Document_and_Entity_Informatio
Document and Entity Information | 3 Months Ended | |
Mar. 31, 2014 | 2-May-14 | |
Document and Entity Information [Abstract] | ' | ' |
Entity Registrant Name | 'CPI AEROSTRUCTURES INC | ' |
Entity Central Index Key | '0000889348 | ' |
Current Fiscal Year End Date | '--12-31 | ' |
Entity Well-known Seasoned Issuer | 'No | ' |
Entity Voluntary Filers | 'No | ' |
Entity Current Reporting Status | 'Yes | ' |
Entity Filer Category | 'Accelerated Filer | ' |
Entity Common Stock, Shares Outstanding | ' | 8,460,785 |
Document Fiscal Year Focus | '2014 | ' |
Document Fiscal Period Focus | 'Q1 | ' |
Document Type | '10-Q | ' |
Amendment Flag | 'false | ' |
Document Period End Date | 31-Mar-14 | ' |
CONDENSED_BALANCE_SHEETS_Unaud
CONDENSED BALANCE SHEETS (Unaudited) (USD $) | Mar. 31, 2014 | Dec. 31, 2013 |
Current Assets: | ' | ' |
Cash | $973,525 | $2,166,103 |
Accounts receivable, net | 8,108,359 | 4,392,254 |
Costs and estimated earnings in excess of billings on uncompleted contracts | 119,205,553 | 112,597,136 |
Deferred income taxes | 417,000 | 417,000 |
Prepaid expenses and other current assets | 737,867 | 609,268 |
Total current assets | 129,442,304 | 120,181,761 |
Plant and equipment, net | 2,730,847 | 2,849,753 |
Deferred income taxes | 1,025,000 | 1,133,000 |
Other assets | 108,080 | 108,080 |
Total Assets | 133,306,231 | 124,272,594 |
Current Liabilities: | ' | ' |
Accounts payable | 7,733,328 | 7,614,755 |
Accrued expenses | 499,168 | 654,868 |
Billings in excess of costs and estimated earnings on uncompleted contracts | 179,698 | 276,170 |
Current portion of long-term debt | 993,139 | 1,020,349 |
Line of credit | 28,850,000 | 21,350,000 |
Income tax payable | 512,699 | 736,536 |
Deferred income taxes | 89,000 | 89,000 |
Total current liabilities | 38,857,032 | 31,741,678 |
Long-term debt, net of current portion | 1,952,417 | 2,198,187 |
Deferred income taxes | 788,000 | 788,000 |
Other liabilities | 592,306 | 593,210 |
Total Liabilities | 42,189,755 | 35,321,075 |
Shareholders' Equity: | ' | ' |
Common stock - $.001 par value; authorized 50,000,000 shares, 8,460,785 and 8,410,493 shares, respectively, issued and outstanding | 8,461 | 8,410 |
Additional paid-in capital | 50,814,206 | 50,381,348 |
Retained earnings | 40,311,745 | 38,582,876 |
Accumulated other comprehensive loss | -17,936 | -21,115 |
Total Shareholders' Equity | 91,116,476 | 88,951,519 |
Total Liabilities and Shareholders' Equity | $133,306,231 | $124,272,594 |
CONDENSED_BALANCE_SHEETS_Unaud1
CONDENSED BALANCE SHEETS (Unaudited) (Parenthetical) (USD $) | Mar. 31, 2014 | Dec. 31, 2013 |
Shareholders' Equity: | ' | ' |
Common stock, par value (in dollars per value) | $0.00 | $0.00 |
Common stock, shares authorized (in shares) | 50,000,000 | 50,000,000 |
Common stock, shares issued (in shares) | 8,460,785 | 8,410,493 |
Common stock, shares outstanding (in shares) | 8,460,785 | 8,410,493 |
CONDENSED_STATEMENTS_OF_INCOME
CONDENSED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME (Unaudited) (USD $) | 3 Months Ended | |
Mar. 31, 2014 | Mar. 31, 2013 | |
CONDENSED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME (Unaudited) [Abstract] | ' | ' |
Revenue | $21,883,517 | $19,927,433 |
Cost of sales | 17,392,385 | 15,486,863 |
Gross profit | 4,491,132 | 4,440,570 |
Selling, general and administrative expenses | 1,838,660 | 1,877,922 |
Income from operations | 2,652,472 | 2,562,648 |
Interest expense | 143,603 | 141,372 |
Income before provision for income taxes | 2,508,869 | 2,421,276 |
Provision for income taxes | 780,000 | 750,000 |
Net income | 1,728,869 | 1,671,276 |
Other comprehensive income, net of tax | ' | ' |
Change in unrealized loss- interest rate swap | 3,179 | 3,711 |
Comprehensive Income | $1,732,048 | $1,674,987 |
Income per common share - basic (in dollars per share) | $0.21 | $0.20 |
Income per common share - diluted (in dollars per share) | $0.20 | $0.20 |
Shares used in computing income per common share: | ' | ' |
Basic (in shares) | 8,421,142 | 8,377,654 |
Diluted (in shares) | 8,534,856 | 8,447,974 |
STATEMENTS_OF_SHAREHOLDERS_EQU
STATEMENTS OF SHAREHOLDERS' EQUITY (Unaudited) (USD $) | Common Stock [Member] | Additional Paid-in Capital [Member] | Retained Earnings [Member] | Accumulated Other Comprehensive Loss [Member] | Total |
Balance at Dec. 31, 2012 | $8,371 | $49,780,673 | $30,845,982 | ($40,827) | $80,594,199 |
Balance (in shares) at Dec. 31, 2012 | 8,371,439 | ' | ' | ' | ' |
Increase (Decrease) in Shareholders' Equity [Roll Forward] | ' | ' | ' | ' | ' |
Net Income | 0 | 0 | 1,671,276 | 0 | 1,671,276 |
Change in unrealized loss from interest rate swap | 0 | 0 | 0 | 3,711 | 3,711 |
Common stock issued upon exercise of stock options | 3 | -3 | 0 | 0 | 0 |
Common stock issued upon exercise of options (in shares) | 2,645 | ' | ' | ' | ' |
Tax provision (benefit) of stock option exercise | 0 | -26,000 | 0 | 0 | -26,000 |
Common stock issued as bonus | 18 | 152,056 | 0 | 0 | 152,074 |
Common stock issued as bonus (in shares) | 17,870 | ' | ' | ' | ' |
Stock compensation expense | 0 | 360,964 | 0 | 0 | 360,964 |
Balance at Mar. 31, 2013 | 8,392 | 50,267,690 | 32,517,258 | -37,116 | 82,756,224 |
Balance (in shares) at Mar. 31, 2013 | 8,391,954 | ' | ' | ' | ' |
Balance at Dec. 31, 2013 | 8,410 | 50,381,348 | 38,582,876 | -21,115 | 88,951,519 |
