Inc. As at September 30, 2014 and 2013 there was $1,700,000 outstanding under the revolving credit facility. |
EMPLOYEE_BENEFIT_PLANS
EMPLOYEE BENEFIT PLANS | 12 Months Ended | ||||||||||||
Sep. 30, 2014 | |||||||||||||
EMPLOYEE BENEFIT PLANS [Abstract] | |||||||||||||
EMPLOYEE BENEFIT PLANS | (7) EMPLOYEE BENEFIT PLANS | ||||||||||||
Sevcon, Inc. has defined contribution plans covering the majority of its U.S. and U.K. employees in the controls business. There is also a small defined contribution plan covering senior managers in the capacitor business. The Company has frozen U.K. and U.S. defined benefit plans for which no future benefits are being earned by employees. The Company uses a September 30 measurement date for its defined benefit pension plans. | |||||||||||||
The Company’s French subsidiary, Sevcon S.A.S., has a liability to pay its employees a service and salary based award when they reach retirement age and leave the Company’s employment. This liability, which is unfunded, is recognized in accrued expenses and was $173,000 and was $152,000 at September, 30, 2014 and 2013 respectively. The obligation to pay this award is a French legal requirement and is only payable if the employee is employed by the Company when they retire; if they leave the Company prior to that time the award is no longer payable. | |||||||||||||
The following table sets forth the estimated funded status of these frozen defined benefit plans and the amounts recognized by Sevcon, Inc.: | |||||||||||||
(in thousands of dollars) | |||||||||||||
2014 | 2013 | ||||||||||||
Change in benefit obligation: | |||||||||||||
Benefit obligation at beginning of year | $ | 27,908 | $ | 28,145 | |||||||||
Interest cost | 1,303 | 1,256 | |||||||||||
Actuarial loss (gain) | 1,911 | (1,164 | ) | ||||||||||
Benefits paid | (482 | ) | (395 | ) | |||||||||
Foreign currency exchange rate changes | 6 | 66 | |||||||||||
Benefit obligation at end of year | 30,646 | 27,908 | |||||||||||
Change in plan assets: | |||||||||||||
Fair value of plan assets at beginning of year | 19,554 | 17,881 | |||||||||||
Return on plan assets | 1,334 | 1,393 | |||||||||||
Employer contributions | 698 | 584 | |||||||||||
Benefits paid | (482 | ) | (395 | ) | |||||||||
Foreign currency exchange rate changes | 13 | 91 | |||||||||||
Fair value of plan assets at end of year | 21,117 | 19,554 | |||||||||||
Funded status | (9,529 | ) | (8,354 | ) | |||||||||
Liability for pension benefits recorded in the balance sheet | $ | (9,529 | ) | $ | (8,354 | ) | |||||||
The funded status of the Company’s defined benefit pension plans declined from a deficit of $8,354,000 at September 30, 2013 to a deficit of $9,529,000 at September 30, 2014. The increase in the deficit of $1,175,000 was due to several factors. The most significant factor was an actuarial loss of $1,911,000 of which $1,706,000 related to the Company’s U.K. defined benefit plan and $205,000 related to the Company’s U.S. defined benefit plan. The actuarial loss in the Company’s U.K. defined benefit plan was largely the result of deterioration in the financial assumptions underlying the calculation of the liabilities during the year and in particular the yield on high quality corporate bonds. This led to a higher value being placed on the liabilities at the end of the fiscal year. | |||||||||||||
Amounts recognized in the balance sheets consist of: | |||||||||||||
(in thousands of dollars) | |||||||||||||
2014 | 2013 | ||||||||||||
Non current liabilities | $ | 9,529 | $ | 8,354 | |||||||||
Amounts recognized in other comprehensive loss consist of: | |||||||||||||
(in thousands of dollars) | |||||||||||||
2014 | 2013 | ||||||||||||
Actuarial (loss) gain net of $351,000 tax benefit (2013:actuarial gain net of $410,000 tax charge) | $ | (1,311 | ) | $ | 1,260 | ||||||||
The Sevcon, Inc. net pension cost included the following components: | |||||||||||||
(in thousands of dollars) | |||||||||||||
2014 | 2013 | ||||||||||||
Components of net periodic benefit cost: | |||||||||||||
Interest cost | $ | 1,303 | $ | 1,256 | |||||||||
Expected return on plan assets | (1,309 | ) | (1,166 | ) | |||||||||
Amortization of net actuarial loss | 227 | 278 | |||||||||||
Net periodic benefit cost | $ | 221 | $ | 368 | |||||||||
Net cost of defined contribution plans | $ | 500 | $ | 455 | |||||||||
The weighted average assumptions used to determine plan obligations and net periodic benefit cost for the years ended September 30, 2014 and 2013 were as set out below: | |||||||||||||
2014 | 2013 | ||||||||||||
Plan obligations: | |||||||||||||
Discount rate | 4.24 | % | 4.61 | % | |||||||||
Rate of compensation increase | 0 | % | 0 | % | |||||||||
Net periodic benefit cost: | |||||||||||||
Discount rate | 4.24 | % | 4.61 | % | |||||||||
Expected long term return on plan assets | 6.15 | % | 6.53 | % | |||||||||
Rate of compensation increase | 0 | % | 0 | % | |||||||||
The changes in these assumptions reflect actuarial advice and changing market conditions and experience. There is no compensation increase assumed in 2014 and in future years as both the U.K. and the U.S. defined benefit pension plans have been frozen and therefore there will be no future benefits earned by employees under these benefit arrangements. | |||||||||||||
The Company’s investment strategy is to build an efficient, well-diversified portfolio based on a long-term strategic outlook of the investment markets. The investment markets outlook utilizes both historical-based and forward-looking return forecasts to establish future return expectations for various asset classes. These return expectations are used to develop a core asset allocation based on the specific needs of the plan. The core asset allocation utilizes multiple investment managers to maximize the plan’s return while minimizing risk. | |||||||||||||
The assumed rate of return on plan assets represents an estimate of long-term returns on an investment portfolio consisting of a mixture of equities, fixed income and alternative investments. In determining the expected return on plan assets, the Company considers long-term rates of return on the asset classes (historically and forecasted) in which the Company expects the pension funds to be invested. | |||||||||||||
At September 30, 2014, the assets of the U.S. plan were invested 81% in mutual funds and 19% in cash and cash equivalents. The U.S. plan had a deficit of $313,000, or 10% of the total U.S. benefit obligation, as at September 30, 2014. The Company has committed to future annual contributions to the defined benefit plan to pay down this deficit within the next seven years. The Company established a 401(k) defined contribution plan for current and future U.S. employees effective October 1, 2010. | |||||||||||||
At September 30, 2014, the assets of the U.K. plan were invested 79% in equity like securities, 10% in U.K. government bonds, 10% in U.K. corporate bonds and 1% in cash and cash equivalents. The U.K. plan was frozen effective September 30, 2012 and in consequence there will be no future accrual earned by U.K. employees under this defined benefit arrangement. The U.K. plan had a deficit of $9,216,000, or 34% of the total U.K. benefit obligation, as at September 30, 2014. The Company has committed to future annual contributions to the defined benefit plan to pay down this deficit within the next twelve years. The Company has established a defined contribution pension plan for current and future U.K. employees effective October 1, 2012. | |||||||||||||
The overall expected long-term rate of return on plan assets has been based on the expected returns on equities, bonds and real estate based broadly on the current and proposed future asset allocation. | |||||||||||||
The table below presents information about our plan assets measured and recorded at fair value as of September 30, 2014, and indicates the fair value hierarchy of the inputs utilized by the Company to determine the fair values (see Fair value measurements in Note 1). | |||||||||||||
(in thousands of dollars) | |||||||||||||
Level 1* | Level 2** | Level 3*** | |||||||||||
(Quoted | (Significant | (Unobservable | |||||||||||
prices in | observable | inputs) | |||||||||||
active | inputs) | ||||||||||||
markets) | |||||||||||||
Mutual Funds | |||||||||||||
Standard Life Pension Global Absolute Returns Strategies Fund | 7,187 | - | - | ||||||||||
Standard Life UK Indexed Linked Fund | 1,856 | - | - | ||||||||||
Standard Life Long Corporate Bond Fund | 1,785 | - | - | ||||||||||
CF Ruffer Absolute Return Fund | 7,177 | - | - | ||||||||||
U.S. Mutual Funds | 2,431 | - | - | ||||||||||
U.S. Exchange Traded Funds | 348 | - | - | ||||||||||
Other Types of Investments | |||||||||||||
Cash | 333 | - | - | ||||||||||
Total | 21,117 | - | - | ||||||||||
* | Level 1 investments represent mutual funds for which a quoted market price is available on an active market. These investments primarily hold stocks or bonds, or a combination of stocks and bonds. | ||||||||||||
** | The Company currently does not have any Level 2 pension plan financial assets. | ||||||||||||
*** | The Company currently does not have any Level 3 pension plan financial assets. | ||||||||||||
The following estimated benefit payments, which reflect future service, as appropriate, are expected to be paid: | |||||||||||||
(in thousands of dollars) | |||||||||||||
2015 | $ | 668 | |||||||||||
2016 | 707 | ||||||||||||
2017 | 697 | ||||||||||||
2018 | 695 | ||||||||||||
2019 | 671 | ||||||||||||
2020 – 2024 | 3,658 | ||||||||||||
In 2015 it is estimated that the Company will make contributions to the U.K. and U.S. defined benefit pension plans of $687,000. Actual payment obligations with respect to the pension plan liability come due over an extended period of time and will depend on changes in the assumptions described above. |
SEGMENT_INFORMATION
SEGMENT INFORMATION | 12 Months Ended | ||||||||||||||||
Sep. 30, 2014 | |||||||||||||||||
SEGMENT INFORMATION [Abstract] | |||||||||||||||||
SEGMENT INFORMATION | (8) SEGMENT INFORMATION | ||||||||||||||||
The Company has two reportable segments: electronic controls and capacitors. The electronic controls segment produces microprocessor based control systems for zero emission and hybrid electric vehicles. The capacitor segment produces special metalized film capacitors for sale to electronic equipment manufacturers. Each segment has its own management team, manufacturing facilities and sales force. | |||||||||||||||||
The accounting policies of the segments are the same as those described in Note 1. Intersegment sales are accounted for at current market prices. The Company evaluates the performance of each segment principally based on operating income. The Company does not allocate income taxes, interest income and expense or foreign currency translation gains and losses to segments. Information concerning operations of these businesses is as follows: | |||||||||||||||||
(in thousands of dollars) | |||||||||||||||||
2014 | |||||||||||||||||
Controls | Capacitors | Corporate | Total | ||||||||||||||
Sales to external customers | $ | 35,708 | $ | 2,215 | $ | - | $ | 37,923 | |||||||||
Inter-segment revenues | - | 5 | - | 5 | |||||||||||||
Operating income (loss) | 977 | 283 | (235 | ) | 1,025 | ||||||||||||
Depreciation | 517 | 90 | 1 | 608 | |||||||||||||
Identifiable assets | 22,507 | 1,199 | 10,261 | 33,967 | |||||||||||||
Capital expenditures | 709 | 33 | 2 | 744 | |||||||||||||
2013 | |||||||||||||||||
Controls | Capacitors | Corporate | Total | ||||||||||||||
Sales to external customers | $ | 30,320 | $ | 1,883 | $ | - | $ | 32,203 | |||||||||
Inter-segment revenues | - | 8 | - | 8 | |||||||||||||
Operating income (loss) | (739 | ) | 75 | (284 | ) | (948 | ) | ||||||||||
Depreciation | 514 | 85 | 2 | 601 | |||||||||||||
Identifiable assets | 21,545 | 1,325 | 490 | 23,360 | |||||||||||||
Capital expenditures | 410 | 25 | - | 435 | |||||||||||||
The Company has businesses located in the United States, the United Kingdom, France, Korea, Japan and China. The analysis of revenues set out below is by the location of the business selling the products rather than by destination of the products. | |||||||||||||||||
(in thousands of dollars) | |||||||||||||||||
2014 | 2013 | ||||||||||||||||
Sales:- | |||||||||||||||||
U.S. sales | $ | 16,389 | $ | 13,657 | |||||||||||||
Foreign sales: | |||||||||||||||||
United Kingdom | 13,486 | 10,627 | |||||||||||||||
France | 8,026 | 7,919 | |||||||||||||||
China | 22 | - | |||||||||||||||
Total Foreign | 21,534 | 18,546 | |||||||||||||||
Total sales | $ | 37,923 | $ | 32,203 | |||||||||||||
Long-lived assets: | |||||||||||||||||
U.S.A. | $ | 2,245 | $ | 2,235 | |||||||||||||
Foreign: | |||||||||||||||||
United Kingdom | 5,239 | 4,305 | |||||||||||||||
France | 74 | 69 | |||||||||||||||
Korea, Japan and China | 289 | 1 | |||||||||||||||
Total Foreign | 5,602 | 4,375 | |||||||||||||||
Total | $ | 7,847 | $ | 6,610 | |||||||||||||
