Document and Entity Information
Document and Entity Information - shares | 6 Months Ended | |
Jun. 30, 2018 | Jul. 31, 2018 | |
Document and Entity Information [Abstract] | ||
Entity Registrant Name | SERVOTRONICS INC /DE/ | |
Entity Central Index Key | 89,140 | |
Trading Symbol | svt | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Smaller Reporting Company | |
Entity Common Stock, Shares Outstanding | 2,582,833 | |
Document Type | 10-Q | |
Document Period End Date | Jun. 30, 2018 | |
Amendment Flag | false | |
Document Fiscal Year Focus | 2,018 | |
Document Fiscal Period Focus | Q2 |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Jun. 30, 2018 | Dec. 31, 2017 |
Current assets: | ||
Cash and cash equivalents | $ 3,199 | $ 4,707 |
Accounts receivable, net | 9,960 | 8,424 |
Inventories, net | 13,587 | 12,791 |
Prepaid income taxes | 149 | |
Other current assets | 429 | 249 |
Total current assets | 27,324 | 26,171 |
Property, plant and equipment, net | 11,502 | 11,021 |
Deferred income taxes | 409 | 409 |
Other non-current assets | 379 | 385 |
Total Assets | 39,614 | 37,986 |
Current liabilities: | ||
Current portion of long-term debt | 548 | 548 |
Current portion of capitalized lease obligations | 175 | 133 |
Dividend payable | 416 | |
Accounts payable | 2,546 | 1,377 |
Accrued employee compensation and benefits costs | 2,077 | 1,784 |
Accrued income taxes | 414 | |
Other accrued liabilities | 560 | 872 |
Total current liabilities | 6,322 | 5,128 |
Long-term debt | 2,771 | 2,950 |
Post retirement obligation | 1,799 | 1,743 |
Shareholders' equity: | ||
Common stock, par value $0.20; authorized 4,000,000 shares; issued 2,614,506 shares; outstanding 2,498,870 (2,308,315 - 2017) shares | 523 | 523 |
Capital in excess of par value | 14,192 | 14,171 |
Retained earnings | 16,325 | 15,709 |
Accumulated other comprehensive loss | (26) | (32) |
Employee stock ownership trust commitment | (662) | (662) |
Treasury stock, at cost 115,636 (183,983 - 2017) shares | (1,630) | (1,544) |
Total shareholders' equity | 28,722 | 28,165 |
Total Liabilities and Shareholders' Equity | $ 39,614 | $ 37,986 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parentheticals) - $ / shares | Jun. 30, 2018 | Dec. 31, 2017 |
Statement Of Financial Position [Abstract] | ||
Common stock, par value (in dollars per share) | $ 0.20 | $ 0.20 |
Common stock, shares authorized | 4,000,000 | 4,000,000 |
Common stock, shares issued | 2,614,506 | 2,614,506 |
Common stock, shares outstanding | 2,498,870 | 2,308,315 |
Treasury stock, shares | 115,636 | 183,983 |
CONSOLIDATED STATEMENTS OF INCO
CONSOLIDATED STATEMENTS OF INCOME (Unaudited) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | |
Income Statement [Abstract] | ||||
Revenue | $ 11,946 | $ 9,616 | $ 22,505 | $ 18,719 |
Cost, expenses and other (income): | ||||
Costs of goods sold, inclusive of depreciation and amortization | 9,022 | 7,830 | 17,531 | 15,074 |
Selling, general and administrative | 2,013 | 1,622 | 3,641 | 3,462 |
Interest expense | 27 | 15 | 52 | 38 |
Total expenses | 11,062 | 9,467 | 21,224 | 18,574 |
Income before income tax provision | 884 | 149 | 1,281 | 145 |
Income tax provision | 177 | 44 | 243 | 14 |
Net income | $ 707 | $ 105 | $ 1,038 | $ 131 |
Basic | ||||
Net Income per share (in dollars per share) | $ 0.31 | $ 0.05 | $ 0.46 | $ 0.06 |
Diluted | ||||
Net income per share (in dollars per share) | $ 0.30 | $ 0.05 | $ 0.45 | $ 0.06 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) - USD ($) $ in Thousands | 6 Months Ended | |
Jun. 30, 2018 | Jun. 30, 2017 | |
Cash flows related to operating activities: | ||
Net Income | $ 1,038 | $ 131 |
Adjustments to reconcile net income to net cash used in operating activities: | ||
Depreciation and amortization | 502 | 428 |
Loss on disposal of property | 1 | 16 |
Stock based compensation | 85 | 107 |
Increase in inventory reserve | 54 | 12 |
Increase in warranty reserve | 217 | 1 |
Change in assets and liabilities: | ||
Accounts receivable | (1,536) | 141 |
Inventories | (850) | 211 |
Prepaid income taxes | (149) | (24) |
Other current assets | (180) | 9 |
Other non-current assets | 6 | (378) |
Accounts payable | 1,169 | (512) |
Accrued employee compensation and benefit costs | 293 | 66 |
Other accrued liabilities | (473) | (96) |
Accrued income taxes | (414) | (193) |
Net cash used in operating activities | (237) | (81) |
Cash flows related to investing activities: | ||
Capital expenditures - property, plant and equipment | (984) | (571) |
Proceeds from sale of assets | 180 | |
Net cash used in investing activities | (984) | (391) |
Cash flows related to financing activities: | ||
Principal payments on long-term debt | (274) | (295) |
Principal payments on capital lease obligations | (73) | |
Proceeds from capital leases | 210 | |
Purchase of treasury shares | (150) | (160) |
Net cash used in financing activities | (287) | (455) |
Net decrease in cash and cash equivalents | (1,508) | (927) |
Cash and cash equivalents at beginning of period | 4,707 | 3,515 |
Cash and cash equivalents at end of period | $ 3,199 | $ 2,588 |
Basis of Presentation
Basis of Presentation | 6 Months Ended |
Jun. 30, 2018 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Basis of Presentation | 1. Basis of Presentation The accompanying unaudited consolidated financial statements have been prepared in accordance with United States generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Article 8 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by United States generally accepted accounting principles for complete financial statements. The accompanying consolidated financial statements reflect all adjustments which are, in the opinion of management, necessary for a fair statement of the results for the interim periods presented. All such adjustments are of a normal recurring nature. Operating results for the three and six months ended June 30, 2018 are not necessarily indicative of the results that may be expected for the year ending December 31, 2018. The consolidated financial statements should be read in conjunction with the 2017 annual report and the notes thereto. |