Balance (in shares) at Dec. 31, 2013 | 8,410,493 | ' | ' | ' | ' |
Increase (Decrease) in Shareholders' Equity [Roll Forward] | ' | ' | ' | ' | ' |
Net Income | 0 | 0 | 1,728,869 | 0 | 1,728,869 |
Change in unrealized loss from interest rate swap | 0 | 0 | 0 | 3,179 | 3,179 |
Common stock issued upon exercise of stock options | 51 | 278,049 | 0 | 0 | 278,100 |
Common stock issued upon exercise of options (in shares) | 50,292 | ' | ' | ' | ' |
Tax provision (benefit) of stock option exercise | 0 | 52,000 | 0 | 0 | 52,000 |
Common stock issued as bonus | ' | ' | ' | ' | 0 |
Stock compensation expense | 0 | 102,809 | 0 | 0 | 102,809 |
Balance at Mar. 31, 2014 | $8,461 | $50,814,206 | $40,311,745 | ($17,936) | $91,116,476 |
Balance (in shares) at Mar. 31, 2014 | 8,460,785 | ' | ' | ' | ' |
CONDENSED_STATEMENTS_OF_CASH_F
CONDENSED STATEMENTS OF CASH FLOWS (Unaudited) (USD $) | 3 Months Ended | |
Mar. 31, 2014 | Mar. 31, 2013 | |
Cash flows from operating activities: | ' | ' |
Net income | $1,728,869 | $1,671,276 |
Adjustments to reconcile net income to net cash used in operating activities: | ' | ' |
Depreciation and amortization | 175,043 | 163,507 |
Deferred rent | 4,274 | 13,655 |
Stock compensation | 102,809 | 360,964 |
Deferred income taxes | 108,000 | -16,000 |
Tax benefit (provision) from stock option plans | -52,000 | 26,000 |
Changes in operating assets and liabilities: | ' | ' |
Increase in accounts receivable | -3,716,105 | -2,621,277 |
Increase in costs and estimated earnings in excess of billings on uncompleted contracts | -6,608,417 | -1,101,586 |
Increase in prepaid expenses and other assets | -128,599 | -179,704 |
Decrease in accounts payable and accrued expenses | -39,126 | -5,486,060 |
Decrease in billings in excess of costs and estimated earnings on uncompleted contracts | -96,472 | -346,826 |
Increase (decrease) in income taxes payable | -171,837 | 169,530 |
Net cash used in operating activities | -8,693,561 | -7,346,521 |
Cash used in investing activities - purchase of plant and equipment | -56,137 | -294,632 |
Cash flows from financing activities: | ' | ' |
Payment of long-term debt | -272,980 | -281,774 |
Proceeds from long-term debt | 0 | 0 |
Proceeds from line of credit | 7,500,000 | 6,500,000 |
Proceeds from exercise of stock options | 278,100 | 0 |
Tax (benefit) provision of stock option exercise | 52,000 | -26,000 |
Net cash provided by financing activities | 7,557,120 | 6,192,226 |
Net decrease in cash | -1,192,578 | -1,448,927 |
Cash at beginning of period | 2,166,103 | 2,709,803 |
Cash at end of period | 973,525 | 1,260,876 |
Non cash investing and financing activities: | ' | ' |
Common stock issued for bonuses | 0 | 152,074 |
Cash paid during the period for: | ' | ' |
Interest | 250,852 | 238,443 |
Income taxes | $850,000 | $500,000 |
INTERIM_FINANCIAL_STATEMENTS
INTERIM FINANCIAL STATEMENTS | 3 Months Ended |
Mar. 31, 2014 | |
INTERIM FINANCIAL STATEMENTS [Abstract] | ' |
INTERIM FINANCIAL STATEMENTS | ' |
1. INTERIM FINANCIAL STATEMENTS | |
The condensed financial statements of CPI Aerostructures, Inc. (the “Company”) as of March 31, 2014 and for the three months ended March 31, 2014 and 2013 have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission ("SEC"). Certain information and note disclosures normally included in annual financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted pursuant to those rules and regulations, although the Company believes that the disclosures made are adequate to make the information not misleading. | |
The condensed balance sheet at December 31, 2013 has been derived from the audited financial statements at that date, but does not include all of the information and notes required by accounting principles generally accepted in the United States for complete financial statements. All adjustments that, in the opinion of management, are necessary for a fair presentation for the periods presented have been reflected as required by the SEC. Such adjustments are of a normal, recurring nature. It is suggested that these condensed financial statements be read in conjunction with the financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2013. The results of operations for interim periods are not necessarily indicative of the operating results to be expected for the full year or any other interim period. | |
The Company maintains its cash in two financial institutions. The balances are insured by the Federal Deposit Insurance Corporation. From time to time, the Company’s balances may exceed these limits. As of March 31, 2014, the Company had approximately $905,245 of uninsured balances. The Company limits its credit risk by selecting financial institutions considered to be highly credit worthy. |
STOCKBASED_COMPENSATION
STOCK-BASED COMPENSATION | 3 Months Ended | ||||
Mar. 31, 2014 | |||||
STOCK-BASED COMPENSATION [Abstract] | ' | ||||
STOCK-BASED COMPENSATION | ' | ||||
2 | STOCK-BASED COMPENSATION | ||||
The Company accounts for compensation expense associated with stock options based on the fair value of the options on the date of grant. | |||||
The Company’s net income for the three months ended March 31, 2014 and 2013 includes approximately $103,000 and $361,000 of non-cash compensation expense, respectively, related to the Company’s stock options. The non-cash compensation expense related to all of the Company’s stock-based compensation arrangements is recorded as a component of selling, general and administrative expenses. | |||||