In the controls business segment the revenues were derived from the following products and services: | |||||||||||||||||
(in thousands of dollars) | |||||||||||||||||
2014 | 2013 | ||||||||||||||||
Electronic controls for zero emission and hybrid electric vehicles | $ | 26,014 | $ | 19,884 | |||||||||||||
Accessory and aftermarket products and services | 9,694 | 10,436 | |||||||||||||||
Total controls segment revenues | $ | 35,708 | $ | 30,320 | |||||||||||||
The business located in the United States services customers in North and South America. The business located in France services customers in Germany, France, Spain, Portugal, Belgium, Netherlands and North Africa. The businesses located in Korea and Japan support customers in Asia, however, sales to these customers are made from the United Kingdom. The businesses located in the United Kingdom service customers in the rest of the world, principally Europe and the Far East. The business in China services customers in the on-road sector in the People’s Republic of China. | |||||||||||||||||
In 2014 Sevcon, Inc.'s largest customer, Toyota Group, accounted for 14% of sales and, at September 30, 2014 17% of receivables. A second customer, Haulotte Group, accounted for 11% of receivables at September 30, 2014. In 2013 the largest customer, Toyota Group, accounted for 10% of sales and, at September 30, 2013 8% of receivables. |
DEBT
DEBT | 12 Months Ended | ||||
Sep. 30, 2014 | |||||
DEBT [Abstract] | |||||
Debt | (9) DEBT | ||||
At September 30, 2014 the Company had $28,000 outstanding under a U.K. bank loan entered into in April 2010, with a fixed interest rate of 6.8%. The loan, which was entered into by the U.K. metalized film capacitor subsidiary to purchase an item of capital equipment, is denominated in British Pounds. The loan agreement provides for equal monthly installments comprising interest and principal for a five year period commencing in May 2010. The amount outstanding at September 30, 2014, $28,000, is shown in the current liabilities section of the accompanying consolidated balance sheet under current debt, representing the principal element of the loan installments in the year ending September 30, 2015. The fair market value of the debt at September 30, 2014 was $28,000. | |||||
The Company’s wholly owned subsidiary, Sevcon USA, Inc., has a $3,500,000 secured revolving credit facility with Citizens Bank, National Association for working capital and general corporate purposes. The loan and security agreement was extended as of September 30, 2013 and will expire on June 14, 2017 when all outstanding principal and unpaid interest will be due and payable in full. The facility may be paid before maturity in whole or in part at the option of Sevcon USA, Inc., without penalty or premium. Under the facility, Sevcon USA, Inc. must maintain, on a quarterly basis, a debt to tangible net worth ratio of no more than 2.40:1 and a debt service coverage ratio of no less than 1.25:1 for each rolling twelve-month period. Interest on the loan is payable monthly, and in 2014, was calculated at a margin of 3.125% over LIBOR. Upon entering into the revolving credit facility, Sevcon USA, Inc. drew down $1,700,000, which was the total amount outstanding at September 30, 2014. This $1,700,000 is shown in the accompanying consolidated balance sheet under long-term debt. The carrying value of the debt approximated fair value based on current interest rates. | |||||
In July 2014, the Company’s U.K. bank renewed the overdraft facilities of the Company’s U.K. controls and capacitor subsidiaries. The Company’s U.K. controls and capacitor subsidiaries each have multi-currency overdraft facilities which together total $1,460,000 and which are secured against real estate owned by those companies. The renewal of the facilities is for a twelve month period although they can be withdrawn on demand by the bank. The facilities were unused at September 30, 2014 and at September 30, 2013. | |||||
Annual principal payments on long term debt at September 30, 2014 are as follows: | |||||
(in thousands of dollars) | |||||
2015 | $ | - | |||
2016 | - | ||||
2017 | 1,700 | ||||
Total | $ | 1,700 |
ESTABLISHMENT_OF_JOINT_VENTURE
ESTABLISHMENT OF JOINT VENTURE IN CHINA | 12 Months Ended |
Sep. 30, 2014 | |
Establishment of Joint Venture in China [Abstract] | |
Establishment of Joint Venture in China | (10) ESTABLISHMENT OF JOINT VENTURE IN CHINA |
During the third quarter of 2014, the Company received the required government approvals in China to formally establish a joint-venture company which will source from Sevcon and supply, market and sell in China, current and future Sevcon products for on-road electric and hybrid vehicle applications. The joint-venture company, in which Sevcon and Xuchang Fuhua Glass Company Limited each own a 50% stake, will operate as Sevcon New Energy Technology (Hubei) Company Limited. Xuchang Fuhua Glass Company Limited is a Chinese Tier 1 automotive supplier based in Hubei Province. | |
The activities of the joint-venture company in the third and fourth quarters have been limited to the investment of initial capital of $320,000 by each party to the joint-venture, the sourcing of business premises, the hiring of engineering and sales and marketing staff and initial shipments to customers which were largely product prototypes designed specifically for the unique requirements of the Chinese market. In the fourth quarter, the Company recognized the initial establishment costs of the joint-venture company which amounted to $481,000; this represented the legal costs associated with the joint-venture agreement, the cost of sourcing and establishing business premises and the hiring cost of initial staff. | |
The financial statements of the joint-venture company have been consolidated with the Company’s as at September 30, 2014. |
CAPITAL_RAISE
CAPITAL RAISE | 12 Months Ended |
Sep. 30, 2014 | |
CAPITAL RAISE [Abstract] | |
Capital rise | (11) CAPITAL RAISE |
On August 1, 2014 the Company filed a registration statement for a rights offering of Series A Convertible Preferred Stock ("Series A Preferred") intended to raise $10 million before expenses. On September 12, 2014 the rights offering closed and the Company issued 465,500 shares of Series A Preferred at $21.50 per share. The issue raised $9.3 million after costs. The preferred stock, which has a stated value of $24 per share, will pay a 4% cumulative annual dividend paid semi-annually on October 15 and April 15, each year; the first dividend was paid on October 15, 2014. The main terms of the convertible preferred stock are as follows: | |
Ranking. With respect to the payment of dividends and distribution of amounts of net assets upon a dissolution, liquidation or winding up, the Series A Preferred will rank senior to common stock and any other class or series of stock over which the Series A Preferred has preference or priority in the payment of dividends or in the distribution of assets on liquidation. | |
Dividends. The holders of the Series A Preferred are entitled to receive, when, as and if declared by the Board of Directors, out of funds legally available for such purpose, dividends at the rate equal to 4% of the stated value per share of $24.00, and no more. Such dividends are cumulative and accrue without interest on a daily basis from the date of issuance of the Series A Preferred, and are payable semiannually in cash or in shares of common stock at the Company's sole discretion. | |
Classification. We evaluated the Series A Preferred and determined that it should be considered an "equity host" and not a "debt host." This evaluation was necessary to determine if any embedded features required bifurcation and, therefore, would be required to be accounted for separately as a derivative liability. Our analysis followed the "whole instrument approach," which compares an individual feature against the entire preferred stock instrument that includes that feature. Our analysis was based on a consideration of the economic characteristics and risks of the preferred stock and, more specifically, evaluated all of the stated and implied substantive terms and features of the stock, including (1) whether the preferred stock included redemption features; (2) how and when any redemption features could be exercised; (3) whether the holders of preferred stock were entitled to dividends; (4) the voting rights of the preferred stock; and (5) the existence and nature of any conversion rights. As a result of our determination that the Series A Preferred was an "equity host," we determined that the embedded conversion options did not require bifurcation as derivative liabilities. | |
Liquidation Preference. In the event of a liquidation, dissolution or winding up (a "liquidation"), after the satisfaction in full of the debts of the corporation and the payment of any priority liquidation preference owed to the holders of shares of stock which rank senior to the Series A Preferred, the holders of Series A Preferred shall be entitled to receive out of the assets of the corporation an amount equal to the dividends accrued and unpaid thereon, without interest, plus a sum in cash or property at its fair market value as determined by the Board of Directors equal to the greater of (a) the stated value per share of Series A Preferred and (b) such amount per share as would have been payable had all shares of Series A Preferred been converted into common stock immediately before the liquidation, before any payment may be made or assets distributed to the holders of Junior Stock. For this purpose, "liquidation" does not include any consolidation of the Company with, or merger of the Company into, any other entity, any merger of another entity into the Company, any sale or transfer of assets of the Company or any exchange of securities of the Company. | |
Conversion. | |
Optional Conversion by Holder. Each share of Series A Preferred is convertible at the election of the holder, at any time, into shares of common stock by dividing the stated value ($24.00) per share by a conversion price, which will initially be $8.00, resulting in a conversion ratio of 3:1. | |
Optional Conversion by Sevcon. If at any time after the fifth anniversary of the initial issue date of the Series A Preferred, the closing sale price of common stock exceeds $15.50 for 20 out of 30 consecutive trading days the Company may, at its discretion, elect all (but not less than all) outstanding shares of Series A Preferred to be automatically converted into shares of common stock. | |
Conversion Price Adjustment. The conversion price and, therefore, the conversion rate, will be adjusted to reflect any dividend or distribution in shares of common stock made on any class or series of its capital stock other than on shares of Series A Preferred or any subdivision, combination or reclassification of the outstanding shares of common stock (including through a merger of the Company with another entity) so that each holder of shares of Series A Preferred thereafter surrendered for conversion shall be entitled to receive the number of shares or other of common stock that such Holder would have owned or have been entitled to receive immediately after such action had such shares of Series A Preferred been converted immediately before such action. | |
Voting. The holders of Series A Preferred do not have any voting rights except in the event the terms of Series A Preferred were to be altered or the Company were to issue any shares of any other class or series of capital stock ranking senior to the Series A Preferred as to dividends or upon liquidation. | |
Redemption. Series A Preferred are non-redeemable for cash or other assets. | |
RESTRUCTURING_CHARGE
RESTRUCTURING CHARGE | 12 Months Ended | ||||||||||||||||
Sep. 30, 2014 | |||||||||||||||||
Restructuring charge [Abstract] | |||||||||||||||||
Restructuring charge | (12) RESTRUCTURING CHARGE 2013 | ||||||||||||||||
In February 2013, the Company announced a limited restructuring program in the controls business segment to reduce operating expense in response to the uncertain economic environment and the resultant lower demand for the Company's products experienced in the first quarter of 2013. The program, which was completed in March 2013, resulted in the termination of 8 employees across the Company's operations in the U.S. and the U.K. There was a restructuring charge in the second quarter of fiscal 2013 of $605,000 before taxes, which comprised one-time employee severance costs, associated professional fees, consultant costs and other costs relating to this program. | |||||||||||||||||
The following table summarizes the components of the restructuring charge for the period ended September 30, 2013: | |||||||||||||||||
(in thousands of dollars) | |||||||||||||||||
Severance and other related costs | $ | 343 | |||||||||||||||
Consultant costs, professional fees and other costs | 262 | ||||||||||||||||
Total restructuring charge | $ | 605 | |||||||||||||||