Business Description and Summar
Business Description and Summary of Significant Accounting Policies | 6 Months Ended |
Jun. 30, 2018 | |
Accounting Policies [Abstract] | |
Business Description and Summary of Significant Accounting Policies | 2. Business Description and Summary of Significant Accounting Policies Business Description Servotronics, Inc. and its subsidiaries design, manufacture and market advanced technology products consisting primarily of control components, and consumer products consisting of knives and various types of cutlery and other edged products. Principles of Consolidation The consolidated financial statements include the accounts of Servotronics, Inc. and its wholly-owned subsidiaries (the “Company”). All intercompany balances and transactions have been eliminated upon consolidation. Cash and Cash Equivalents The Company considers cash and cash equivalents to include all cash accounts and short-term investments purchased with an original maturity of three months or less. Accounts Receivable The Company grants credit to substantially all of its customers and carries its accounts receivable at original invoice amount less an allowance for doubtful accounts. On a periodic basis, the Company evaluates its accounts receivable and establishes an allowance for doubtful accounts based on history of past write-offs, collections, and current credit conditions. The allowance for doubtful accounts amounted to approximately $149,000 at June 30, 2018 and December 31, 2017. The Company does not accrue interest on past due receivables. Revenue Recognition Revenues are recognized at the time of shipment of goods, transfer of title and customer acceptance, as required. Our revenue transactions generally consist of a single performance obligation to transfer contracted goods and are not accounted for under industry-specific guidance. Purchase orders generally include specific terms relative to quantity, item description, specifications, price, customer responsibility for in-process costs, delivery schedule, shipping point, payment and other standard terms and conditions of purchase. Service sales, principally representing repair, are recognized at the time of shipment of goods. The costs incurred for nonrecurring engineering, development and repair activities of our products under agreements with commercial customers are expensed as incurred. Subsequently, the revenue is recognized as products are delivered to the customers with the approval by the customers. Revenue is recognized at an amount that reflects the consideration to which the Company expects to be entitled in exchange for transferring goods and services to a customer. The Company determines revenue recognition using the following five steps: (1) identify the contract(s) with a customer; (2) identify the performance obligations in the contract; (3) determine the transaction price, (4) allocate the transaction price to the performance obligations in the contract; and (5) recognize revenue when the company satisfies a performance obligation. Revenue excludes taxes assessed by a governmental authority that are both imposed on and concurrent with a specific revenue-producing transaction and collected by the Company from a customer (e.g., sales and use taxes). Revenue includes payments for shipping activities that are reimbursed by the customer to the Company. Revenue on a significant portion of our contracts is currently recognized at the time of shipment of goods, transfer of title and customer acceptance, as required. Our revenue transactions generally consist of a single performance obligation to transfer contracted goods and are not accounted for under industry-specific guidance. Performance obligations are satisfied as of a point in time. Performance obligations are supported by contracts with customers, providing a framework for the nature of the distinct goods, services or bundle of goods and services. The timing of satisfying the performance obligation is typically indicated by the terms of the contract. As a significant portion of the Company’s revenue are recognized at the time of shipment, transfer of title and customer acceptance, there is no significant judgment applied to determine the timing of the satisfaction of performance obligations or transaction price. The timing of satisfaction of our performance obligations does not significantly vary from the typical timing of payment. The Company generally receives payment for these contracts within the payment terms negotiated and agreed upon by each customer contract. Warranty and repair obligations are assessed on all returns. Revenue is not recorded on any warranty returns. Revenue is recognized on repair returns, covered under a customer contract, at the contractual price upon shipment to the customer. The Company elected the practical expedient allowing it to not recognize as a contract asset the commission paid to its salesforce on the sale of its products as an incremental cost of obtaining a contract with a customer but rather recognize such commission as expense when incurred as the amortization period of the asset that the Company would have otherwise recognized is one year or less. Inventories Inventories are stated at the lower of cost or net realizable value. Cost includes all costs incurred to bring each product to its present location and condition. Market provisions in respect of lower of cost or market adjustments and inventory on hand that is greater than the expected amount to be used that is greater than one year are applied to the gross value of the inventory