The estimated fair value of each option award granted was determined on the date of grant using the Black-Scholes option valuation model. The following weighted-average assumptions were used for the options granted during the three months ended March 31, 2014 and 2013: | |||||
2014 | 2013 | ||||
Risk-free interest rate | 1.45% | 0.72% | |||
Expected volatility | 102% | 106% | |||
Dividend yield | 0% | 0% | |||
Expected option term | 5 years | 5 years | |||
A summary of the status of the Company’s stock option plans as of March 31, 2014 and changes during the three months ended March 31, 2014 is as follows: | |||||
Weighted | Weighted | Aggregate | |||
average | average | Intrinsic Value | |||
Exercise | remaining | ||||
Price | contractual | ||||
Options | term (in years) | ||||
Outstanding | |||||
at beginning of period | 461,919 | $9.80 | |||
Granted | 36,292 | 15.04 | |||
Exercised | -65,000 | 7.32 | |||
Outstanding and vested | |||||
at end of period | 405,994 | $10.32 | 2.73 | $1,276,112 | |
Options to acquire 36,292 shares of common stock were granted on January 1, 2014 to members of our board of directors as part of their normal compensation. Of the 36,292 options granted on January 1, 2014, 9,075 vested immediately, 9,073 vest on April 1, 2014, 9,073 vest on July 1, 2014 and 9,071 vest on October 1, 2014. | |||||
During the three months ended March 31, 2014, 35,000 stock options were exercised for cash resulting in proceeds to the Company of $278,100. During the same period 30,000 stock options were exercised, pursuant to provisions of the stock option plan, where the Company received no cash and 14,708 shares of its common stock in exchange for the 30,000 shares issued in the exercise. The 14,708 shares that the Company received were valued at $197,927, the fair market value of the shares on the dates of exercise. | |||||
The intrinsic value of all options exercised during the three months ended March 31, 2014 and 2013 was approximately $413,450 and $26,300, respectively. |
DERIVATIVE_INSTRUMENTS_AND_FAI
DERIVATIVE INSTRUMENTS AND FAIR VALUE | 3 Months Ended | |||||
Mar. 31, 2014 | ||||||
DERIVATIVE INSTRUMENTS AND FAIR VALUE [Abstract] | ' | |||||
DERIVATIVE INSTRUMENTS AND FAIR VALUE | ' | |||||
3. DERIVATIVE INSTRUMENTS AND FAIR VALUE | ||||||
Our use of derivative instruments has been to hedge interest rates. These derivative contracts are entered into with a financial institution. We do not use derivative instruments for trading purposes and we have procedures in place to monitor and control their use. | ||||||
We record these derivative financial instruments on the condensed balance sheets at fair value. For derivative instruments that are designated and qualify as a cash flow hedge, the effective portion of the gain or loss on the derivative instrument is reported as a component of other comprehensive income (loss) and reclassified into earnings in the same period or periods during which the hedged transaction affects earnings. | ||||||
Any ineffective portion of the gain or loss on the derivative instrument for a cash flow hedge is recorded in the results of operations immediately. For derivative instruments not designated as hedging instruments, the gain or loss is recognized in the results of operations immediately. | ||||||
In March 2012, the Company entered into interest rate swaps with the objective of reducing our exposure to cash flow volatility arising from interest rate fluctuations associated with certain debt. The notional amount, maturity date, and currency of these contracts match those of the underlying debt. The Company has designated these interest rate swap contracts as cash flow hedges. The Company measures ineffectiveness by comparing the cumulative change in the forward contact with the cumulative change in the hedged item. No material ineffectiveness was recognized in the quarter ended March 31, 2014. As of March 31, 2014 and December 31, 2013, we had a net deferred loss associated with cash flow hedges of approximately $27,000 and $32,000, respectively, due to the interest rate swap which has been included in Other Liabilities. | ||||||
As a result of the use of derivative instruments, the Company is exposed to risk that the counterparties may fail to meet their contractual obligations. Recent adverse developments in the global financial and credit markets could negatively impact the creditworthiness of our counterparties and cause one or more of our counterparties to fail to perform as expected. To mitigate the counterparty credit risk, we only enter into contracts with carefully selected major financial institutions based upon their credit ratings and other factors, and continually assess the creditworthiness of counterparties. To date, all counterparties have performed in accordance with their contractual obligations. | ||||||
Fair Value | ||||||
At March 31, 2014 and December 31, 2013, the fair values of cash, accounts receivable, accounts payable and accrued expenses approximated their carrying values because of the short-term nature of these instruments. | ||||||
31-Mar-14 | ||||||
Carrying Amount | Fair Value | |||||
Debt | ||||||
Short-term borrowings and long-term debt | $31,795,556 | $31,795,556 | ||||