The following table summarizes the liabilities related to the 2013 restructuring program: | |||||||||||||||||
(in thousands of dollars) | |||||||||||||||||
Balance at October 1, 2012 | Charges | Payments | Balance at September 30, 2013 | ||||||||||||||
Severance and other related costs | - | 343 | (343 | ) | - | ||||||||||||
Consultant costs, professional fees and other costs | - | 262 | (262 | ) | - | ||||||||||||
Total | - | 605 | (605 | ) | - |
SUBSEQUENT_EVENTS
SUBSEQUENT EVENTS | 12 Months Ended |
Sep. 30, 2014 | |
Subsequent events [Abstract] | |
Subsequent events | (13) SUBSEQUENT EVENTS |
In preparing these consolidated financial statements, the Company has evaluated, for the potential recognition or disclosure, events or transactions subsequent to the end of the fiscal year and through the date these financial statements were available to be issued. | |
On December 1, 2014 the Company repaid the $1,700,000 loan that was outstanding at September 30, 2014 with Citizens Bank, National Association. The Company has retained the $3,500,000 secured revolving credit facility with Citizens Bank, National Association and may draw down on that facility until June 14, 2017, subject to the covenant requirements under the facility. | |
No further material subsequent events were identified that require recognition or disclosure in these financial statements. |
SCHEDULE_II
SCHEDULE II | 12 Months Ended | ||||||||
Sep. 30, 2014 | |||||||||
SCHEDULE II [Abstract] | |||||||||
SCHEDULE II | SCHEDULE II | ||||||||
SEVCON, INC. AND SUBSIDIARIES | |||||||||
Reserves for the years ended September 30, 2014 and 2013 | |||||||||
(in thousands of dollars) | |||||||||
Allowance for doubtful accounts | 2014 | 2013 | |||||||
Balance at beginning of year | 61 | 32 | |||||||
Additions charged to costs and expenses | 2 | 31 | |||||||
Deductions from reserves: | |||||||||
Reduction in reserve | (6 | ) | - | ||||||
Write off of uncollectible accounts | (14 | ) | (4 | ) | |||||
Foreign currency translation adjustment | (3 | ) | 2 | ||||||
Balance at end of year | 40 | 61 |
SUMMARY_OF_SIGNIFICANT_ACCOUNT1
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 12 Months Ended | ||||||||
Sep. 30, 2014 | |||||||||
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES [Abstract] | |||||||||
Revenue recognition | B. Revenue recognition | ||||||||
Revenue from the sales of products is recognized at the time title and risks and rewards of ownership pass to the customer (either when the products reach the free-on-board shipping point or destination depending on the contractual terms), there is persuasive evidence of an arrangement, the sales price is fixed and determinable and collection is reasonably assured. Shipping, handling, purchasing, receiving, inspecting, warehousing, and other costs of distribution are presented in cost of sales in the consolidated statements of operations. The Company classifies amounts charged to its customers for shipping and handling in net sales in its consolidated statement of operations. The Company’s only post-shipment obligation relates to warranty in the normal course of business for which ongoing reserves, which management believes to be adequate, are maintained. The movement in warranty reserves was as follows: | |||||||||
(in thousands of dollars) | |||||||||
2014 | 2013 | ||||||||
Warranty reserves at beginning of year | 138 | 89 | |||||||
Decrease in beginning balance for warranty obligations settled during the year | - | (70 | ) | ||||||
Foreign currency translation adjustment | (4 | ) | 2 | ||||||
Net increase in warranty reserves for products sold during the year | 19 | 117 | |||||||
Warranty reserves at end of year | $ | 153 | $ | 138 | |||||
Infrequently the Company enters into fixed-price non-recurring engineering contracts. Revenue from these contracts is recognized in accordance with the proportional performance method of accounting. | |||||||||
Research and development | C. Research and development | ||||||||
The cost of research and development programs is charged against income as incurred and amounted to approximately $3,964,000 in 2014 and $3,916,000 in 2013, net of U.K. government grants received. This expense is included in selling, research and administrative expense in the accompanying consolidated statements of operations. Research and development expense, net of grants received, was 10% of sales in 2014 and 12% of sales in 2013. | |||||||||
In recent years the Company has received several awards of research and development grants by the Technology Strategy Board, a public body established by the U.K. government to stimulate technology-enabled innovation. | |||||||||
In 2011, the Company was awarded a research and development grant by the Technology Strategy Board to lead a collaborative project with Cummins Generator Technologies and Newcastle University in the U.K. to develop an innovative electric drive system for electric vehicles using advanced switched reluctance motor technology. The Company recorded grant income from this Technology Strategy Board project of $84,000 in 2014 associated with research and development expense of $251,000. The Company recorded grant income of $133,000 associated with research and development expense of $395,000 in respect of this Technology Strategy Board grant in 2013. | |||||||||
In 2013, the Company was awarded a research and development grant by the Technology Strategy Board as one of a consortium of organizations in the U.K to research and design ultra-efficient systems for electric and hybrid vehicles. The Company recorded grant income from this Technology Strategy Board project of $6,000 in 2014 associated with research and development expense of $25,000. The Company recorded grant income from this Technology Strategy Board project of $2,000 in 2013 associated with research and development expense of $9,000. | |||||||||
In July 2013, the Company was awarded a grant of approximately $480,000 by the Low Emission Transport Collaborative Projects Fund, a U.K. government body. The grant is to develop next-generation controls for high-voltage, low-power applications. This grant will defray part of the research and development expense associated with this project over the period ending March 2015. The Company recorded grant income from this Technology Strategy Board project of $410,000 in 2014 associated with research and development expense of $1,683,000. The Company recorded grant income from this Technology Strategy Board project of $14,000 in 2013 associated with research and development expense of $58,000. | |||||||||
In 2014, the Company participated in a U.K. government research and development arrangement which allows U.K. companies to record an additional available tax credit to the income statement above operating income as an "above the line credit" subject to meeting certain qualifying conditions. The credit is a percentage, which currently ranges from 10% to 14.5% depending on circumstances, of qualifying research and development expenditure in the period. The credit discharges income tax the Company would have to pay or allows companies without an income tax liability to receive a refund payment from the U.K. government. In 2014, the Company recorded an income statement credit of $261,000 and had an income tax receivable balance of $227,000 at September 30, 2014 from this initiative. The company did not record a credit to the income statement or have an income tax receivable balance in respect of this arrangement in 2013. | |||||||||
Depreciation and maintenance | D. Depreciation and maintenance | ||||||||
Property, plant and equipment are depreciated on a straight-line basis over their estimated useful lives, which are primarily fifty years for buildings, seven years for equipment and four years for computer equipment and software. Maintenance and repairs are charged to expense and renewals and betterments are capitalized. | |||||||||
Stock based compensation plans | E. Stock based compensation plans | ||||||||
The Company’s 1996 Equity Incentive Plan (the “Equity Plan”) provides for the granting of stock options, restricted stock and other equity-based awards to officers, key employees, consultants and non-employee directors of the Company. | |||||||||
The fair value of each option grant is estimated on the date of grant using the Black-Scholes option pricing model. The Company has not granted stock options since 2003. | |||||||||
Since 2004, the Company has granted restricted stock to certain officers, key employees and non-employee directors in exchange for services provided to the Company over the vesting period of the stock. The vesting period of the restricted stock (i.e. when the restrictions lapse) is normally five years in respect of officers and key employees and one year in respect of non-employee directors. For officers and key employees, the Company recognizes compensation expense in respect of restricted stock grants on a straight line basis over the vesting period of the restricted stock based on the closing stock price on the grant date and an expected forfeiture rate of awards of 4%. For non-employee directors, the Company recognizes compensation expense in respect of restricted stock grants on a straight line basis over the vesting period of the restricted stock based on the closing stock price on the grant date. | |||||||||
Income taxes | F. Income taxes | ||||||||
The Company uses the liability method of accounting for income taxes. Under the liability method, deferred tax assets and liabilities reflect the impact of temporary differences between amounts of assets and liabilities for financial reporting purposes and such amounts as measured under enacted tax laws. A valuation allowance is required to offset any net deferred tax assets if, based upon the available evidence, it is more likely than not that some or all of the deferred tax asset will not be realized. | |||||||||
Sevcon, Inc. files tax returns in the respective countries in which it operates. The financial statements reflect the current and deferred tax consequences of all events recognized in the financial statements or tax returns. We account for income tax uncertainties according to guidance on the recognition, de-recognition and measurement of potential tax benefits associated with tax positions. We recognize interest and penalties relating to income tax matters as a component of income tax expense. See Note 4. | |||||||||
Inventories | G. Inventories | ||||||||
Inventories are valued at the lower of cost or market. Inventory costs include materials, direct labor and overhead, and are relieved from inventory on a first-in, first-out basis. The Company's reported financial condition includes a provision for estimated slow-moving and obsolete inventory that is based on a comparison of inventory levels with forecasted future demand. Such demand is estimated based on many factors, including management judgments, relating to each customer's business and to economic conditions. The Company reviews in detail all significant inventory items with holdings in excess of estimated normal requirements. It also considers the likely impact of changing technology. It makes an estimate of the provision for slow moving and obsolete stock on an item-by-item basis based on a combination of likely usage based on forecasted customer demand, potential sale or scrap value and possible alternative use. This provision represents the difference between original cost and market value at the end of the financial period. In cases where there is no estimated future use for the inventory item and there is no estimated scrap or resale value, a 100% provision is recorded. Where the Company estimates that only part of the total holding of an inventory item will not be used, or there is an estimated scrap, resale or alternate use value, then a proportionate provision is recorded. Once an item has been written down, it is not subsequently revalued upwards. The reserve for slow moving and obsolete inventories at September 30, 2014 was $485,000 and at September 30, 2013, the reserve was $658,000. | |||||||||
Inventories were comprised of: | |||||||||
(in thousands of dollars) | |||||||||
2014 | 2013 | ||||||||
Raw materials | $ | 2,095 | $ | 2,201 | |||||
Work-in-process | 102 | 11 | |||||||
Finished goods | 4,061 | 3,511 | |||||||
$ | 6,258 | $ | 5,723 | ||||||
Accounts receivable | H. Accounts receivable | ||||||||
In the normal course of business, the Company provides credit to customers, performs credit evaluations of these customers, monitors payment performance, and maintains reserves for potential credit losses in the allowance for doubtful accounts which, when realized, have historically been within the range of the Company's reserves. An account receivable is considered past due if any portion has been outstanding for greater than 60 days. | |||||||||
Translation of foreign currencies | I. Translation of foreign currencies | ||||||||