through a reserve of approximately $1,492,000 and $1,438,000 at June 30, 2018 and December 31, 2017, respectively. Pre-production and start-up costs are expensed as incurred. The purchase of suppliers’ minimum economic quantities of material such as steel, etc. may result in a purchase of quantities exceeding one year of customer requirements. Also, in order to maintain a reasonable and/or agreed to lead time, certain larger quantities of other product support items may have to be purchased and may result in over one year’s supply. These amounts are not included in the inventory reserve discussed above. Shipping and Handling Costs Shipping and handling costs are classified as a component of cost of goods sold. Property, Plant and Equipment Property, plant and equipment is carried at cost; expenditures for new facilities and equipment and expenditures which substantially increase the useful lives of existing plant and equipment are capitalized; expenditures for maintenance and repairs are expensed as incurred. Upon disposal of properties, the related cost and accumulated depreciation are removed from the respective accounts and any profit or loss on disposition is included in income. Depreciation is provided on the basis of estimated useful lives of depreciable properties, primarily by the straight-line method for financial statement purposes and by accelerated methods for income tax purposes. Depreciation expense includes the amortization of capital lease assets. The estimated useful lives of depreciable properties are generally as follows: Buildings and improvements 5-40 years Machinery and equipment 5-20 years Tooling 3-5 years Income Taxes The Company recognizes deferred tax assets and liabilities for the expected future tax consequences of temporary differences between the carrying amounts and the tax basis of assets and liabilities, as well as operating loss and credit carryforwards. The Company and its subsidiaries file a consolidated federal income tax return, combined New York and Texas state income tax returns and separate Pennsylvania and Arkansas income tax returns. The Company’s practice is to recognize interest and/or penalties related to income tax matters in income tax expense. The Company did not have any accrued interest or penalties included in its consolidated balance sheets at June 30, 2018 or December 31, 2017, and did not recognize any interest and/or penalties in its consolidated statements of income during the six months ended June 30, 2018 and 2017. The Company did not have any material uncertain tax positions or unrecognized tax benefits or obligations as of June 30, 2018 and December 31, 2017. The 2014 through 2016 federal and state tax returns remain subject to examination. Supplemental Cash Flow Information Income taxes paid during the six months ended June 30, 2018 and 2017 amounted to approximately $775,000 and $165,000, respectively. Interest paid amounted to approximately $ , respectively, during the six months ended June 30, 2018 and 2017. Employee Stock Ownership Plan Contributions to the employee stock ownership plan are determined annually by the Company according to plan formula. Impairment of Long-Lived Assets The Company reviews long-lived assets for impairment annually or whenever events or changes in business circumstances indicate that the carrying amount of the assets may not be fully recoverable based on undiscounted future operating cash flow analyses. If an impairment is determined to exist, any related impairment loss is calculated based on fair value. Impairment losses on assets to be disposed of, if any, are based on the estimated proceeds to be received, less costs of disposal. The Company has determined that no impairment of long-lived assets existed at June 30, 2018 and December 31, 2017. Use of Estimates The preparation of the consolidated financial statements in conformity with U.S. generally accepted accounting principles (GAAP) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Reclassifications Certain balances, as previously reported, were reclassified to conform with classifications adopted in the current period. Research and Development Costs Research and development costs are expensed as incurred. Concentration of Credit Risks Financial instruments that potentially subject the Company to concentration of credit risks principally consist of cash accounts in financial institutions. Although the accounts exceed the federally insured deposit amount, management does not anticipate nonperformance by the financial institutions. Fair Value of Financial Instruments The carrying amount of cash and cash equivalents, accounts receivable, accounts payable and accrued expenses are reasonable estimates of their fair value due to their short maturity. Based on variable interest rates and the borrowing rates currently available to the Company for loans similar to its long-term debt, the fair value approximates its carrying amount. Recent Accounting Pronouncements Adopted Effective January 1, 2018 the Company adopted ASU 2017-07, “Compensation-Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost,” issued by the Financial Accounting Standards Board (FASB) which requires employers to present the service cost component of net periodic benefit cost in the same income statement line item(s) as other employee compensation costs arising from services rendered during the period. Only the service cost component will be eligible for capitalization in assets. The other components of net periodic benefit cost will be presented separately from the line item(s) that includes the service cost and outside of any subtotal of operating income, if one is presented. ASU 2017-07 allows a practical expedient that permits an entity to use amounts disclosed in its pension and other post retirement requirements. The Company adopted this guidance during