31-Dec-13 | ||||||
Carrying Amount | Fair Value | |||||
Debt | ||||||
Short-term borrowings and long-term debt | $24,568,536 | $24,568,536 | ||||
We estimated the fair value of debt using market quotes and calculations based on market rates. | ||||||
Based on current rates offered to the company for the debt of similar terms and maturites per 10-K. | ||||||
The following table presents the fair values of those financial liabilities measured on a recurring basis as of March 31, 2014 and December 31, 2013: | ||||||
Fair Value Measurements March 31, 2014 | ||||||
Description | Total | Quoted Prices | Significant | Significant | ||
in Active | Other | Unobservable | ||||
Markets for | Observable | Inputs | ||||
Identical assets | Inputs | (Level 3) | ||||
(Level 1) | (Level 2) | |||||
Interest Rate Swap, net | $26,936 | -- | $26,936 | -- | ||
Total | $26,936 | -- | $26,936 | -- | ||
Fair Value Measurements December 31, 2013 | ||||||
Description | Total | Quoted Prices | Significant | Significant | ||
in Active | Other | Unobservable | ||||
Markets for | Observable | Inputs | ||||
Identical assets | Inputs | (Level 3) | ||||
(Level 1) | (Level 2) | |||||
Interest Rate Swap, net | $31,992 | -- | $31,992 | -- | ||
Total | $31,992 | -- | $31,992 | -- | ||
The fair value of the Company’s interest rate swaps was determined by comparing the fixed rate set at the inception of the transaction to the “replacement swap rate,” which represents the market rate for an offsetting interest rate swap with the same notional amounts and final maturity date. The market value is then determined by calculating the present value of the interest differential between the contractual swap and the replacement swap. | ||||||
As of March 31, 2014 and December 31, 2013, $26,936 and $31,992, respectively, was included in Other Liabilities related to the fair value of the Company’s interest rate swap, and $17,936 and $21,115, respectively, net of tax of $9,000 and $10,877, was included in Accumulated Other Comprehensive Loss. | ||||||
COSTS_AND_ESTIMATED_EARNINGS_O
COSTS AND ESTIMATED EARNINGS ON UNCOMPLETED CONTRACTS | 3 Months Ended | ||||
Mar. 31, 2014 | |||||
COSTS AND ESTIMATED EARNINGS ON UNCOMPLETED CONTRACTS [Abstract] | ' | ||||
COSTS AND ESTIMATED EARNINGS ON UNCOMPLETED CONTRACTS | ' | ||||
4. COSTS AND ESTIMATED EARNINGS ON UNCOMPLETED CONTRACTS | |||||
Costs and estimated earnings in excess of billings on uncompleted contracts consist of: | |||||
31-Mar-14 | |||||
U.S | |||||
Government | Commercial | Total | |||
Costs incurred on uncompleted | |||||
contracts | $270,605,597 | $68,163,669 | $338,769,266 | ||
Estimated earnings | 99,151,468 | 32,278,970 | 131,430,438 | ||
Sub-total | 369,757,065 | 100,442,639 | 470,199,704 | ||
Less billings to date | 281,858,400 | 69,315,449 | 351,173,849 | ||
Costs and estimated earnings | |||||
in excess of billings on | |||||
uncompleted contracts | $87,898,665 | $31,127,190 | $119,025,855 | ||
31-Dec-13 | |||||
U.S. | |||||
Government | Commercial | Total | |||
Costs incurred on uncompleted | |||||
contracts | $259,050,407 | $62,502,116 | $321,552,523 | ||
Estimated earnings | 95,590,879 | 30,694,605 | 126,285,484 | ||
Sub-total | 354,641,286 | 93,196,721 | 447,838,007 | ||
Less billings to date | 272,783,120 | 62,733,921 | 335,517,041 | ||
Costs and estimated earnings in excess of billings on uncompleted contracts | $81,858,166 | $30,462,800 | $112,320,966 | ||
The above amounts are included in the accompanying balance sheets under the following captions at March 31, 2014 and December 31, 2013: | |||||
31-Mar-14 | 31-Dec-13 | ||||
Costs and estimated earnings in excess of billings on | |||||
uncompleted contracts | $119,205,553 | $112,597,136 | |||
Billings in excess of costs and estimated earnings on | |||||
uncompleted contracts | (179,698) | (276,170) | |||
Totals | $119,025,855 | $112,320,966 | |||
U.S. Government Contracts includes contracts directly with the U.S. Government and Government subcontracts. | |||||
Revisions in the estimated gross profits on contracts and contract amounts are made in the period in which the circumstances requiring the revisions occur. During the three months ended March 31, 2014 and 2013, the effect of such revisions in total estimated contract profits resulted in a decrease to the total gross profit to be earned on the contracts of approximately $1,477,000 and $1,377,000, respectively, from that which would have been reported had the revised estimates been used as the basis of recognition of contract profits in prior years. | |||||
Although management believes it has established adequate procedures for estimating costs to complete on uncompleted open contracts, it is possible that additional significant costs could occur on contracts prior to completion. | |||||
INCOME_PER_COMMON_SHARE
INCOME PER COMMON SHARE | 3 Months Ended | |
Mar. 31, 2014 | ||
INCOME PER COMMON SHARE [Abstract] | ' | |
INCOME PER COMMON SHARE | ' | |
5 | INCOME PER COMMON SHARE | |