Sevcon, Inc. translates the assets and liabilities of its foreign subsidiaries at the current rate of exchange, and statement of operations accounts at the average exchange rates in effect during the period. Gains or losses from foreign currency translation are credited or charged to the cumulative translation adjustment included in the statement of comprehensive (loss) income and as a component of accumulated other comprehensive loss in stockholders' equity in the consolidated balance sheets. Foreign currency transaction gains and losses are shown in the consolidated statement of operations. | |||||||||
Derivative instruments and hedging | J. Derivative instruments and hedging | ||||||||
Cash equivalents and short-term investments | K. Cash equivalents and short-term investments | ||||||||
The Company considers all highly liquid investments with a maturity of 90 days or less to be cash equivalents. Highly liquid investments with maturities greater than 90 days and less than one year are classified as short-term investments. | |||||||||
Such investments are generally money market funds, bank certificates of deposit, U.S. Treasury bills and short-term bank deposits in Europe. | |||||||||
Earnings per share | L. Earnings per share | ||||||||
Basic earnings per share is computed by dividing the net income or loss for the period by the weighted average number of shares of common stock outstanding during the period. The computation of diluted earnings per share is similar to the computation of basic earnings per share, except that the denominator is increased for the assumed exercise of dilutive options and other potentially dilutive securities, including convertible preferred stock, using the treasury stock method unless the effect is anti-dilutive. | |||||||||
Basic and diluted net income (loss) per common share for the two years ended September 30, 2014 is calculated as follows: | |||||||||
(in thousands except per share data) | |||||||||
2014 | 2013 | ||||||||
Net income (loss) | $ | 909 | $ | (1,071 | ) | ||||
Weighted average shares outstanding | 3,398 | 3,357 | |||||||
Basic income (loss) per share | $ | 0.27 | $ | (0.32 | ) | ||||
Common stock equivalents | 1,458 | - | |||||||
Average common and common equivalent shares outstanding | 4,856 | 3,357 | |||||||
Diluted income (loss) per share | $ | 0.19 | $ | (0.32 | ) | ||||
In 2013 common stock equivalents of 12,000 were excluded from the calculation of diluted earnings per share as their effect on the calculation would have been anti-dilutive. | |||||||||
Use of estimates in the preparation of financial statements | M. Use of estimates in the preparation of financial statements | ||||||||
The presentation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities as of the date of the financial statements and the reported amounts of income and expenses during the reporting periods. The most significant estimates and assumptions made by management include bad debt, inventory and warranty reserves, goodwill impairment assessment, pension plan assumptions and income tax assumptions. Operating results in the future could vary from the amounts derived from management's estimates and assumptions. | |||||||||
Fair value measurements | N. Fair value measurements | ||||||||
The FASB has issued authoritative guidance, which defines fair value, establishes a framework for measuring fair value in generally accepted accounting principles, and expands disclosures about fair value measurements. This guidance does not require any new fair value measurements, but provides guidance on how to measure fair value by providing a fair value hierarchy used to classify the source of the information. In accordance with this guidance, financial assets and liabilities have been categorized, based on the priority of the inputs to the valuation technique, into a three-level fair value hierarchy as set forth below. If the inputs used to measure the financial instruments fall within different levels of the hierarchy, the categorization is based on the lowest level input that is significant to the fair value measurement of the instrument. | |||||||||
The three levels of the hierarchy are defined as follows: | |||||||||
Level 1 - Unadjusted quoted prices in active markets for identical assets or liabilities. | |||||||||
Level 2 - Observable inputs other than quoted prices included in Level 1. Level 2 inputs include quoted prices for identical assets or liabilities in non-active markets, quoted prices for similar assets or liabilities in active markets and inputs other than quoted prices that are observable for substantially the full term of the asset or liability. The Company currently does not have any Level 2 financial assets or liabilities. | |||||||||
Level 3 - Unobservable inputs reflecting management’s own assumptions about the input used in pricing the asset or liability. The Company currently does not have any Level 3 financial assets or liabilities. | |||||||||
At September 30, 2014, the fair value measurements affect only the Company’s consideration of pension plan assets as disclosed in Note 7, Employee Benefit Plans and debt as disclosed in Note 9. | |||||||||
Fair value of financial instruments | O. Fair value of financial instruments | ||||||||
The Company's financial instruments consist mainly of cash and cash equivalents, short-term investments, accounts receivable and accounts payable. The carrying amount of these financial instruments as of September 30, 2014 approximates fair value due to the short-term nature of these instruments. The fair value of the Company’s long term debt at September 30, 2014 approximated $1,700,000 (the carrying value on the consolidated balance sheet at September 30, 2014) based on recent financial market pricing. The long term debt represented a level 2 liability in accordance with the fair value hierarchy outlined above. | |||||||||
Goodwill | P. Goodwill | ||||||||
The amount by which the cost of purchased businesses included in the accompanying financial statements exceeded the fair value of net assets at the date of acquisition has been recorded as goodwill. | |||||||||
In accordance with FASB accounting guidance regarding goodwill and other intangible assets, the Company performs an assessment of goodwill impairment annually or more frequently if events or changes in circumstances indicate that the value has been impaired. The Company has designated September 30 as the date it performs the annual review of goodwill impairment. Goodwill impairment testing is performed at the segment (or “reporting unit”) level. | |||||||||
In evaluating goodwill for impairment, the reporting unit’s fair value was first compared to its carrying value. The fair value of the reporting unit was estimated by considering (1) market capitalization, (2) market multiple and recent transaction values of similar companies and (3) projected discounted future cash flows, if reasonably estimable. Key assumptions in the estimation of projected discounted future cash flows include the use of an appropriate discount rate, estimated future cash flows and estimated run rates of sales, gross profit and operating expenses. In estimating future cash flows, the Company incorporates expected growth rates, as well as other factors into its revenue and expense forecasts. If the reporting unit’s fair value exceeds its carrying value, no further testing is required. If, however, the reporting unit’s carrying value exceeds its fair value, the amount of the impairment charge is determined, if any. An impairment charge is recognized if the carrying value of the reporting unit’s goodwill exceeds its implied fair value. At each of September 30, 2014 and 2013, there was $1,435,000 of goodwill on the balance sheet of the Company which related wholly to one business segment, the controls segment, and the estimated fair value of the reporting unit significantly exceeded its carrying value under each method of calculation performed. | |||||||||
New Accounting Pronouncements | Q. New Accounting Pronouncements | ||||||||
In May 2014, the FASB issued ASU 2014-09, "Revenue from Contracts with Customers (Topic 606)", requiring an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers. The updated standard will replace most existing revenue recognition guidance in U.S. GAAP when it becomes effective and permits the use of either a full retrospective or retrospective with cumulative effect transition method. Early adoption is not permitted. The updated standard becomes effective for the Company in the first quarter of fiscal 2018. The Company has not yet selected a transition method and is currently evaluating the effect that the updated standard will have on the consolidated financial statements. | |||||||||
In July 2013, the FASB issued Accounting Standards Update (ASU) No. 2013-11, "Income Taxes (Topic 740): Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a similar Tax Loss, or a Tax Credit Carryforward Exists." ASU No. 2013-11 clarifies that companies should present, in certain cases, an unrecognized tax benefit as a reduction to a deferred tax asset for a net operating loss carryforward, a similar tax loss or a tax credit carryforward when such items exist in the same jurisdiction. This guidance is effective for fiscal years, and interim periods within those years, beginning after December 15, 2013, our fiscal year ended September 30, 2015. The Company is currently assessing the impact on its consolidated statement of financial position; however we do not anticipate the adoption of ASU 2013-11 will have a material effect on our financial position, results of operations or cash flows. | |||||||||
In March 2013, the FASB issued ASU No. 2013-05, "Foreign Currency Matters (Topic 830): Parent's Accounting for the Cumulative Translation Adjustment upon Derecognition of Certain Subsidiaries or Groups of Assets within a Foreign Entity or of an Investment in a Foreign Entity." ASU No. 2013-05 clarifies when companies should release the cumulative translation adjustment (CTA) into net income when a parent either sells a part or all of its investment in a foreign entity or no longer holds a controlling financial interest in a subsidiary or group of assets within a foreign entity. Additionally, ASU No. 2013-05 states that CTA should be released into net income upon an acquirer obtaining control of an acquiree in which it held an equity interest immediately before the acquisition date (step acquisition). This guidance is effective for fiscal years, and interim periods within those years, beginning after December 15, 2013, our fiscal year ended September 30, 2015. The Company is currently assessing the impact on its consolidated statement of financial position; however we do not anticipate the adoption of ASU 2013-05 will have a material effect on our financial position, results of operations or cash flows. | |||||||||
In August 2014, the FASB issued ASU 2014-15, "Presentation of Financial Statements — Going Concern (Subtopic 205-40)" ("ASU 2014-15"). ASU 2014-15 requires management to assess an entity's ability to continue as a going concern by incorporating and expanding upon certain principles of current U.S. auditing standards. Specifically, the amendments (1) provide a definition of the term "substantial doubt", (2) require an evaluation every reporting period, including interim periods, (3) provide principles for considering the mitigating effect of management's plans, (4) require certain disclosures when substantial doubt is alleviated as a result of consideration of management's plans, (5) require an express statement and other disclosures when substantial doubt is still present, and (6) require an assessment for a period of one year after the date that the financial statements are issued (or available to be issued). ASU 2014-15 is effective for annual reporting periods ending after December 15, 2016 and interim periods thereafter. The Company does not believe that this pronouncement will have an impact on its consolidated financial statements. | |||||||||
Employee Benefit Plans | R. Employee Benefit Plans | ||||||||
Sevcon, Inc. recognizes its pension plans’ over-funded or under-funded status in its balance sheets and recognizes the change in a plan’s funded status in comprehensive income in the year which the changes occur. |
SUMMARY_OF_SIGNIFICANT_ACCOUNT2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables) | 12 Months Ended | ||||||||
Sep. 30, 2014 | |||||||||
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES [Abstract] | |||||||||
Warranty reserves | The movement in warranty reserves was as follows: | ||||||||
(in thousands of dollars) | |||||||||
2014 | 2013 | ||||||||
Warranty reserves at beginning of year | 138 | 89 | |||||||
Decrease in beginning balance for warranty obligations settled during the year | - | (70 | ) | ||||||
Foreign currency translation adjustment | (4 | ) | 2 | ||||||
Net increase in warranty reserves for products sold during the year | 19 | 117 | |||||||
Warranty reserves at end of year | $ | 153 | $ | 138 | |||||
Inventories | Inventories were comprised of: | ||||||||