the reporting period. The reporting of the annual service costs is expected to be immaterial. Effective January 1, 2018, the Company adopted ASU 2014-09, "Revenue from Contracts with Customers (Topic 606)" using the modified retrospective method. The new revenue recognition standard outlines a comprehensive model for companies to use in accounting for revenue arising from contracts with customers and supersedes most current revenue recognition guidance, including industry-specific guidance. Topic 606 also requires significantly expanded disclosure requirements and applied the standard to all contracts that were not completed as of January 1, 2018. There was no cumulative effect of the adoption recognized. We have obtained an understanding of the new standard and determined that the Company will retain much of the same accounting treatment used to recognize revenue as compared to current standards. See above for the Company’s updated revenue recognition accounting policy. Effective January 1, 2018, the Company adopted Recent Accounting Pronouncements Not Yet Adopted In February 2016, the FASB issued ASU 2016-02, “Leases (Topic 842).” There are elements of the new standard that could impact almost all entities to some extent, although the lessees will likely see the most significant changes. Lessee will need to recognize virtually all of their leases on the balance sheet, by recording the right-of-use asset and a lease liability. Public business entities are required to adopt the new leasing standard for fiscal years, and interim period within those fiscal years, beginning December 15, 2018. For calendar year-end public companies, this means an adoption date of January 1, 2019. Early adoption is permitted. The Company does not believe the adoption will have a material impact on the financial statements and disclosures. |
Inventories
Inventories | 6 Months Ended |
Jun. 30, 2018 | |
Inventory Disclosure [Abstract] | |
Inventories | 3. Inventories June 30, December 31, 2018 2017 ($000's omitted) Raw material and common parts $ 7,500 $ 8,375 Work-in-process 4,568 2,940 Finished goods 3,011 2,914 15,079 14,229 Less inventory reserve (1,492 ) (1,438 ) Total inventories $ 13,587 $ 12,791 |
Property, Plant and Equipment
Property, Plant and Equipment | 6 Months Ended |
Jun. 30, 2018 | |
Property, Plant and Equipment [Abstract] | |
Property, Plant and Equipment | 4. Property, Plant and Equipment June 30, December 31, 2018 2017 ($000's omitted) Land $ 7 $ 7 Buildings 10,384 10,288 Machinery, equipment and tooling 18,007 17,249 Construction in progress 776 665 29,174 28,209 Less accumulated depreciation (17,672 ) (17,188 ) $ 11,502 $ 11,021 As previously disclosed, the Company through a wholly-owned subsidiary, entered into a contract to sell unused commercial real property in Franklinville, New York for approximately $180,000. The sale transaction closed on March 9, 2017 and the wholly-owned subsidiary recognized a de minimis loss on the sale. Depreciation and amortization expense amounted to approximately $502,00 and $ for the six months ended June 30, 2018 and 2017, respectively. Depreciation and amortization expense amounted to approximately $244,000 and $218,000 for the 3 months ended June 30, 2018 and 2017, respectively. Depreciation expense amounted to approximately $465,00 and $ for the six months ended June 30, 2018 and 2017, respectively. Depreciation expense amounted to approximately $224,000 and $215,000 for the 3 months ended June 30, 2018 and 2017, respectively. Amortization expense primarily related to capital leases amounted to approximately $37,000 and $7,000 for the six months ended June 30, 2018 and June 30, 2017, respectively. Amortization expense amounted to approximately $20,000 and $3,000 for the three months ended June 30, 2018 and June 30, 2017. The Company believes that it maintains property and casualty insurance in amounts adequate for the risk and nature of its assets and operations and which are generally customary in its industry. As of June 30, 2018, there is approximately $776,000 ($665,000 – 2017) of construction in progress included in property, plant and equipment all of which is related to capital projects, primarily the implementation costs for the enterprise resource planning software that will be used as an integral part of the product in the process at the Advanced Technology Group (“ATG”) and the Consumer Products Group (“CPG”). See Note 7, Commitments and Contingencies, for more information on anticipated capital expenditures. |
Long-Term Debt
Long-Term Debt | 6 Months Ended |
Jun. 30, 2018 | |
Debt Disclosure [Abstract] | |
Long-Term Debt | 5. Long-Term Debt June 30, December 31, 2018 2017 ($000's omitted) Term loan payable to a financial institution; Interest rate option of bank prime or Libor plus 1.4% (3.382% as of June 30, 2018), monthly prinicipal payments of $21,833 through 2021 with a balloon payment of $786,000 due December 1, 2021 $ 1,703 $ 1,835 Term loan payable to a financial institution; Interest rate option of bank prime or Libor plus 1.4% (3.382% as of June 30, 2018), monthly prinicipal payments of $23,810 through December 1, 2021 1,000 1,142 Capital lease obligations; Interest rate fixed for term of each funding based upon the Lender's lease pricing at time of funding. (Interest rate/factor 1.822758% - 1.869304% at time of funding with principal payments made over 60 months) 791 654 3,494 3,631 Less current portion (723 ) (681 ) $ 2,771 $ 2,950 The Company has a $2,000,000 line of credit on which there was no balance outstanding at June 30, 2018 and December 31, 2017. The term loans are secured by all personal property of the Company with the exception of certain equipment that was purchased from proceeds of government grants. Certain lenders require the Company to comply with debt covenants as described in the specific loan