Basic income per common share is computed using the weighted average number of common shares outstanding. Diluted income per common share for the three month periods ended March 31, 2014 and 2013 is computed using the weighted-average number of common shares outstanding adjusted for the incremental shares attributed to outstanding options to purchase common stock. Incremental shares of 316,919 were used in the calculation of diluted income per common share for the three month period ended March 31, 2014. Incremental shares of 116,292 were not included in the diluted earnings per share calculations for the three month period ended March 31, 2014 as their exercise price was in excess of the Company’s average stock price for the respective period and, accordingly, these shares are not assumed to be exercised for the diluted earnings per share calculation, as they would be anti-dilutive. Incremental shares of 245,000 were used in the calculation of diluted income per common share in the three months ended March 31, 2013. Incremental shares of 239,734 were not included in the diluted earnings per share calculations for the three month period ended March 31, 2013 as their exercise price was in excess of the Company’s average stock price for the respective period and, accordingly, these shares are not assumed to be exercised for the diluted earnings per share calculation, as they would be anti-dilutive. |
LINE_OF_CREDIT
LINE OF CREDIT | 3 Months Ended | |
Mar. 31, 2014 | ||
LINE OF CREDIT [Abstract] | ' | |
LINE OF CREDIT | ' | |
6 | LINE OF CREDIT | |
On December 5, 2012, the Company entered into an Amended and Restated Credit Agreement ("Restated Agreement") with Sovereign Bank as the sole arranger, administrative agent and collateral agent and Valley National Bank. The Restated Agreement provides for a revolving credit loan commitment of $35 million | ||
As of March 31, 2014, the Company was in compliance with all financial covenants contained in the "Restated Agreement". As of March 31, 2014, the Company had $28.85 million outstanding under the "Restated Agreement" bearing interest at 3.25%. | ||
The Sovereign Revolving Facilty and term loan under the Restated Agreement are secured by all our assets. | ||
LONGTERM_DEBT
LONG-TERM DEBT | 3 Months Ended | |
Mar. 31, 2014 | ||
LONG-TERM DEBT [Abstract] | ' | |
LONG-TERM DEBT | ' | |
7. LONG-TERM DEBT | ||
On March 9, 2012, the Company obtained a $4.5 million term loan from Sovereign Bank to be amortized over five years (the “Sovereign Term Facility ”). Sovereign Term Facility was used to purchase tooling and equipment for new programs. Sovereign Term Facility bears interest at the lower of LIBOR plus 3% or Sovereign Bank’s prime rate. | ||
Additionally, the Company and Sovereign Bank entered into a five year interest rate swap agreement, in the notional amount of $4.5 million. Under the interest rate swap, the Company pays an amount to Sovereign Bank representing interest on the notional amount at a fixed rate of 4.11% and receives an amount from Sovereign Bank representing interest on the notional amount of a rate equal to the one-month LIBOR plus 3%. The effect of this interest rate swap will be the Company paying a fixed interest fixed rate of 4.11% over the term of the Sovereign Term Facility . | ||
The maturities of long-term debt are as follows: | ||
Twelve months ending March 31, | ||
2015 | 993,139 | |
2016 | 957,325 | |
2017 | 920,092 | |
2018 | 75,000 | |
$2,945,556 | ||
In addition to the Sovereign Term Loan , included in long-term debt are capital leases and notes payable of $170,557, including a current portion of $93,139. |
MAJOR_CUSTOMERS
MAJOR CUSTOMERS | 3 Months Ended |
Mar. 31, 2014 | |
MAJOR CUSTOMERS [Abstract] | ' |
MAJOR CUSTOMERS | ' |
8. MAJOR CUSTOMERS | |
During the three months ended March 31, 2014, the Company’s three largest commercial customers accounted for 28%, 24% and 17% of revenue, respectively. During the three months ended March 31, 2013, the Company’s three largest commercial customers accounted for 26%, 24% and 18% of revenue, respectively. In addition, during the three months ended March 31, 2014 and 2013, 1% of revenue was directly from the U.S. Government. | |
At March 31, 2014, 40%, 18%, 16% and 9% of Costs and Estimated Earnings in Excess of Billings on Uncompleted Contracts were from four largest commercial customers. At December 31, 2013, 40%, 17%, 16% and 10% of Costs and Estimated Earnings in Excess of Billings on Uncompleted Contracts were from the Company’s four largest commercial customers. | |
At March 31, 2014 and December 31, 2013, less than 1% of Costs and Estimated Earnings in Excess of Billings on Uncompleted Contracts were direct from the U.S. Government. | |
At March 31, 2014, 36%, 20% and 12% of our accounts receivable were from our three largest commercial customers. At December 31, 2013, 28%, 24% and 20% of accounts receivable were from our three largest commercial customers. |
STOCKBASED_COMPENSATION_Tables
STOCK-BASED COMPENSATION (Tables) | 3 Months Ended | ||||
Mar. 31, 2014 | |||||
STOCK-BASED COMPENSATION [Abstract] | ' | ||||
Weighted-average assumptions used for options granted | ' | ||||
The estimated fair value of each option award granted was determined on the date of grant using the Black-Scholes option valuation model. The following weighted-average assumptions were used for the options granted during the three months ended March 31, 2014 and 2013: | |||||
2014 | 2013 | ||||
Risk-free interest rate | 1.45% | 0.72% | |||
Expected volatility | 102% | 106% | |||
Dividend yield | 0% | 0% | |||
Expected option term | 5 years | 5 years | |||
Stock option activity | ' | ||||