(in thousands of dollars) | |||||||||
2014 | 2013 | ||||||||
Raw materials | $ | 2,095 | $ | 2,201 | |||||
Work-in-process | 102 | 11 | |||||||
Finished goods | 4,061 | 3,511 | |||||||
$ | 6,258 | $ | 5,723 | ||||||
Basic and diluted net incomes per common share | Basic and diluted net income (loss) per common share for the two years ended September 30, 2014 is calculated as follows: | ||||||||
(in thousands except per share data) | |||||||||
2014 | 2013 | ||||||||
Net income (loss) | $ | 909 | $ | (1,071 | ) | ||||
Weighted average shares outstanding | 3,398 | 3,357 | |||||||
Basic income (loss) per share | $ | 0.27 | $ | (0.32 | ) | ||||
Common stock equivalents | 1,458 | - | |||||||
Average common and common equivalent shares outstanding | 4,856 | 3,357 | |||||||
Diluted income (loss) per share | $ | 0.19 | $ | (0.32 | ) |
STOCKBASED_COMPENSATION_PLANS_
STOCK-BASED COMPENSATION PLANS (Tables) | 12 Months Ended | ||||||||||||||||
Sep. 30, 2014 | |||||||||||||||||
STOCK-BASED COMPENSATION PLANS [Abstract] | |||||||||||||||||
Summary of option activity for all plans | Option transactions under the plans for the two years ended September 30, 2014 were as follows: | ||||||||||||||||
Shares under | Weighted | Weighted | Aggregate | ||||||||||||||
option | average | average | Intrinsic | ||||||||||||||
exercise | remaining | value | |||||||||||||||
price | contractual life | ||||||||||||||||
(years) | |||||||||||||||||
Outstanding at September 30, 2012 | 36,000 | $ | 4.51 | 0.6 years | $ | 11,800 | |||||||||||
Exercised in 2013 | - | $ | - | - | - | ||||||||||||
Cancelled in 2013 | (31,000 | ) | $ | 4.37 | - | - | |||||||||||
Outstanding at September 30, 2013 | 5,000 | $ | 5.4 | 0.1 years | $ | - | |||||||||||
Exercisable at September 30, 2013 | 5,000 | $ | 5.4 | 0.1 years | $ | - | |||||||||||
Exercised in 2014 | - | $ | - | - | - | ||||||||||||
Cancelled in 2014 | 5,000 | $ | 5.4 | - | - | ||||||||||||
Outstanding at September 30, 2014 | N/A | $ | N/A | N/A | $ | N/A | |||||||||||
Exercisable at September 30, 2014 | N/A | $ | N/A | N/A | $ | N/A | |||||||||||
Summary of restricted stock activity | Restricted stock transactions under the plans for the two years ended September 30, 2014 were as follows: | ||||||||||||||||
(in thousands of shares) | |||||||||||||||||
2014 | 2013 | ||||||||||||||||
Beginning Balance – Non-vested | 103.8 | 144.2 | |||||||||||||||
Granted to employees – 5 year vesting | 80 | - | |||||||||||||||
Granted to non-employee directors – 1 year vesting | 28.6 | 16.8 | |||||||||||||||
Vested | (43.8 | ) | (57.2 | ) | |||||||||||||
Forfeited | - | - | |||||||||||||||
Ending Balance – Non-vested | 168.6 | 103.8 | |||||||||||||||
Weighted-average fair value for shares granted during the year | $ | 5.23 | $ | 4.26 | |||||||||||||
Weighted-average fair value for shares vested during the year | $ | 4.63 | $ | 5.24 | |||||||||||||
Weighted-average fair value for ending balance - non-vested | $ | 5.27 | $ | 5.05 |
INCOME_TAXES_Tables
INCOME TAXES (Tables) | 12 Months Ended | ||||||||||||||||||||
Sep. 30, 2014 | |||||||||||||||||||||
INCOME TAXES [Abstract] | |||||||||||||||||||||
Domestic and foreign components of income before income taxes | The domestic and foreign components of income (loss) before income taxes are as follows: | ||||||||||||||||||||
(in thousands of dollars) | |||||||||||||||||||||
2014 | 2013 | ||||||||||||||||||||
Domestic | $ | 430 | $ | (1 | ) | ||||||||||||||||
Foreign | 386 | (1,462 | ) | ||||||||||||||||||
$ | 816 | $ | (1,463 | ) | |||||||||||||||||
Provision for income taxes and deferred taxes components | The components of the provision (benefit) for income taxes and deferred taxes for the years ended September 30, 2014 and 2013 are as follows: | ||||||||||||||||||||
(in thousands of dollars) | |||||||||||||||||||||
2014 | |||||||||||||||||||||
Current | Deferred | ||||||||||||||||||||
Federal | $ | - | $ | 134 | |||||||||||||||||
State | 44 | 87 | |||||||||||||||||||
Foreign | (97 | ) | (83 | ) | |||||||||||||||||
$ | (53 | ) | $ | 138 | |||||||||||||||||
2013 | |||||||||||||||||||||
Current | Deferred | ||||||||||||||||||||
Federal | $ | 30 | $ | (4 | ) | ||||||||||||||||
State | 7 | 9 | |||||||||||||||||||
Foreign | 85 | (519 | ) | ||||||||||||||||||
$ | 122 | $ | (514 | ) | |||||||||||||||||
Provision (benefit) for income taxes in each period differs | The following is a summary of the major items affecting the provision: | ||||||||||||||||||||
(in thousands of dollars) | |||||||||||||||||||||
2014 | 2013 | ||||||||||||||||||||
Statutory Federal income tax rate | 34 | % | 34 | % | |||||||||||||||||
Computed tax provision at statutory rate | $ | 275 | $ | (491 | ) | ||||||||||||||||
Increases (decreases) resulting from: | |||||||||||||||||||||
Foreign tax rate differentials | (122 | ) | 167 | ||||||||||||||||||
State taxes net of federal tax benefit | 71 | 10 | |||||||||||||||||||
Foreign research incentives | (213 | ) | (567 | ) | |||||||||||||||||
U.K. rate change | 27 | 444 | |||||||||||||||||||
Other | 47 | 45 | |||||||||||||||||||
Income tax provision in the consolidated statement of operations | $ | 85 | $ | (392 | ) | ||||||||||||||||
Domestic and foreign deferred tax accounts items | The significant items comprising the domestic and foreign deferred tax accounts at September 30, 2014 and 2013 are as follows: | ||||||||||||||||||||
2014 | |||||||||||||||||||||
Domestic | Domestic | Foreign | Foreign | ||||||||||||||||||
current | long-term | current | long-term | Total | |||||||||||||||||
Assets: | |||||||||||||||||||||
Pension accruals | $ | - | $ | 186 | $ | 37 | $ | 1,805 | $ | 2,028 | |||||||||||
Inventory basis differences | 69 | - | - | - | 69 | ||||||||||||||||
Warranty reserves | 21 | - | - | - | 21 | ||||||||||||||||
Foreign tax credit carry forwards | - | 266 | - | - | 266 | ||||||||||||||||
Accrued compensation expense | - | - | - | 58 | 58 | ||||||||||||||||
Net operating losses | 103 | 108 | 289 | 1,568 | 2,068 | ||||||||||||||||
Other (net) | - | 308 | 3 | - | 311 | ||||||||||||||||
193 | 868 | 329 | 3,431 | 4,821 | |||||||||||||||||
Liabilities: | |||||||||||||||||||||
Property basis asset (liability) | - | 12 | - | (130 | ) | (118 | ) | ||||||||||||||
Net asset | 193 | 880 | 329 | 3,301 | 4,703 | ||||||||||||||||
Valuation allowance | - | (159 | ) | - | (112 | ) | (271 | ) | |||||||||||||
Net deferred tax asset | $ | 193 | $ | 721 | $ | 329 | $ | 3,189 | $ | 4,432 | |||||||||||
2013 | |||||||||||||||||||||
Domestic | Domestic | Foreign | Foreign | ||||||||||||||||||
current | long-term | current | long-term | Total | |||||||||||||||||
Assets: | |||||||||||||||||||||
Pension accruals | $ | - | $ | 229 | $ | 30 | $ | 1,561 | $ | 1,820 | |||||||||||
Inventory basis differences | 61 | - | - | - | 61 | ||||||||||||||||
Warranty reserves | 21 | - | - | - | 21 | ||||||||||||||||
Foreign tax credit carry forwards | - | 277 | - | - | 277 | ||||||||||||||||
Accrued compensation expense | 7 | - | - | 51 | 58 | ||||||||||||||||
Net operating losses | 286 | 75 | 652 | 895 | 1,908 | ||||||||||||||||
Other (net) | - | 263 | 4 | - | 267 | ||||||||||||||||
375 | 844 | 686 | 2,507 | 4,412 | |||||||||||||||||
Liabilities: | |||||||||||||||||||||
Property basis asset (liability) | - | 35 | - | (75 | ) | (40 | ) | ||||||||||||||
Net asset | 375 | 879 | 686 | 2,432 | 4,372 | ||||||||||||||||
Valuation allowance | - | (159 | ) | - | - | (159 | ) | ||||||||||||||
Net deferred tax asset | $ | 375 | $ | 720 | $ | 686 | $ | 2,432 | $ | 4,213 |
ACCRUED_EXPENSES_Tables
ACCRUED EXPENSES (Tables) | 12 Months Ended | ||||||||
Sep. 30, 2014 | |||||||||
ACCRUED EXPENSES [Abstract] | |||||||||
Analysis of other accrued expenses | The analysis of accrued expenses at September 30, 2014 and 2013 showing separately any items in excess of 5% of total current liabilities was as follows: | ||||||||
(in thousands of dollars) | |||||||||
2014 | 2013 | ||||||||
Accrued compensation and related costs | $ | 1,062 | $ | 1,015 | |||||
Other accrued expenses | 774 | 1,072 | |||||||
$ | 1,836 | $ | 2,087 |
EMPLOYEE_BENEFIT_PLANS_Tables
EMPLOYEE BENEFIT PLANS (Tables) | 12 Months Ended | ||||||||||||
Sep. 30, 2014 | |||||||||||||
EMPLOYEE BENEFIT PLANS [Abstract] | |||||||||||||
Estimated funded status of these frozen defined benefit plans | The following table sets forth the estimated funded status of these frozen defined benefit plans and the amounts recognized by Sevcon, Inc.: | ||||||||||||
(in thousands of dollars) | |||||||||||||
2014 | 2013 | ||||||||||||
Change in benefit obligation: | |||||||||||||
Benefit obligation at beginning of year | $ | 27,908 | $ | 28,145 | |||||||||
Interest cost | 1,303 | 1,256 | |||||||||||
Actuarial loss (gain) | 1,911 | (1,164 | ) | ||||||||||
Benefits paid | (482 | ) | (395 | ) | |||||||||
Foreign currency exchange rate changes | 6 | 66 | |||||||||||
Benefit obligation at end of year | 30,646 | 27,908 | |||||||||||
Change in plan assets: | |||||||||||||
Fair value of plan assets at beginning of year | 19,554 | 17,881 | |||||||||||
Return on plan assets | 1,334 | 1,393 | |||||||||||
Employer contributions | 698 | 584 | |||||||||||
Benefits paid | (482 | ) | (395 | ) | |||||||||
Foreign currency exchange rate changes | 13 | 91 | |||||||||||
Fair value of plan assets at end of year | 21,117 | 19,554 | |||||||||||
Funded status | (9,529 | ) | (8,354 | ) | |||||||||
Liability for pension benefits recorded in the balance sheet | $ | (9,529 | ) | $ | (8,354 | ) | |||||||
Amounts recognized in balance sheet | Amounts recognized in the balance sheets consist of: | ||||||||||||
(in thousands of dollars) | |||||||||||||
2014 | 2013 | ||||||||||||
Non current liabilities | $ | 9,529 | $ | 8,354 | |||||||||
Amounts recognized in other comprehensive income | Amounts recognized in other comprehensive loss consist of: | ||||||||||||
(in thousands of dollars) | |||||||||||||
2014 | 2013 | ||||||||||||
Actuarial (loss) gain net of $351,000 tax benefit (2013:actuarial gain net of $410,000 tax charge) | $ | (1,311 | ) | $ | 1,260 | ||||||||
Components of the net pension cost | The Sevcon, Inc. net pension cost included the following components: | ||||||||||||
(in thousands of dollars) | |||||||||||||
2014 | 2013 | ||||||||||||
Components of net periodic benefit cost: | |||||||||||||
Interest cost | $ | 1,303 | $ | 1,256 | |||||||||
Expected return on plan assets | (1,309 | ) | (1,166 | ) | |||||||||
Amortization of net actuarial loss | 227 | 278 | |||||||||||
Net periodic benefit cost | $ | 221 | $ | 368 | |||||||||
Net cost of defined contribution plans | $ | 500 | $ | 455 | |||||||||
Weighted average assumptions used to determine plan obligations and net periodic benefit cost | The weighted average assumptions used to determine plan obligations and net periodic benefit cost for the years ended September 30, 2014 and 2013 were as set out below: | ||||||||||||
2014 | 2013 | ||||||||||||
Plan obligations: | |||||||||||||
Discount rate | 4.24 | % | 4.61 | % | |||||||||
Rate of compensation increase | 0 | % | 0 | % | |||||||||
Net periodic benefit cost: | |||||||||||||
Discount rate | 4.24 | % | 4.61 | % | |||||||||
Expected long term return on plan assets | 6.15 | % | 6.53 | % | |||||||||
Rate of compensation increase | 0 | % | 0 | % | |||||||||
Pension plan assets measured and recorded at fair value | The table below presents information about our plan assets measured and recorded at fair value as of September 30, 2014, and indicates the fair value hierarchy of the inputs utilized by the Company to determine the fair values (see Fair value measurements in Note 1). | ||||||||||||
(in thousands of dollars) | |||||||||||||
Level 1* | Level 2** | Level 3*** | |||||||||||
(Quoted | (Significant | (Unobservable | |||||||||||
prices in | observable | inputs) | |||||||||||
active | inputs) | ||||||||||||
markets) | |||||||||||||
Mutual Funds | |||||||||||||
Standard Life Pension Global Absolute Returns Strategies Fund | 7,187 | - | - | ||||||||||
Standard Life UK Indexed Linked Fund | 1,856 | - | - | ||||||||||
Standard Life Long Corporate Bond Fund | 1,785 | - | - | ||||||||||
CF Ruffer Absolute Return Fund | 7,177 | - | - | ||||||||||
U.S. Mutual Funds | 2,431 | - | - | ||||||||||
U.S. Exchange Traded Funds | 348 | - | - | ||||||||||
Other Types of Investments | |||||||||||||
Cash | 333 | - | - | ||||||||||
Total | 21,117 | - | - | ||||||||||
* | Level 1 investments represent mutual funds for which a quoted market price is available on an active market. These investments primarily hold stocks or bonds, or a combination of stocks and bonds. | ||||||||||||
** | The Company currently does not have any Level 2 pension plan financial assets. | ||||||||||||
*** | The Company currently does not have any Level 3 pension plan financial assets. | ||||||||||||
Estimated future benefit payments | The following estimated benefit payments, which reflect future service, as appropriate, are expected to be paid: | ||||||||||||
(in thousands of dollars) | |||||||||||||
2015 | $ | 668 | |||||||||||
2016 | 707 | ||||||||||||