documents, including a debt service ratio. At June 30, 2018 and December 31, 2017 the Company was in compliance with these covenants. The Company established a lease line of credit for equipment financing in the amount of $1,000,000 available until June 28, 2018. This line is non-revolving and non-renewable. The lease term for equipment covered by the lease line of credit is 60 months, with a $1 buy out at the end of the term. Monthly payments will be fixed for the term of each funding based upon the Lender’s lease pricing in effect at the time of such funding. Principal payments for the capital lease obligations are expected for 2018 and for each of the next five years: June 30, 2018 ($000's omitted) 2018 $ 193 2019 193 2020 193 2021 193 2022 100 Total minimum lease payments 872 Less amount representing interest (81 ) Present value of net minimum lease payment 791 Less current portion (175 ) $ 616 Each lease is secured by the underlying equipment. There was approximately $791,000 outstanding at June 30, 2018. |
Shareholders' Equity
Shareholders' Equity | 6 Months Ended |
Jun. 30, 2018 | |
Equity [Abstract] | |
Shareholders' Equity | 6. Shareholders’ Equity Common Stock ($000's omitted except for share data) Accumulated Number Capital in Other Total of shares excess of Retained Treasury Comprehensive shareholders' issued Amount par value earnings ESOT stock Loss equity Balance at December 31, 2017 2,614,506 $ 523 $ 14,171 $ 15,709 $ (662 ) $ (1,544 ) $ (32 ) $ 28,165 Net income 1,038 1,038 Purchase of treasury shares - - - - - (150 ) - (150 ) Cash dividend - - - (416 ) - - - (416 ) Stock based compensation, net of tax benefit - - 21 (6 ) - 64 6 85 Balance at June 30, 2018 2,614,506 $ 523 $ 14,192 $ 16,325 $ (662 ) $ (1,630 ) $ (26 ) $ 28,722 The Company’s Board of Directors authorized the purchase of up to 450,000 shares of its common stock in the open market or in privately negotiated transactions. As of June 30, 2018, the Company has purchased 352,680 shares and there remains 97,320 shares available to purchase under this program. There were 3,350 shares purchased by the Company during the six month period ended June 30, 2018. On April 18, 2013, the Company issued 165,000 shares of restricted stock to Executive Officers of the Company under the Company's 2012 Long-Term Incentive Plan that was approved by the shareholders at the 2012 Annual Meeting of Shareholders. This plan authorizes the issuance of up to 300,000 shares. The restricted share awards vest over four year periods between January 2014 and January 2017; however, these shares have voting rights and accrue dividends prior to vesting. The aggregate amount of expense to the Company, measured based on grant date fair value ($1,336,500) was recognized over the four year requisite service period. On April 11, 2016, the Company issued 51,000 shares of restricted stock to Executive Officers and certain key management of the Company under the Company’s 2012 Long-Term Incentive Plan. The restricted share awards have varying vesting periods between January 2017 and January 2018; however, these shares have voting rights and accrue dividends prior to vesting. The aggregate amount of expense to the Company, measured based on grant date fair value ($406,000) and was recognized over the requisite service period. On January 1, 2018, 28,500 shares of restricted stock vested of which shares were withheld and repurchased by the Company for approximately $117,000 to satisfy statutory minimum withholding tax requirements for those participants who elected this option as permitted under the Company’s 2012 Long-Term Incentive Plan. Additionally, upon the death of Servotronics’ Chairman of the Board and Chief Executive Officer (CEO) in August 2017, 15,000 restricted shares awarded to the Chairman and CEO vested. On May 25, 2018, the Company issued 78,750 shares of restricted stock to Executive Officers and certain key management of the Company under the Company’s 2012 Long-Term Incentive Plan. The restricted share awards have varying vesting periods between January 2019 and January 2021; however, these shares have voting rights and accrue dividends prior to vesting. The accrued dividends are paid upon vesting of the restricted shares. The aggregate amount of expense to the Company, measured based on grant date fair value is expected to be approximately $735,000 and will be recognized over the requisite service period. On May 25, 2018, the Company revised its director compensation policy pursuant to which non-employee directors receive a portion of their annual retainer in the form of restricted stock under the Company’s 2012 Long-Term Incentive Plan. An aggregate of 4,288 restricted shares were issued that vest quarterly over a twelve month service period. These shares have voting rights and accrue dividends that are paid upon vesting. The aggregate amount of expense to the Company, measured based on the grant date fair value is expected to be approximately $40,000 and will be recognized over the requisite service period. Included in the six months ended June 30, 2018 and 2017 is approximately $85,000 and $107,000, respectively, of stock-based compensation expense related to the restrictive share awards. On May 18, 2018 the Company announced that its Board of Directors declared a $0.16 per share cash dividend. The dividend was subsequently paid on July 16, 2018 to shareholders of record on June 30, 2018 and was approximately $416,000 in the aggregate. These dividends do not represent that the Company will pay dividends on a regular or scheduled basis. The amount is recorded in dividends payable and as a reduction to retained earnings on the accompanying consolidated balance sheet. Earnings Per Share Basic earnings per share is computed by dividing net earnings by the weighted average number of shares outstanding during the period. The weighted