A summary of the status of the Company’s stock option plans as of March 31, 2014 and changes during the three months ended March 31, 2014 is as follows: | |||||
Weighted | Weighted | Aggregate | |||
average | average | Intrinsic Value | |||
Exercise | remaining | ||||
Price | contractual | ||||
Options | term (in years) | ||||
Outstanding | |||||
at beginning of period | 461,919 | $9.80 | |||
Granted | 36,292 | 15.04 | |||
Exercised | -65,000 | 7.32 | |||
Outstanding and vested | |||||
at end of period | 405,994 | $10.32 | 2.73 | $1,276,112 |
DERIVATIVE_INSTRUMENTS_AND_FAI1
DERIVATIVE INSTRUMENTS AND FAIR VALUE (Tables) | 3 Months Ended | |||||
Mar. 31, 2014 | ||||||
DERIVATIVE INSTRUMENTS AND FAIR VALUE [Abstract] | ' | |||||
Fair values of cash, accounts receivable, accounts payable and accrued expenses | ' | |||||
At March 31, 2014 and December 31, 2013, the fair values of cash, accounts receivable, accounts payable and accrued expenses approximated their carrying values because of the short-term nature of these instruments. | ||||||
31-Mar-14 | ||||||
Carrying Amount | Fair Value | |||||
Debt | ||||||
Short-term borrowings and long-term debt | $31,795,556 | $31,795,556 | ||||
31-Dec-13 | ||||||
Carrying Amount | Fair Value | |||||
Debt | ||||||
Short-term borrowings and long-term debt | $24,568,536 | $24,568,536 | ||||
Fair value of financial liabilities measured on a recurring basis | ' | |||||
The following table presents the fair values of those financial liabilities measured on a recurring basis as of March 31, 2014 and December 31, 2013: | ||||||
Fair Value Measurements March 31, 2014 | ||||||
Description | Total | Quoted Prices | Significant | Significant | ||
in Active | Other | Unobservable | ||||
Markets for | Observable | Inputs | ||||
Identical assets | Inputs | (Level 3) | ||||
(Level 1) | (Level 2) | |||||
Interest Rate Swap, net | $26,936 | -- | $26,936 | -- | ||
Total | $26,936 | -- | $26,936 | -- | ||
Fair Value Measurements December 31, 2013 | ||||||
Description | Total | Quoted Prices | Significant | Significant | ||
in Active | Other | Unobservable | ||||
Markets for | Observable | Inputs | ||||
Identical assets | Inputs | (Level 3) | ||||
(Level 1) | (Level 2) | |||||
Interest Rate Swap, net | $31,992 | -- | $31,992 | -- | ||
Total | $31,992 | -- | $31,992 | -- | ||
COSTS_AND_ESTIMATED_EARNINGS_O1
COSTS AND ESTIMATED EARNINGS ON UNCOMPLETED CONTRACTS (Tables) | 3 Months Ended | ||||
Mar. 31, 2014 | |||||
COSTS AND ESTIMATED EARNINGS ON UNCOMPLETED CONTRACTS [Abstract] | ' | ||||
Costs and estimated earnings in excess of billings on uncompleted contracts | ' | ||||
Costs and estimated earnings in excess of billings on uncompleted contracts consist of: | |||||
31-Mar-14 | |||||
U.S | |||||
Government | Commercial | Total | |||
Costs incurred on uncompleted | |||||
contracts | $270,605,597 | $68,163,669 | $338,769,266 | ||
Estimated earnings | 99,151,468 | 32,278,970 | 131,430,438 | ||
Sub-total | 369,757,065 | 100,442,639 | 470,199,704 | ||
Less billings to date | 281,858,400 | 69,315,449 | 351,173,849 | ||
Costs and estimated earnings | |||||
in excess of billings on | |||||
uncompleted contracts | $87,898,665 | $31,127,190 | $119,025,855 | ||
31-Dec-13 | |||||
U.S. | |||||
Government | Commercial | Total | |||
Costs incurred on uncompleted | |||||
contracts | $259,050,407 | $62,502,116 | $321,552,523 | ||
Estimated earnings | 95,590,879 | 30,694,605 | 126,285,484 | ||
Sub-total | 354,641,286 | 93,196,721 | 447,838,007 | ||
Less billings to date | 272,783,120 | 62,733,921 | 335,517,041 | ||
Costs and estimated earnings in excess of billings on uncompleted contracts | $81,858,166 | $30,462,800 | $112,320,966 | ||
Net unbilled and estimated earnings | ' | ||||
The above amounts are included in the accompanying balance sheets under the following captions at March 31, 2014 and December 31, 2013: | |||||
31-Mar-14 | 31-Dec-13 | ||||
Costs and estimated earnings in excess of billings on | |||||
uncompleted contracts | $119,205,553 | $112,597,136 | |||
Billings in excess of costs and estimated earnings on | |||||
uncompleted contracts | (179,698) | (276,170) | |||
Totals | $119,025,855 | $112,320,966 |
LONGTERM_DEBT_Tables
LONG-TERM DEBT (Tables) | 3 Months Ended | |
Mar. 31, 2014 | ||
LONG-TERM DEBT [Abstract] | ' | |
Maturities of long-term debt | ' | |
The maturities of long-term debt are as follows: | ||
Twelve months ending March 31, | ||
2015 | 993,139 | |
2016 | 957,325 | |
2017 | 920,092 | |
2018 | 75,000 | |
$2,945,556 |
INTERIM_FINANCIAL_STATEMENTS_D
INTERIM FINANCIAL STATEMENTS (Details) (USD $) | 3 Months Ended |
Mar. 31, 2014 | |
Institution | |
INTERIM FINANCIAL STATEMENTS [Abstract] | ' |
Number of financial institutions with which cash is maintained | 2 |
Uninsured balances | $0 |
STOCKBASED_COMPENSATION_Detail
STOCK-BASED COMPENSATION (Details) (USD $) | 3 Months Ended | |
Mar. 31, 2014 | Mar. 31, 2013 | |
Vesting period of options granted [Line Items] | ' | ' |
Noncash compensation expense | $103,000 | $361,000 |
Weighted-average assumptions used for options granted [Abstract] | ' | ' |
Risk-free interest rate (in hundredths) | 1.45% | 0.72% |
Expected volatility (in hundredths) | 102.00% | 106.00% |
Dividend yield (in hundredths) | 0.00% | 0.00% |
Expected option term | '5 years | '5 years |
Options [Abstract] | ' | ' |