2017 | 697 | ||||||||||||
2018 | 695 | ||||||||||||
2019 | 671 | ||||||||||||
2020 – 2024 | 3,658 |
SEGMENT_INFORMATION_Tables
SEGMENT INFORMATION (Tables) | 12 Months Ended | ||||||||||||||||
Sep. 30, 2014 | |||||||||||||||||
SEGMENT INFORMATION [Abstract] | |||||||||||||||||
Information concerning operations of business segments | The Company does not allocate income taxes, interest income and expense or foreign currency translation gains and losses to segments. Information concerning operations of these businesses is as follows: | ||||||||||||||||
(in thousands of dollars) | |||||||||||||||||
2014 | |||||||||||||||||
Controls | Capacitors | Corporate | Total | ||||||||||||||
Sales to external customers | $ | 35,708 | $ | 2,215 | $ | - | $ | 37,923 | |||||||||
Inter-segment revenues | - | 5 | - | 5 | |||||||||||||
Operating income (loss) | 977 | 283 | (235 | ) | 1,025 | ||||||||||||
Depreciation | 517 | 90 | 1 | 608 | |||||||||||||
Identifiable assets | 22,507 | 1,199 | 10,261 | 33,967 | |||||||||||||
Capital expenditures | 709 | 33 | 2 | 744 | |||||||||||||
2013 | |||||||||||||||||
Controls | Capacitors | Corporate | Total | ||||||||||||||
Sales to external customers | $ | 30,320 | $ | 1,883 | $ | - | $ | 32,203 | |||||||||
Inter-segment revenues | - | 8 | - | 8 | |||||||||||||
Operating income (loss) | (739 | ) | 75 | (284 | ) | (948 | ) | ||||||||||
Depreciation | 514 | 85 | 2 | 601 | |||||||||||||
Identifiable assets | 21,545 | 1,325 | 490 | 23,360 | |||||||||||||
Capital expenditures | 410 | 25 | - | 435 | |||||||||||||
Analysis of revenues set out by location of business selling products | The analysis of revenues set out below is by the location of the business selling the products rather than by destination of the products. | ||||||||||||||||
(in thousands of dollars) | |||||||||||||||||
2014 | 2013 | ||||||||||||||||
Sales:- | |||||||||||||||||
U.S. sales | $ | 16,389 | $ | 13,657 | |||||||||||||
Foreign sales: | |||||||||||||||||
United Kingdom | 13,486 | 10,627 | |||||||||||||||
France | 8,026 | 7,919 | |||||||||||||||
China | 22 | - | |||||||||||||||
Total Foreign | 21,534 | 18,546 | |||||||||||||||
Total sales | $ | 37,923 | $ | 32,203 | |||||||||||||
Long-lived assets: | |||||||||||||||||
U.S.A. | $ | 2,245 | $ | 2,235 | |||||||||||||
Foreign: | |||||||||||||||||
United Kingdom | 5,239 | 4,305 | |||||||||||||||
France | 74 | 69 | |||||||||||||||
Korea, Japan and China | 289 | 1 | |||||||||||||||
Total Foreign | 5,602 | 4,375 | |||||||||||||||
Total | $ | 7,847 | $ | 6,610 | |||||||||||||
Revenues of electronic controls segment by products and services | In the controls business segment the revenues were derived from the following products and services: | ||||||||||||||||
(in thousands of dollars) | |||||||||||||||||
2014 | 2013 | ||||||||||||||||
Electronic controls for zero emission and hybrid electric vehicles | $ | 26,014 | $ | 19,884 | |||||||||||||
Accessory and aftermarket products and services | 9,694 | 10,436 | |||||||||||||||
Total controls segment revenues | $ | 35,708 | $ | 30,320 |
DEBT_Tables
DEBT (Tables) | 12 Months Ended | ||||
Sep. 30, 2014 | |||||
DEBT [Abstract] | |||||
Annual principal payments on long term debt | Annual principal payments on long term debt at September 30, 2014 are as follows: | ||||
(in thousands of dollars) | |||||
2015 | $ | - | |||
2016 | - | ||||
2017 | 1,700 | ||||
Total | $ | 1,700 |
RESTRUCTURING_CHARGE_Tables
RESTRUCTURING CHARGE (Tables) | 12 Months Ended | ||||||||||||||||
Sep. 30, 2014 | |||||||||||||||||
Restructuring charge [Abstract] | |||||||||||||||||
Summarizes of components of restructuring charge | The following table summarizes the components of the restructuring charge for the period ended September 30, 2013: | ||||||||||||||||
(in thousands of dollars) | |||||||||||||||||
Severance and other related costs | $ | 343 | |||||||||||||||
Consultant costs, professional fees and other costs | 262 | ||||||||||||||||
Total restructuring charge | $ | 605 | |||||||||||||||
Summarizes the liabilities related to the 2013 restructuring program | The following table summarizes the liabilities related to the 2013 restructuring program: | ||||||||||||||||
(in thousands of dollars) | |||||||||||||||||
Balance at October 1, 2012 | Charges | Payments | Balance at September 30, 2013 | ||||||||||||||
Severance and other related costs | - | 343 | (343 | ) | - | ||||||||||||
Consultant costs, professional fees and other costs | - | 262 | (262 | ) | - | ||||||||||||
Total | - | 605 | (605 | ) | - |
SUMMARY_OF_SIGNIFICANT_ACCOUNT3
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details) (USD $) | 12 Months Ended | |
Sep. 30, 2014 | Sep. 30, 2013 | |
Plant | ||
Variable Interest Entity [Line Items] | ||
Warranty reserves at beginning of year | $138,000 | $89,000 |
Decrease in beginning balance for warranty obligations settled during the year | 0 | -70,000 |
Foreign currency translation adjustment | -4,000 | 2,000 |
Net increase in warranty reserves for products sold during the year | 19,000 | 117,000 |
Warranty reserves at end of year | 153,000 | 138,000 |
Research and Development Arrangement, Contract to Perform for Others [Line Items] | ||
Cost of research and development program | 3,964,000 | 3,916,000 |
Percentage of sales (in hundredths) | 10.00% | 12.00% |
Income statement credit | 261,000 | |
Income tax receivable | 227,000 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Expected forfeiture rate (in hundredths) | 4.00% | |
Inventory, Net [Abstract] | ||
Reserve for obsolete and slow moving inventories | 485,000 | 658,000 |
Raw materials | 2,095,000 | 2,201,000 |
Work-in-process | 102,000 | 11,000 |
Finished goods | 4,061,000 | 3,511,000 |
Inventory, Net | 6,258,000 | 5,723,000 |
Trading Activity, Gains and Losses, Net [Line Items] | ||
Number of production plants | 3 | |
Earnings Per Share [Abstract] | ||
Net income (loss) | 909,000 | -1,071,000 |
Weighted average shares outstanding (in shares) | 3,398,000 | 3,357,000 |
Basic income (loss) per share (in dollars per share) | $0.27 | ($0.32) |
Common stock equivalents | 1,458,000 | 0 |
Average common and common equivalent shares outstanding (in shares) | 4,856,000 | 3,357,000 |
Diluted income (loss) per share (in dollars per share) | $0.19 | ($0.32) |
Financial Instruments, Owned, at Fair Value [Abstract] | ||
Long-term debt | 1,700,000 | |
Goodwill [Abstract] | ||
Goodwill | 1,435,000 | 1,435,000 |
Convertible preferred stock [Member] | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Common share equivalents excluded from the calculation of diluted earnings per share (in shares) | 12,000 | |
U.S Dollars [Member] | ||
Trading Activity, Gains and Losses, Net [Line Items] | ||
Sales in different currencies (in hundredths) | 49.00% | |
British Pound [Member] | ||
Trading Activity, Gains and Losses, Net [Line Items] | ||
Sales in different currencies (in hundredths) | 25.00% | |
Cost of sales in different currencies (in hundredths) | 18.00% | |
Euro [Member] | ||
Trading Activity, Gains and Losses, Net [Line Items] | ||
Sales in different currencies (in hundredths) | 26.00% | |
Cost of sales in different currencies (in hundredths) | 73.00% | |
Restricted Stock [Member] | Officers and key employees [Member] | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Period | 5 years | |
Restricted Stock [Member] | Non-Employee Directors [Member] | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Period | 1 year | |
Building [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property, Plant and Equipment, Estimated Useful Lives | 50 years | |
Equipment [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property, Plant and Equipment, Estimated Useful Lives | 7 years | |
Computer Equipment and Software [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property, Plant and Equipment, Estimated Useful Lives | 4 years | |
Minimum [Member] | ||
Research and Development Arrangement, Contract to Perform for Others [Line Items] | ||
Credit percentage (in hundredths) | 10.00% | |
Maximum [Member] | ||
Research and Development Arrangement, Contract to Perform for Others [Line Items] | ||
Credit percentage (in hundredths) | 14.50% | |
Cummins Generator Technologies and Newcastle University [Member] | ||
Research and Development Arrangement, Contract to Perform for Others [Line Items] | ||
Revenue from Grants | 84,000 | 133,000 |
Research and Development Expense | 251,000 | 395,000 |
Technology Strategy Board Project Grant in 2013 [Member] | ||
Research and Development Arrangement, Contract to Perform for Others [Line Items] | ||
Revenue from Grants | 6,000 | 2,000 |
Research and Development Expense | 25,000 | 9,000 |
Low Emission Transport Collaborative Projects Fund [Member] | ||
Research and Development Arrangement, Contract to Perform for Others [Line Items] | ||
Revenue from Grants | 410,000 | 14,000 |
Research and Development Expense | 1,683,000 | 58,000 |
Total grants awarded | $0 | $480,000 |
Sevcon New Energy Technology (Hubei) [Member] | ||
Variable Interest Entity [Line Items] | ||
Variable interest entity ownership percentage (in hundredths) | 50.00% |
CAPITAL_STOCK_Details
CAPITAL STOCK (Details) (USD $) | Sep. 30, 2014 | Sep. 30, 2013 |
CAPITAL STOCK [Abstract] | ||
Preferred stock, authorized (in shares) | 1,000,000 | 1,000,000 |
Preferred stock, par value (in dollars per share) | $0.10 | $0.10 |
Common stock, authorized (in shares) | 8,000,000 | 8,000,000 |
Common stock, par value (in dollars per share) | $0.10 | $0.10 |
STOCKBASED_COMPENSATION_PLANS_1
STOCK-BASED COMPENSATION PLANS (Details) (USD $) | 12 Months Ended | 1 Months Ended | 3 Months Ended | |||
Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2012 | Feb. 28, 2014 | Dec. 28, 2013 | Mar. 29, 2014 | |
Employee | Employee | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Increase in shares reserved and available for grant (in shares) | 150,000 | |||||
Details of options outstanding | ||||||
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range, Upper Range Limit | $5.40 | |||||
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range, Number of Outstanding Options, Ending Balance | 5,000 | |||||
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range, Outstanding Options, Weighted Average Remaining Contractual Term | 0 years 1 month 6 days | |||||
Weighted Average Grant-Date Fair Value [Roll Forward] | ||||||
Stock based compensation expense | $320,000 | $262,000 | ||||
Unrecognized compensation expense | 619,000 | |||||
Weighted average period for unrecognized compensation expense to be recognized | 3 years | |||||
Stock Options [Member] | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Options exercised (in shares) | 0 | 0 | ||||
Shares under Option [Roll Forward] | ||||||
Outstanding, beginning of period (in shares) | 5,000 | 36,000 | 5,000 | |||
Exercised (in shares) | 0 | 0 | ||||
Cancelled (in shares) | 5,000 | -31,000 | ||||
Outstanding, end of period (in shares) | 5,000 | 36,000 | ||||
Exercisable, end of period (in shares) | 5,000 | |||||
Weighted average Exercise Price [Roll Forward] | ||||||
Outstanding, beginning of period (in dollars per share) | $5.40 | $4.51 | $5.40 | |||
Exercised (in dollars per share) | $0 | $0 | ||||
Cancelled (in dollars per share) | $5.40 | $4.37 | ||||
Outstanding, end of period (in dollars per share) | $5.40 | $4.51 | ||||
Exercisable, end of period (in dollars per share) | $5.40 | |||||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Additional Disclosures [Abstract] | ||||||
Weighted average remaining contractual life, outstanding, beginning of period | 0 years 1 month 6 days | 0 years 7 months 6 days | ||||
Weighted average remaining contractual life, outstanding, end of period | 0 years 1 month 6 days | 0 years 7 months 6 days | ||||
Weighted average remaining contractual life, exercisable, end of period | 0 years 1 month 6 days | |||||
Aggregate intrinsic value, outstanding, beginning of period | 0 | 11,800 | 0 | |||
Aggregate intrinsic value, outstanding, end of period | 0 | 11,800 | ||||
Aggregate intrinsic value, exercisable, end of period | 0 | |||||
Restricted Stock [Member] | ||||||
Number of shares of Restricted Stock [Roll Forward] | ||||||
Non-vested balance, beginning of period (in shares) | 103,800 | 144,200 | 103,800 | |||
Granted (in shares) | 80,000 | 0 | 28,600 | 80,000 | ||
Granted to non-employee directors - 1 year vesting | 28,600 | 16,800 | ||||
Vested (in shares) | -43,800 | -57,200 | ||||
Forfeited | 0 | 0 | ||||
Non-vested balance, end of period (in shares) | 168,600 | 103,800 | ||||
Weighted Average Grant-Date Fair Value [Roll Forward] | ||||||
Non-vested balance, beginning of period (in dollars per share) | $5.05 | $5.05 | ||||
Granted (in dollars per share) | $5.23 | $4.26 | ||||
Vested (in dollars per share) | $4.63 | $5.24 | ||||
Non-vested balance, ending of period (in dollars per share) | $5.27 | $5.05 | ||||
Number of employees and non-employee directors with restricted stock grant | 11 | 7 | ||||
Estimated fair value of stock at date of grant | 213,000 | 354,000 | ||||