average number of common shares outstanding does not include any potentially dilutive securities or any unvested restricted shares of common stock. These unvested restricted shares, although classified as issued and outstanding, are considered forfeitable until the restrictions lapse and will not be included in the basic EPS calculation until the shares are vested. Diluted earnings per share is computed by dividing net earnings by the weighted average number of shares outstanding during the period plus the number of shares of common stock that would be issued assuming all contingently issuable shares having a dilutive effect on the earnings per share that were outstanding for the period. Incremental shares from assumed conversions are calculated as the number of shares that would be issued, net of the number of shares that could be purchased in the marketplace with the cash received upon stock option exercise. The dilutive effect of unvested restrictive stock is determined using the treasury stock method. Three Months Ended Six Months Ended June 30, June 30, 2018 2017 2018 2017 ($000's omitted except per share data) Net Income $ 707 $ 105 $ 1,038 $ 131 Weighted average common shares outstanding (basic) 2,267 2,251 2,241 2,251 Unvested restricted stock 83 43 83 43 Weighted average common shares outstanding (diluted) 2,350 2,294 2,324 2,294 Basic Net income per share $ 0.31 $ 0.05 $ 0.46 $ 0.06 Diluted Net income per share $ 0.30 $ 0.05 $ 0.45 $ 0.06 |
Commitments and Contingencies
Commitments and Contingencies | 6 Months Ended |
Jun. 30, 2018 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | 7. Commitments and Contingencies Post retirement obligation. The Company provides certain post-employment health and life insurance benefits for Kenneth Trbovich. Upon retirement and after attaining at least the age of 65, the Company will pay for the retired Executive’s and dependent’s health benefits and will continue the Company-provided life insurance offered at the time of retirement. The retiree’s health insurance benefits ceases upon the death of the retired executive. Approximately $792,000 and $736,000 has been accrued as of June 30, 2018 and December 31, 2017, respectively, and is reflected as Post Retirement Obligation in the accompanying balance sheet. Facility Expansion. The Company’s Consumer Products Group (“CPG”) was awarded a $300,000 grant from Cattaraugus County Industrial Development Agency (“CCIDA”) on March 13, 2014. The grant was used towards new manufacturing equipment in connection with the proposed expansion project. As part of the terms of the Grant Contract with CCIDA, the Company’s CPG has agreed to maintain certain employment levels for a period of five years from the date of the agreement. If the employment levels are not maintained, the Company will be required to repay the grant proceeds on a prorated basis. The Company has maintained the required employment levels as of June 30, 2018. |
Litigation
Litigation | 6 Months Ended |
Jun. 30, 2018 | |
Litigation [Abstract] | |
Litigation | 8. Litigation Litigation. There are no other legal proceedings currently pending by or against the Company other than ordinary routine litigation incidental to the business which is not expected to have a material adverse effect on the business or earnings of the Company. |
Related Party Transactions
Related Party Transactions | 6 Months Ended |
Jun. 30, 2018 | |
Related Party Transactions [Abstract] | |
Related Party Transactions | 9. Related Party Transactions The Company paid legal fees and disbursements of approximately $95,000 and $144,000 in the six month period ended June 30, 2018 and 2017, respectively, for services provided by a law firm that is owned by a member of the Company’s Board of Directors. Legal fees paid for the three month period ended June 30, 2018 and 2017 amounted to approximately $48,000 and $94,000, respectively. Additionally, the Company had accrued unbilled legal fees at June 30, 2018 and 2017 of approximately $32,000 and $23,000, respectively, with this firm. |
Business Segments
Business Segments | 6 Months Ended |
Jun. 30, 2018 | |
Segment Reporting [Abstract] | |
Business Segments | 10. Business Segments The Company operates in two business segments, ATG and CPG. The Company’s reportable segments are strategic business units that offer different products and services. The segments are composed of separate corporations and are managed separately. Operations in ATG primarily involve the design, manufacture, and marketing of servo-control components (i.e., torque motors, control valves, actuators, etc.) for government, commercial and industrial applications. CPG’s operations involve the design, manufacture and marketing of a variety of cutlery products for use by consumers and government agencies. The Company derives its primary sales revenue from domestic customers, although a portion of finished products are for foreign end use. As of June 30, 2018, the Company had identifiable assets of approximately $39,614,000 ($37,986,000 – December 31, 2017) of which approximately $28,666,000 ($26,331,000 – December 31, 2017) was for ATG and approximately $10,948,000 ($11,655,000 – December 31, 2017) was for CPG. Information regarding the Company’s operations in these segments is summarized as follows: ($000's omitted) ATG CPG Consolidated Six Months Ended Six Months Ended Six Months Ended June 30, June 30, June 30, 2018 2017 2018 2017 2018 2017 Revenues from unaffiliated customers $ 19,389 $ 15,050 $ 3,116 $ 3,669 $ 22,505 $ 18,719 Cost of goods sold, inclusive of depreciation and amortization (14,635 ) (11,628 ) (2,896 ) (3,446 ) (17,531 ) (15,074 ) Selling, general and administrative (2,655 ) (2,506 ) (986 ) (956 ) (3,641 ) (3,462 ) Interest expense (35 ) (23 ) (17 ) (15 ) (52 ) (38 ) Income (loss) before income tax provision (benefits) 2,064 893 (783 ) (748 ) 1,281 145 Income tax provision (benefits) 392 239 (149 ) (225 ) 243 14 Net income (loss) $ 1,672 $ 654 $ (634 ) $ (523 ) $ 1,038 $ 131 Capital expenditures $ 845 $ 495 $ 139 $ 76 $ 984 $ 571 ($000's omitted) ATG CPG Consolidated Three Months Ended Three Months Ended Three Months Ended June 30, June 30, June 30, 2018 2017 2018 2017 2018 2017 Revenues from unaffiliated customers $ 10,274 $ 7,630 $ 1,672 $ 1,986 $ 11,946 $ 9,616 Cost of goods sold, inclusive of depreciation and amortization (7,552 ) (6,024 ) (1,470 ) (1,806 ) (9,022 ) (7,830 ) Selling, general and administrative (1,426 ) (1,173 ) (587 ) (449 ) (2,013 ) (1,622 ) Interest expense (18 ) (8 ) (9 ) (7 ) (27 ) (15 ) Income (loss) before income tax provision (benefits) 1,278 425 (394 ) (276 ) 884 149 Income tax provision (benefits) 262 127 (85 ) (83 ) 177 44 Net income (loss) $ 1,016 $ 298 $ (309 ) $ (193 ) $ 707 $ 105 Capital expenditures $ 440 $ 314 $ 33 $ 74 $ 473 $ 388 |
Subsequent Events
Subsequent Events | 6 Months Ended |
Jun. 30, 2018 | |
Subsequent Events [Abstract] | |
Subsequent Events | 11. Subsequent Events None. |
Business Description and Summ17
Business Description and Summary of Significant Accounting Policies (Policies) | 6 Months Ended |
Jun. 30, 2018 | |
Accounting Policies [Abstract] | |
Principles of Consolidation | Principles of Consolidation The consolidated financial statements include the accounts of Servotronics, Inc. and its wholly-owned subsidiaries (the “Company”). All intercompany balances and transactions have been eliminated upon consolidation. |
Cash and Cash Equivalents | Cash and Cash Equivalents The Company considers cash and cash equivalents to include all cash accounts and short-term investments purchased with an original maturity of three months or less. |
Accounts Receivable | Accounts Receivable The Company grants credit to substantially all of its customers and carries its accounts receivable at original invoice amount less an allowance for doubtful accounts. On a periodic basis, the Company evaluates its accounts receivable and establishes an allowance for doubtful accounts based on history of past write-offs, collections, and current credit conditions. The allowance for doubtful accounts amounted to approximately $149,000 at June 30, 2018 and December 31, 2017. The Company does not accrue interest on past due receivables. |
Revenue Recognition | Revenue Recognition Revenues are recognized at the time of shipment of goods, transfer of title and customer acceptance, as required. Our revenue transactions generally consist of a single performance obligation to transfer contracted goods and are not accounted for under industry-specific guidance. Purchase orders generally include specific terms relative to quantity, item description, specifications, price, customer responsibility for in-process costs, delivery schedule, shipping point, payment and other standard terms and conditions of purchase. Service sales, principally representing repair, are recognized at the time of shipment of goods. The costs incurred for nonrecurring engineering, development and repair activities of our products under agreements with commercial customers are expensed as incurred. Subsequently, the revenue is recognized as products are delivered to the customers with the approval by the customers. Revenue is recognized at an amount that reflects the consideration to which the Company expects to be entitled in exchange for transferring goods and services to a customer. The Company determines revenue recognition using the following five steps: (1) identify the contract(s) with a customer; (2) identify the performance obligations in the contract; (3) determine the transaction price, (4) allocate the transaction price to the performance obligations in the contract; and (5) recognize revenue when the company satisfies a performance obligation. Revenue excludes taxes assessed by a governmental authority that are both imposed on and concurrent with a specific revenue-producing transaction and collected by the Company from a customer (e.g., sales and use taxes). Revenue includes payments for shipping activities that are reimbursed by the customer to the Company. Revenue on a significant portion of our contracts is currently recognized at the time of shipment of goods, transfer of title and customer acceptance, as required. Our revenue transactions generally consist of a single performance obligation to transfer contracted goods and are not accounted for under industry-specific guidance. Performance obligations are satisfied as of a point in time. Performance obligations are supported by contracts with customers, providing a framework for the nature of the distinct goods, services or bundle of goods and services. The timing of satisfying the performance obligation is typically indicated by the terms of the contract. As a significant portion of the Company’s revenue are recognized at the time of shipment, transfer of title and customer acceptance, there is no significant judgment applied to determine the timing of the satisfaction of performance obligations or transaction price. The timing of satisfaction of our performance obligations does not significantly vary from the typical timing of payment. The Company generally receives payment for these contracts within the payment terms negotiated and agreed upon by each customer contract. Warranty and repair obligations are assessed on all returns. Revenue is not recorded on any warranty returns. Revenue is recognized on repair returns, covered under a customer contract, at the contractual price upon shipment to the customer. The Company elected the practical expedient allowing it to not recognize as a contract asset the commission paid to its salesforce on the sale of its products as an incremental cost of obtaining a contract with a customer but rather recognize such commission as expense when incurred as the amortization period of the asset that the Company would have otherwise recognized is one year or less. |