Outstanding at beginning of period (in shares) | 461,919 | ' |
Granted (in shares) | 36,292 | ' |
Exercised (in shares) | -65,000 | ' |
Outstanding and vested at end of period (in shares) | 405,994 | ' |
Weighted average Exercise Price [Abstract] | ' | ' |
Outstanding at beginning of period (in dollars per share) | $9.80 | ' |
Granted (in dollars per share) | $15.04 | ' |
Exercised (in dollars per share) | $7.32 | ' |
Outstanding and vested at end of period (in dollars per share) | $10.32 | ' |
Weighted average remaining contractual term [Abstract] | ' | ' |
Outstanding and vested at end of period | '2 years 8 months 23 days | ' |
Aggregate Intrinsic Value [Abstract] | ' | ' |
Outstanding and vested at end of period | 1,276,112 | ' |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ' | ' |
Proceeds from exercise of stock options | 278,100 | 0 |
Intrinsic value of options exercised | 413,450 | 26,300 |
Issue of Stock for Cash [Member] | ' | ' |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ' | ' |
Common stock issued upon exercise of options (in shares) | 35,000 | ' |
Proceeds from exercise of stock options | 278,100 | ' |
Issue of Stock for Noncash Consideration [Member] | ' | ' |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ' | ' |
Common stock issued upon exercise of options (in shares) | 30,000 | ' |
Exchange of common stock upon exercise of stock options (in shares) | 14,708 | ' |
Fair market value of common stock upon exercise of options | $197,927 | ' |
January 1, 2014 [Member] | ' | ' |
Options [Abstract] | ' | ' |
Vested (in shares) | 9,075 | ' |
April 1, 2014 [Member] | ' | ' |
Options [Abstract] | ' | ' |
Vested (in shares) | 9,073 | ' |
July 1, 2014 [Member] | ' | ' |
Options [Abstract] | ' | ' |
Vested (in shares) | 9,073 | ' |
October 1, 2014 [Member] | ' | ' |
Options [Abstract] | ' | ' |
Vested (in shares) | 9,071 | ' |
DERIVATIVE_INSTRUMENTS_AND_FAI2
DERIVATIVE INSTRUMENTS AND FAIR VALUE (Details) (USD $) | 3 Months Ended | |
Mar. 31, 2014 | Dec. 31, 2013 | |
Counterparty | ||
DERIVATIVE INSTRUMENTS AND FAIR VALUE [Abstract] | ' | ' |
Material ineffectiveness | $0 | ' |
Net deferred loss on interest rate swap included in other liabilities | 27,000 | 32,000 |
Number of counterparties failed to perform as expected, minimum | 1 | ' |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ' | ' |
Fair value of interest rate swap included in accumulated other comprehensive loss | 17,936 | 21,115 |
Interest rate swap included in accumulated other comprehensive loss, tax effect | 9,000 | 10,877 |
Recurring [Member] | ' | ' |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ' | ' |
Interest Rate Swap, net | 26,936 | 31,992 |
Total | 26,936 | 31,992 |
Recurring [Member] | Quoted Prices in Active Markets for Identical assets (Level 1) [Member] | ' | ' |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ' | ' |
Interest Rate Swap, net | 0 | 0 |
Total | 0 | 0 |
Recurring [Member] | Significant Other Observable Inputs (Level 2) [Member] | ' | ' |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ' | ' |
Interest Rate Swap, net | 26,936 | 31,992 |
Total | 26,936 | 31,992 |
Recurring [Member] | Significant Unobservable Inputs (Level 3) [Member] | ' | ' |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ' | ' |
Interest Rate Swap, net | 0 | 0 |
Total | 0 | 0 |
Carrying Amount [Member] | ' | ' |
Fair values and carrying values of short-term instruments [Abstract] | ' | ' |
Short-term borrowings and long-term debt | 31,795,556 | 24,568,536 |
Fair Value [Member] | ' | ' |
Fair values and carrying values of short-term instruments [Abstract] | ' | ' |
Short-term borrowings and long-term debt | $31,795,556 | $24,568,536 |
COSTS_AND_ESTIMATED_EARNINGS_O2
COSTS AND ESTIMATED EARNINGS ON UNCOMPLETED CONTRACTS (Details) (USD $) | 3 Months Ended | ||
Mar. 31, 2014 | Mar. 31, 2013 | Dec. 31, 2013 | |
Costs and Estimated Earnings on Uncompleted Contracts [Line Items] | ' | ' | ' |
Costs incurred on uncompleted contracts | $338,769,266 | ' | $321,552,523 |
Estimated earnings | 131,430,438 | ' | 126,285,484 |
Sub-total | 470,199,704 | ' | 447,838,007 |
Less billings to date | 351,173,849 | ' | 335,517,041 |
Costs and estimated earnings in excess of billings on uncompleted contracts | 119,025,855 | ' | 112,320,966 |
Costs and estimated earnings in excess of billings on uncompleted contracts | 119,205,553 | ' | 112,597,136 |
Billings in excess of costs and estimated earnings on uncompleted contracts | -179,698 | ' | -276,170 |
Costs and estimated earnings in excess of billings on uncompleted contracts | 119,025,855 | ' | 112,320,966 |
Decrease in estimated gross profits on contracts due to revisions | 1,477,000 | 1,377,000 | ' |
U.S. Government [Member] | ' | ' | ' |
Costs and Estimated Earnings on Uncompleted Contracts [Line Items] | ' | ' | ' |
Costs incurred on uncompleted contracts | 270,605,597 | ' | 259,050,407 |
Estimated earnings | 99,151,468 | ' | 95,590,879 |
Sub-total | 369,757,065 | ' | 354,641,286 |
Less billings to date | 281,858,400 | ' | 272,783,120 |
Costs and estimated earnings in excess of billings on uncompleted contracts | 87,898,665 | ' | 81,858,166 |
Costs and estimated earnings in excess of billings on uncompleted contracts | 87,898,665 | ' | 81,858,166 |
Commercial [Member] | ' | ' | ' |
Costs and Estimated Earnings on Uncompleted Contracts [Line Items] | ' | ' | ' |