Period for recognition of unearned compensation | 12 months | 5 months | ||||
Charge to income for restricted stock | 124,000 | 53,000 | ||||
Quarterly charge to income for restricted stock | $53,000 | $18,000 | ||||
1996 Equity Incentive Plan [Member] | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Shares reserved and available for grant (in shares) | 219,557 | 137,000 | ||||
Options grants (in shares) | 0 | 0 | ||||
Options exercised (in shares) | 0 | 0 | ||||
Shares under Option [Roll Forward] | ||||||
Exercised (in shares) | 0 | 0 |
INCOME_TAXES_Details
INCOME TAXES (Details) (USD $) | 12 Months Ended | |
Sep. 30, 2014 | Sep. 30, 2013 | |
Domestic and foreign components of income before income taxes [Abstract] | ||
Domestic and foreign components of income before income taxes | $816,000 | ($1,463,000) |
Components of the provision for income taxes and deferred taxes [Abstract] | ||
Federal | 0 | 30,000 |
State | 44,000 | 7,000 |
Foreign | -97,000 | 85,000 |
Provision for income taxes and deferred taxes, Current, Total | -53,000 | 122,000 |
Federal | 134,000 | -4,000 |
State | 87,000 | 9,000 |
Foreign | -83,000 | -519,000 |
Provision for income taxes and deferred taxes, Deferred, Total | 138,000 | -514,000 |
Provision (benefit) for income taxes [Abstract] | ||
Statutory Federal income tax rate (in hundredths) | 34.00% | 34.00% |
Computed tax provision at statutory rate | 275,000 | -491,000 |
Increases (decreases) resulting from [Abstract] | ||
Foreign tax rate differentials | -122,000 | 167,000 |
State taxes net of federal tax benefit | 71,000 | 10,000 |
Foreign research incentives | -213,000 | -567,000 |
U.K. rate change | 27,000 | 444,000 |
Other | 47,000 | 45,000 |
Income tax provision in the consolidated statement of operations | 85,000 | -392,000 |
Foreign corporate tax rate (in hundredths) | 23.00% | |
Foreign corporate tax rate after first reduction (in hundredths) | 21.00% | |
Foreign corporate tax rate after final reduction (in hundredths) | 20.00% | |
Assets [Abstract] | ||
Pension accruals | 2,028,000 | 1,820,000 |
Inventory basis differences | 69,000 | 61,000 |
Warranty reserves | 21,000 | 21,000 |
Foreign tax credit carry forwards | 266,000 | 277,000 |
Accrued compensation expense | 58,000 | 58,000 |
Net operating losses | 2,068,000 | 1,908,000 |
Other (net) | 311,000 | 267,000 |
Total assets | 4,821,000 | 4,412,000 |
Liabilities [Abstract] | ||
Property basis asset (liability) | -118,000 | -40,000 |
Net asset | 4,703,000 | 4,372,000 |
Valuation allowance | -271,000 | -159,000 |
Net deferred tax asset | 4,432,000 | 4,213,000 |
Unremitted foreign earnings | 10,900,000 | |
Domestic [Member] | ||
Domestic and foreign components of income before income taxes [Abstract] | ||
Domestic and foreign components of income before income taxes | 430,000 | -1,000 |
Liabilities [Abstract] | ||
Federal, state and foreign net operating losses | 608,200 | |
Foreign [Member] | ||
Domestic and foreign components of income before income taxes [Abstract] | ||
Domestic and foreign components of income before income taxes | 386,000 | -1,462,000 |
Increases (decreases) resulting from [Abstract] | ||
Foreign tax rate reduction description | A reduction in the U.K. corporate tax rate from 23% to 21% and then to 20% was substantively enacted in 2013 with effect in 2014 and 2015 | |
Liabilities [Abstract] | ||
Federal, state and foreign net operating losses | 9,201,000 | |
State [Member] | ||
Liabilities [Abstract] | ||
Domestic federal and state net operating losses, expiration dates | 30-Sep-15 | |
Federal [Member] | ||
Liabilities [Abstract] | ||
Domestic federal and state net operating losses, expiration dates | 30-Sep-28 | |
Domestic current [Member] | ||
Assets [Abstract] | ||
Pension accruals | 0 | 0 |
Inventory basis differences | 69,000 | 61,000 |
Warranty reserves | 21,000 | 21,000 |
Foreign tax credit carry forwards | 0 | 0 |
Accrued compensation expense | 0 | 7,000 |
Net operating losses | 103,000 | 286,000 |
Other (net) | 0 | 0 |
Total assets | 193,000 | 375,000 |
Liabilities [Abstract] | ||
Property basis asset (liability) | 0 | 0 |
Net asset | 193,000 | 375,000 |
Valuation allowance | 0 | 0 |
Net deferred tax asset | 193,000 | 375,000 |
Domestic Long-Term [Member] | ||
Assets [Abstract] | ||
Pension accruals | 186,000 | 229,000 |
Inventory basis differences | 0 | 0 |
Warranty reserves | 0 | 0 |
Foreign tax credit carry forwards | 266,000 | 277,000 |
Accrued compensation expense | 0 | 0 |
Net operating losses | 108,000 | 75,000 |
Other (net) | 308,000 | 263,000 |
Total assets | 868,000 | 844,000 |
Liabilities [Abstract] | ||
Property basis asset (liability) | 12,000 | 35,000 |
Net asset | 880,000 | 879,000 |
Valuation allowance | -159,000 | -159,000 |
Net deferred tax asset | 721,000 | 720,000 |
Foreign current [Member] | ||
Assets [Abstract] | ||
Pension accruals | 37,000 | 30,000 |
Inventory basis differences | 0 | 0 |
Warranty reserves | 0 | 0 |
Foreign tax credit carry forwards | 0 | 0 |
Accrued compensation expense | 0 | 0 |
Net operating losses | 289,000 | 652,000 |
Other (net) | 3,000 | 4,000 |
Total assets | 329,000 | 686,000 |
Liabilities [Abstract] | ||
Property basis asset (liability) | 0 | 0 |
Net asset | 329,000 | 686,000 |
Valuation allowance | 0 | 0 |
Net deferred tax asset | 329,000 | 686,000 |
Foreign Long-Term [Member] | ||
Assets [Abstract] | ||
Pension accruals | 1,805,000 | 1,561,000 |
Inventory basis differences | 0 | 0 |
Warranty reserves | 0 | 0 |
Foreign tax credit carry forwards | 0 | 0 |
Accrued compensation expense | 58,000 | 51,000 |
Net operating losses | 1,568,000 | 895,000 |
Other (net) | 0 | 0 |
Total assets | 3,431,000 | 2,507,000 |
Liabilities [Abstract] | ||
Property basis asset (liability) | -130,000 | -75,000 |
Net asset | 3,301,000 | 2,432,000 |
Valuation allowance | -112,000 | 0 |
Net deferred tax asset | 3,189,000 | 2,432,000 |
U. K. [Member] | ||
Liabilities [Abstract] | ||
Federal, state and foreign net operating losses | $261,000 |
ACCRUED_EXPENSES_Details
ACCRUED EXPENSES (Details) (USD $) | Sep. 30, 2014 | Sep. 30, 2013 |
In Thousands, unless otherwise specified | ||
ACCRUED EXPENSES [Abstract] | ||
Accrued compensation and related costs | $1,062 | $1,015 |
Other accrued expenses | 774 | 1,072 |
Accrued expenses | $1,836 | $2,087 |
Percentage of total current liabilities used to analyze accrued expenses (in hundredths) | 5.00% | 5.00% |
COMMITMENTS_AND_CONTINGENCIES_
COMMITMENTS AND CONTINGENCIES (Details) (USD $) | 12 Months Ended | |
Sep. 30, 2014 | Sep. 30, 2013 | |
COMMITMENTS AND CONTINGENCIES [Abstract] | ||
Maximum recorded liability of deferred annuities | $162,000 | |
Minimum rental commitments under non-cancelable leases [Abstract] | ||
2015 | 213,000 | |
2016 | 205,000 | |
2017 | 205,000 | |
2018 | 208,000 | |
2019 | 194,000 | |
Thereafter | 3,405,000 | |
Net rentals expense | 242,000 | 212,000 |
Total overdraft facility | 1,460,000 | |
Revolving credit facility | $1,700,000 | $1,700,000 |
EMPLOYEE_BENEFIT_PLANS_Details
EMPLOYEE BENEFIT PLANS (Details) (USD $) | 12 Months Ended | ||
Sep. 30, 2014 | Sep. 30, 2013 | ||
Change in benefit obligation [Abstract] | |||
Benefit obligation at beginning of year | $27,908,000 | $28,145,000 | |
Interest cost | 1,303,000 | 1,256,000 | |
Actuarial loss (gain) | 1,911,000 | -1,164,000 | |
Benefits paid | -482,000 | -395,000 | |
Foreign currency exchange rate changes | 6,000 | 66,000 | |
Benefit obligation at end of year | 30,646,000 | 27,908,000 | |
Change in plan assets [Abstract] | |||
Fair value of plan assets at beginning of year | 19,554,000 | 17,881,000 | |
Return on plan assets | 1,334,000 | 1,393,000 | |
Employer contributions | 698,000 | 584,000 | |
Benefits paid | -482,000 | -395,000 | |
Foreign currency exchange rate changes | 13,000 | 91,000 | |
Fair value of plan assets at end of year | 21,117,000 | 19,554,000 | |
Funded status | -9,529,000 | -8,354,000 | |
Liability for pension benefits recorded in the balance sheet | -9,529,000 | -8,354,000 | |
Unfunded liability recognized in accrued expenses | 173,000 | 152,000 | |
Increase in the pension liability deficit | 1,175,000 | ||
Defined benefit plan, actuarial loss (gain) | 1,911,000 | -1,164,000 | |
Amounts recognized in balance sheet [Abstract] | |||
Non current liabilities | 9,529,000 | 8,354,000 | |
Amounts recognized in other comprehensive loss [Abstract] | |||
Actuarial (loss) gain, net of $351,000 tax benefit (2013:actuarial gain net of $410,000 tax charge) | -1,311,000 | 1,260,000 | |
Tax benefit (charge) on actuarial gain (loss) | 351,000 | -410,000 | |
Components of net pension cost [Abstract] | |||
Interest cost | 1,303,000 | 1,256,000 | |
Expected return on plan assets | -1,309,000 | -1,166,000 | |
Amortization of net actuarial loss | 227,000 | 278,000 | |
Net periodic benefit cost | 221,000 | 368,000 | |
Net cost of defined contribution plans | 500,000 | 455,000 | |
Plan obligations [Abstract] | |||
Discount rate (in hundredths) | 4.24% | 4.61% | |
Rate of compensation increase (in hundredths) | 0.00% | 0.00% | |
Net periodic benefit cost [Abstract] | |||
Discount rate (in hundredths) | 4.24% | 4.61% | |
Expected long term return on plan assets (in hundredths) | 6.15% | 6.53% | |
Rate of compensation increase (in hundredths) | 0.00% | 0.00% | |
Estimated future benefit payments [Abstract] | |||
2015 | 668,000 | ||
2016 | 707,000 | ||
2017 | 697,000 | ||
2018 | 695,000 | ||
2019 | 671,000 | ||
2020 - 2024 | 3,658,000 | ||
Estimated future employer contributions [Abstract] | |||
Estimated defined benefit pension plans contributions | 687,000 | ||
Level 1 (Quoted prices in active markets) [Member] | |||
Change in plan assets [Abstract] | |||
Fair value of plan assets at end of year | 21,117,000 | [1] | |
Level 2 (Significant observable inputs) [Member] | |||
Change in plan assets [Abstract] | |||
Fair value of plan assets at end of year | 0 | [2] | |
Level 3 (Unobservable inputs) [Member] | |||
Change in plan assets [Abstract] | |||
Fair value of plan assets at end of year | 0 | [3] | |
Standard Life Pension Global Absolute Returns Strategies Fund [Member] | Level 1 (Quoted prices in active markets) [Member] | |||
Change in plan assets [Abstract] | |||
Fair value of plan assets at end of year | 7,187,000 | [1] | |
Standard Life Pension Global Absolute Returns Strategies Fund [Member] | Level 2 (Significant observable inputs) [Member] | |||
Change in plan assets [Abstract] | |||
Fair value of plan assets at end of year | 0 | [2] | |
Standard Life Pension Global Absolute Returns Strategies Fund [Member] | Level 3 (Unobservable inputs) [Member] | |||
Change in plan assets [Abstract] | |||
Fair value of plan assets at end of year | 0 | [3] | |
Standard Life UK Indexed Linked Fund [Member] | Level 1 (Quoted prices in active markets) [Member] | |||
Change in plan assets [Abstract] | |||
Fair value of plan assets at end of year | 1,856,000 | [1] | |
Standard Life UK Indexed Linked Fund [Member] | Level 2 (Significant observable inputs) [Member] | |||
Change in plan assets [Abstract] | |||
Fair value of plan assets at end of year | 0 | [2] | |
Standard Life UK Indexed Linked Fund [Member] | Level 3 (Unobservable inputs) [Member] | |||
Change in plan assets [Abstract] | |||
Fair value of plan assets at end of year | 0 | [3] | |
Standard Life Long Corporate Bond Fund [Member] | Level 1 (Quoted prices in active markets) [Member] | |||
Change in plan assets [Abstract] | |||
Fair value of plan assets at end of year | 1,785,000 | [1] | |
Standard Life Long Corporate Bond Fund [Member] | Level 2 (Significant observable inputs) [Member] | |||
Change in plan assets [Abstract] | |||
Fair value of plan assets at end of year | 0 | [2] | |
Standard Life Long Corporate Bond Fund [Member] | Level 3 (Unobservable inputs) [Member] | |||
Change in plan assets [Abstract] | |||
Fair value of plan assets at end of year | 0 | [3] | |
CF Ruffer Absolute Return Fund [Member] | Level 1 (Quoted prices in active markets) [Member] | |||
Change in plan assets [Abstract] | |||
Fair value of plan assets at end of year | 7,177,000 | [1] | |
CF Ruffer Absolute Return Fund [Member] | Level 2 (Significant observable inputs) [Member] | |||
Change in plan assets [Abstract] | |||
Fair value of plan assets at end of year | 0 | [2] | |
CF Ruffer Absolute Return Fund [Member] | Level 3 (Unobservable inputs) [Member] | |||
Change in plan assets [Abstract] | |||
Fair value of plan assets at end of year | 0 | [3] | |
U.S. Exchange Traded Funds [Member] | Level 1 (Quoted prices in active markets) [Member] | |||
Change in plan assets [Abstract] | |||
Fair value of plan assets at end of year | 348,000 | [1] | |
U.S. Exchange Traded Funds [Member] | Level 2 (Significant observable inputs) [Member] | |||
Change in plan assets [Abstract] | |||
Fair value of plan assets at end of year | 0 | [2] | |
U.S. Exchange Traded Funds [Member] | Level 3 (Unobservable inputs) [Member] | |||
Change in plan assets [Abstract] | |||
Fair value of plan assets at end of year | 0 | [3] | |