Costs incurred on uncompleted contracts | 68,163,669 | ' | 62,502,116 |
Estimated earnings | 32,278,970 | ' | 30,694,605 |
Sub-total | 100,442,639 | ' | 93,196,721 |
Less billings to date | 69,315,449 | ' | 62,733,921 |
Costs and estimated earnings in excess of billings on uncompleted contracts | 31,127,190 | ' | 30,462,800 |
Costs and estimated earnings in excess of billings on uncompleted contracts | $31,127,190 | ' | $30,462,800 |
INCOME_PER_COMMON_SHARE_Detail
INCOME PER COMMON SHARE (Details) | 3 Months Ended | |
Mar. 31, 2014 | Mar. 31, 2013 | |
INCOME PER COMMON SHARE [Abstract] | ' | ' |
Incremental shares used in calculation of diluted income per share (in shares) | 316,919 | 245,000 |
Incremental shares not included in calculation of diluted earnings per share (in shares) | 116,292 | 239,734 |
LINE_OF_CREDIT_Details
LINE OF CREDIT (Details) (USD $) | Mar. 31, 2014 | Dec. 31, 2013 |
Line of Credit Facility [Line Items] | ' | ' |
Outstanding amount under line of credit facility | $28,850,000 | $21,350,000 |
Interest rate on revolving credit facility (in hundredths) | 3.25% | ' |
Sovereign Revolving Facility [Member] | ' | ' |
Line of Credit Facility [Line Items] | ' | ' |
Outstanding amount under line of credit facility | 28,850,000 | ' |
Sovereign Revolving Facility [Member] | Restated Agreement [Member] | ' | ' |
Line of Credit Facility [Line Items] | ' | ' |
Revolving credit facility under credit agreement | $35,000,000 | ' |
LONGTERM_DEBT_Details
LONG-TERM DEBT (Details) (USD $) | Mar. 31, 2014 | Dec. 31, 2012 | Mar. 31, 2014 | Dec. 31, 2012 | Mar. 09, 2012 |
Sovereign Term Facility 2 [Member] | Sovereign Term Facility 2 [Member] | Term loan [Member] | Term loan [Member] | ||
Interest Rate Swap [Member] | Sovereign Term Facility 2 [Member] | Sovereign Term Facility 2 [Member] | |||
Debt Instrument [Line Items] | ' | ' | ' | ' | ' |
Principal amount of term loan | ' | ' | ' | ' | $4,500,000 |
Period of amortization | ' | ' | ' | '5 years | ' |
Description of variable rate basis | ' | 'Sovereign Term Facility 2 bears interest at the lower of LIBOR plus 3% or Sovereign Bank's prime rate. | ' | ' | ' |
Basis spread on variable rate (in hundredths) | ' | ' | ' | ' | 3.00% |
Period of derivative contract | ' | ' | '5 years | ' | ' |
Notional amount | ' | ' | 4,500,000 | ' | ' |
Rate of interest on notional amount (in hundredths) | ' | ' | 4.11% | ' | ' |
Basis spread on variable rate (in hundredths) | ' | ' | 3.00% | ' | ' |
Effect of interest rate derivative (in hundredths) | ' | ' | 4.11% | ' | ' |
Maturities of long-term debt [Abstract] | ' | ' | ' | ' | ' |
2015 | 993,139 | ' | ' | ' | ' |
2016 | 957,325 | ' | ' | ' | ' |
2017 | 920,092 | ' | ' | ' | ' |
2018 | 75,000 | ' | ' | ' | ' |
Long-term debt | 2,945,556 | ' | ' | ' | ' |
Capital leases and notes payable | 170,557 | ' | ' | ' | ' |
Current portion of capital leases and notes payable | $93,139 | ' | ' | ' | ' |
MAJOR_CUSTOMERS_Details
MAJOR CUSTOMERS (Details) | 3 Months Ended | 12 Months Ended | |
Mar. 31, 2014 | Mar. 31, 2013 | Dec. 31, 2013 | |
Customer | Customer | Customer | |
Revenue, Major Customer [Line Items] | ' | ' | ' |
Number of major commercial customers contributed to revenue | 3 | 3 | ' |
Number of large commercial customers accounted for major share in costs and estimated earnings in excess of billings on uncompleted contracts | 4 | ' | 4 |
Number of large customers included in accounts receivable of entity | 3 | ' | 3 |
U.S. Government [Member] | ' | ' | ' |
Revenue, Major Customer [Line Items] | ' | ' | ' |
Percentage of revenue accounted by major customers (in hundredths) | 1.00% | 1.00% | ' |
Percentage of costs and estimated earnings in excess of billings on uncompleted contracts accounted by major customers (in hundredths) | 1.00% | ' | 1.00% |
Customer A [Member] | ' | ' | ' |
Revenue, Major Customer [Line Items] | ' | ' | ' |
Percentage of revenue accounted by major customers (in hundredths) | 28.00% | 26.00% | ' |
Percentage of costs and estimated earnings in excess of billings on uncompleted contracts accounted by major customers (in hundredths) | 40.00% | ' | 40.00% |
Percentage of accounts receivable from major customers (in hundredths) | 36.00% | ' | 28.00% |
Customer B [Member] | ' | ' | ' |
Revenue, Major Customer [Line Items] | ' | ' | ' |
Percentage of revenue accounted by major customers (in hundredths) | 24.00% | 24.00% | ' |
Percentage of costs and estimated earnings in excess of billings on uncompleted contracts accounted by major customers (in hundredths) | 18.00% | ' | 17.00% |
Percentage of accounts receivable from major customers (in hundredths) | 20.00% | ' | 24.00% |
Customer C [Member] | ' | ' | ' |
Revenue, Major Customer [Line Items] | ' | ' | ' |
Percentage of revenue accounted by major customers (in hundredths) | 17.00% | 18.00% | ' |
Percentage of costs and estimated earnings in excess of billings on uncompleted contracts accounted by major customers (in hundredths) | 16.00% | ' | 16.00% |
Percentage of accounts receivable from major customers (in hundredths) | 12.00% | ' | 20.00% |
Customer D [Member] | ' | ' | ' |
Revenue, Major Customer [Line Items] | ' | ' | ' |
Percentage of costs and estimated earnings in excess of billings on uncompleted contracts accounted by major customers (in hundredths) | 9.00% | ' | 10.00% |