U.S. Cash and Cash Equivalents [Member] | |||
Net periodic benefit cost [Abstract] | |||
Defined benefit plan, actual plan asset allocations (in hundredths) | 19.00% | ||
U.S. Mutual Funds [Member] | |||
Net periodic benefit cost [Abstract] | |||
Defined benefit plan, actual plan asset allocations (in hundredths) | 81.00% | ||
U.S. Mutual Funds [Member] | Level 1 (Quoted prices in active markets) [Member] | |||
Change in plan assets [Abstract] | |||
Fair value of plan assets at end of year | 2,431,000 | [1] | |
U.S. Mutual Funds [Member] | Level 2 (Significant observable inputs) [Member] | |||
Change in plan assets [Abstract] | |||
Fair value of plan assets at end of year | 0 | [2] | |
U.S. Mutual Funds [Member] | Level 3 (Unobservable inputs) [Member] | |||
Change in plan assets [Abstract] | |||
Fair value of plan assets at end of year | 0 | [3] | |
U.K. government bonds [Member] | |||
Net periodic benefit cost [Abstract] | |||
Defined benefit plan, actual plan asset allocations (in hundredths) | 10.00% | ||
U.K. corporate bonds [Member] | |||
Net periodic benefit cost [Abstract] | |||
Defined benefit plan, actual plan asset allocations (in hundredths) | 10.00% | ||
U.K. equity securities [Member] | |||
Net periodic benefit cost [Abstract] | |||
Defined benefit plan, actual plan asset allocations (in hundredths) | 79.00% | ||
U.K. Cash and Cash Equivalents [Member] | |||
Net periodic benefit cost [Abstract] | |||
Defined benefit plan, actual plan asset allocations (in hundredths) | 1.00% | ||
Cash [Member] | Level 1 (Quoted prices in active markets) [Member] | |||
Change in plan assets [Abstract] | |||
Fair value of plan assets at end of year | 333,000 | [1] | |
Cash [Member] | Level 2 (Significant observable inputs) [Member] | |||
Change in plan assets [Abstract] | |||
Fair value of plan assets at end of year | 0 | [2] | |
Cash [Member] | Level 3 (Unobservable inputs) [Member] | |||
Change in plan assets [Abstract] | |||
Fair value of plan assets at end of year | 0 | [3] | |
U.S. Pension Plans Defined Benefit [Member] | |||
Change in benefit obligation [Abstract] | |||
Actuarial loss (gain) | 205,000 | ||
Change in plan assets [Abstract] | |||
Defined benefit plan, actuarial loss (gain) | 205,000 | ||
Net periodic benefit cost [Abstract] | |||
Defined benefit plan, benefit obligation | 313,000 | ||
Defined benefit plan, total benefit obligation | 10.00% | ||
Defined benefit plan | 7 years | ||
U.K. Pension Plans, Defined Benefit [Member] | |||
Change in benefit obligation [Abstract] | |||
Actuarial loss (gain) | 1,706,000 | ||
Change in plan assets [Abstract] | |||
Defined benefit plan, actuarial loss (gain) | 1,706,000 | ||
Net periodic benefit cost [Abstract] | |||
Defined benefit plan, benefit obligation | $9,216,000 | ||
Defined benefit plan, total benefit obligation | 34.00% | ||
Defined benefit plan | 12 years | ||
[1] | Level 1 investments represent mutual funds for which a quoted market price is available on an active market. These investments primarily hold stocks or bonds, or a combination of stocks and bonds. | ||
[2] | The Company currently does not have any Level 2 pension plan financial assets. | ||
[3] | The Company currently does not have any Level 3 pension plan financial assets. |
SEGMENT_INFORMATION_Details
SEGMENT INFORMATION (Details) (USD $) | 12 Months Ended | |
In Thousands, unless otherwise specified | Sep. 30, 2014 | Sep. 30, 2013 |
Segment | ||
SEGMENT INFORMATION [Abstract] | ||
Number of reportable segments | 2 | |
Segment Reporting Information, Revenue for Reportable Segment [Abstract] | ||
Sales to external customers | $37,923 | $32,203 |
Operating income (loss) | 1,025 | -948 |
Depreciation | 608 | 601 |
Identifiable assets | 33,967 | 23,360 |
Capital expenditures | 744 | 435 |
Reportable Segments [Member] | Controls [Member] | ||
Segment Reporting Information, Revenue for Reportable Segment [Abstract] | ||
Sales to external customers | 35,708 | 30,320 |
Operating income (loss) | 977 | -739 |
Depreciation | 517 | 514 |
Identifiable assets | 22,507 | 21,545 |
Capital expenditures | 709 | 410 |
Reportable Segments [Member] | Capacitors [Member] | ||
Segment Reporting Information, Revenue for Reportable Segment [Abstract] | ||
Sales to external customers | 2,215 | 1,883 |
Operating income (loss) | 283 | 75 |
Depreciation | 90 | 85 |
Identifiable assets | 1,199 | 1,325 |
Capital expenditures | 33 | 25 |
Intersegment Eliminations [Member] | ||
Segment Reporting Information, Revenue for Reportable Segment [Abstract] | ||
Sales to external customers | 5 | 8 |
Intersegment Eliminations [Member] | Controls [Member] | ||
Segment Reporting Information, Revenue for Reportable Segment [Abstract] | ||
Sales to external customers | 0 | 0 |
Intersegment Eliminations [Member] | Capacitors [Member] | ||
Segment Reporting Information, Revenue for Reportable Segment [Abstract] | ||
Sales to external customers | 5 | 8 |
Corporate [Member] | ||
Segment Reporting Information, Revenue for Reportable Segment [Abstract] | ||
Sales to external customers | 0 | 0 |
Operating income (loss) | -235 | -284 |
Depreciation | 1 | 2 |
Identifiable assets | 10,261 | 490 |
Capital expenditures | $2 | $0 |
SEGMENT_INFORMATION_1_Details
SEGMENT INFORMATION (1) (Details) (USD $) | 12 Months Ended | |
In Thousands, unless otherwise specified | Sep. 30, 2014 | Sep. 30, 2013 |
Revenues from External Customers and Long-Lived Assets [Line Items] | ||
Total sales | $37,923 | $32,203 |
Long-Lived Assets | 7,847 | 6,610 |
Revenue from External Customer [Line Items] | ||
Electronic controls segment revenues | 37,923 | 32,203 |
Sales [Member] | Toyota Group [Member] | ||
Revenue, Major Customer [Line Items] | ||
Concentration risk percentage (in hundredths) | 14.00% | 10.00% |
Receivables [Member] | Toyota Group [Member] | ||
Revenue, Major Customer [Line Items] | ||
Concentration risk percentage (in hundredths) | 17.00% | 8.00% |
Receivables [Member] | Haulotte Group [Member] | ||
Revenue, Major Customer [Line Items] | ||
Concentration risk percentage (in hundredths) | 11.00% | |
Total Foreign [Member] | ||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||
Total sales | 21,534 | 18,546 |
Long-Lived Assets | 5,602 | 4,375 |
Reportable Segments [Member] | Controls [Member] | ||
Revenue from External Customer [Line Items] | ||
Electronic controls segment revenues | 35,708 | 30,320 |
Reportable Segments [Member] | Electronic controls for zero emission and hybrid electric vehicles [Member] | Controls [Member] | ||
Revenue from External Customer [Line Items] | ||
Electronic controls segment revenues | 26,014 | 19,884 |
Reportable Segments [Member] | Accessory and aftermarket products and services [Member] | Controls [Member] | ||
Revenue from External Customer [Line Items] | ||
Electronic controls segment revenues | 9,694 | 10,436 |
Reportable Geographical Components [Member] | United States Of America [Member] | ||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||
Total sales | 16,389 | 13,657 |
Long-Lived Assets | 2,245 | 2,235 |
Reportable Geographical Components [Member] | United Kingdom [Member] | ||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||
Total sales | 13,486 | 10,627 |
Long-Lived Assets | 5,239 | 4,305 |
Reportable Geographical Components [Member] | France [Member] | ||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||
Total sales | 8,026 | 7,919 |
Long-Lived Assets | 74 | 69 |
Reportable Geographical Components [Member] | China [Member] | ||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||
Total sales | 22 | 0 |
Reportable Geographical Components [Member] | Korea, Japan and China [Member] | ||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||
Long-Lived Assets | $289 | $1 |
DEBT_Details
DEBT (Details) (USD $) | 12 Months Ended | |
Sep. 30, 2014 | Sep. 30, 2013 | |
Debt Instrument [Line Items] | ||
Long-term debt | $1,700,000 | |
Current portion of long-term debt | 28,000 | 46,000 |
Line of Credit Facility [Line Items] | ||
Debt covenant description | Under the facility, Sevcon USA, Inc. must maintain, on a quarterly basis, a debt to tangible net worth ratio of no more than 2.40:1 and a debt service coverage ratio of no less than 1.25:1 for each rolling twelve-month period | |
Total overdraft facility | 1,460,000 | |
Annual principal payments on long term debt [Abstract] | ||
2015 | 0 | |
2016 | 0 | |
2017 | 1,700,000 | |
Total maturities | 1,700,000 | |
RBS Citizens, National Association [Member] | Secured Revolving Credit Facility [Member] | ||
Line of Credit Facility [Line Items] | ||
Margin interest rate (in hundredths) | 3.13% | |
Line of credit facility, maximum borrowing capacity | 3,500,000 | |
Line of credit facility, expiration date | 14-Jun-17 | |
Line of credit facility, amount outstanding | 1,700,000 | |
U.K. bank loan [Member] | ||
Debt Instrument [Line Items] | ||
Long-term debt | 28,000 | |
Debt instrument, fixed interest rate (in hundredths) | 6.80% | |
Debt instrument, term | 5 years | |
Current portion of long-term debt | 28,000 | |
Fair market value of the debt | 28,000 | |
Annual principal payments on long term debt [Abstract] | ||
Total maturities | $28,000 |
ESTABLISHMENT_OF_JOINT_VENTURE1
ESTABLISHMENT OF JOINT VENTURE IN CHINA (Details) (USD $) | 3 Months Ended |
Sep. 30, 2014 | |
Establishment of Joint Venture in China [Abstract] | |
Limited partnership stake (in hundredths) | 50.00% |
Investment of initial capital | $320,000 |
Initial establishment costs | $481,000 |
CAPITAL_RAISE_Details
CAPITAL RAISE (Details) (USD $) | 0 Months Ended | 12 Months Ended | ||
Sep. 12, 2014 | Sep. 30, 2014 | Sep. 30, 2013 | Aug. 01, 2014 | |
Capital Raise [Line Items] | ||||
Convertible Preferred Stock Stated value (in dollars per share) | $0.10 | $0.10 | ||
Initial conversion ration (in dollars per share) | $8 | |||
Sale price of common stock (in dollars per share) | $15.50 | |||
Number of days of price of common stock exceeded | 20 days | |||
Consecutive trading days | 30 days | |||
Proceeds from Issuance of Preferred Stock and Preference Stock | $9,345,000 | $9,345,000 | $0 | |
Series A Preferred Stock [Member] | ||||
Capital Raise [Line Items] | ||||
Series A Convertible Preferred Stock offering rights | $10,000,000 | |||
Issuance of preferred stock (in shares) | 465,500 | |||
Convertible preferred stock price per share (in dollars per share) | $21.50 | |||
Convertible Preferred Stock Stated value (in dollars per share) | $24 | |||
Percentage of cumulative annual dividend, Series A Convertible Preferred Stock (in hundredths) | 4.00% | |||
Initial dividend payable | 15-Oct-14 | |||
Preferred stock conversion ratio | 3 |
RESTRUCTURING_CHARGE_Details
RESTRUCTURING CHARGE (Details) (USD $) | 12 Months Ended | |
In Thousands, unless otherwise specified | Sep. 30, 2014 | Sep. 30, 2013 |
Employee | ||
Restructuring charge [Abstract] | ||
Number of employees terminated | 8 | |
Restructuring Charges [Abstract] | ||
Severance and other related costs | $343 | |
Consultant costs, professional fees and other costs | 262 | |
Total restructuring charge | 0 | 605 |
Restructuring Reserve [Roll Forward] | ||
Beginning Balance | 0 | 0 |
Charges | 0 | 605 |
Payments | -605 | |
Ending Balance | 0 | |
Severance and other related costs [Member] | ||
Restructuring Charges [Abstract] | ||
Total restructuring charge | 343 | |
Restructuring Reserve [Roll Forward] | ||
Beginning Balance | 0 | |
Charges | 343 | |
Payments | -343 | |
Ending Balance | 0 | |
Consultant costs, professional fees and other costs [Member] | ||
Restructuring Charges [Abstract] | ||
Total restructuring charge | 262 | |
Restructuring Reserve [Roll Forward] | ||
Beginning Balance | 0 | |
Charges | 262 | |
Payments | -262 | |
Ending Balance | $0 |
SUBSEQUENT_EVENTS_Details
SUBSEQUENT EVENTS (Details) (RBS Citizens, National Association [Member], USD $) | 12 Months Ended | 0 Months Ended |
Sep. 30, 2014 | Dec. 01, 2014 | |
Revolving Credit Facility [Member] | ||
Preference share dividends [Abstract] | ||
Line of Credit Facility, Maximum Borrowing Capacity | $3,500,000 | |
Line of Credit Facility, Expiration Date | 14-Jun-17 | |
Subsequent Event [Member] | ||
Preference share dividends [Abstract] | ||
Repayments of Lines of Credit | 1,700,000 | |
Subsequent Event [Member] | Revolving Credit Facility [Member] | ||
Preference share dividends [Abstract] | ||
Line of Credit Facility, Maximum Borrowing Capacity | $3,500,000 | |
Line of Credit Facility, Expiration Date | 14-Jun-17 |
SCHEDULE_II_Details
SCHEDULE II (Details) (Allowance for Doubtful Accounts [Member], USD $) | 12 Months Ended | |
In Thousands, unless otherwise specified | Sep. 30, 2014 | Sep. 30, 2013 |
Allowance for Doubtful Accounts [Member] | ||
Valuation and Qualifying Accounts Disclosure [Line Items] | ||
Balance at beginning of year | $61 | $32 |
Additions charged to costs and expenses | 2 | 31 |
Deductions from reserves: [Abstract] | ||
Reduction in reserve | -6 | 0 |
Write off of uncollectible accounts | -14 | -4 |
Foreign currency translation adjustment | -3 | 2 |
Balance at end of year | $40 | $61 |