Inventories | Inventories Inventories are stated at the lower of cost or net realizable value. Cost includes all costs incurred to bring each product to its present location and condition. Market provisions in respect of lower of cost or market adjustments and inventory on hand that is greater than the expected amount to be used that is greater than one year are applied to the gross value of the inventory through a reserve of approximately $1,492,000 and $1,438,000 at June 30, 2018 and December 31, 2017, respectively. Pre-production and start-up costs are expensed as incurred. The purchase of suppliers’ minimum economic quantities of material such as steel, etc. may result in a purchase of quantities exceeding one year of customer requirements. Also, in order to maintain a reasonable and/or agreed to lead time, certain larger quantities of other product support items may have to be purchased and may result in over one year’s supply. These amounts are not included in the inventory reserve discussed above. |
Shipping and Handling Costs | Shipping and Handling Costs Shipping and handling costs are classified as a component of cost of goods sold. |
Property, Plant and Equipment | Property, Plant and Equipment Property, plant and equipment is carried at cost; expenditures for new facilities and equipment and expenditures which substantially increase the useful lives of existing plant and equipment are capitalized; expenditures for maintenance and repairs are expensed as incurred. Upon disposal of properties, the related cost and accumulated depreciation are removed from the respective accounts and any profit or loss on disposition is included in income. Depreciation is provided on the basis of estimated useful lives of depreciable properties, primarily by the straight-line method for financial statement purposes and by accelerated methods for income tax purposes. Depreciation expense includes the amortization of capital lease assets. The estimated useful lives of depreciable properties are generally as follows: Buildings and improvements 5-40 years Machinery and equipment 5-20 years Tooling 3-5 years |
Income Taxes | Income Taxes The Company recognizes deferred tax assets and liabilities for the expected future tax consequences of temporary differences between the carrying amounts and the tax basis of assets and liabilities, as well as operating loss and credit carryforwards. The Company and its subsidiaries file a consolidated federal income tax return, combined New York and Texas state income tax returns and separate Pennsylvania and Arkansas income tax returns. The Company’s practice is to recognize interest and/or penalties related to income tax matters in income tax expense. The Company did not have any accrued interest or penalties included in its consolidated balance sheets at June 30, 2018 or December 31, 2017, and did not recognize any interest and/or penalties in its consolidated statements of income during the six months ended June 30, 2018 and 2017. The Company did not have any material uncertain tax positions or unrecognized tax benefits or obligations as of June 30, 2018 and December 31, 2017. The 2014 through 2016 federal and state tax returns remain subject to examination. |
Supplemental Cash Flow Information | Supplemental Cash Flow Information Income taxes paid during the six months ended June 30, 2018 and 2017 amounted to approximately $775,000 and $165,000, respectively. Interest paid amounted to approximately $ , respectively, during the six months ended June 30, 2018 and 2017. |
Employee Stock Ownership Plan | Employee Stock Ownership Plan Contributions to the employee stock ownership plan are determined annually by the Company according to plan formula. |
Impairment of Long-Lived Assets | Impairment of Long-Lived Assets The Company reviews long-lived assets for impairment annually or whenever events or changes in business circumstances indicate that the carrying amount of the assets may not be fully recoverable based on undiscounted future operating cash flow analyses. If an impairment is determined to exist, any related impairment loss is calculated based on fair value. Impairment losses on assets to be disposed of, if any, are based on the estimated proceeds to be received, less costs of disposal. The Company has determined that no impairment of long-lived assets existed at June 30, 2018 and December 31, 2017. |
Use of Estimates | Use of Estimates The preparation of the consolidated financial statements in conformity with U.S. generally accepted accounting principles (GAAP) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. |
Reclassifications | Reclassifications Certain balances, as previously reported, were reclassified to conform with classifications adopted in the current period. |
Research and Development Costs | Research and Development Costs Research and development costs are expensed as incurred. |
Concentration of Credit Risks | Concentration of Credit Risks Financial instruments that potentially subject the Company to concentration of credit risks principally consist of cash accounts in financial institutions. Although the accounts exceed the federally insured deposit amount, management does not anticipate nonperformance by the financial institutions. |
Fair Value of Financial Instruments | Fair Value of Financial Instruments The carrying amount of cash and cash equivalents, accounts receivable, accounts payable and accrued expenses are reasonable estimates of their fair value due to their short maturity. Based on variable interest rates and the borrowing rates currently available to the Company for loans similar to its long-term debt, the fair value approximates its carrying amount. |
Recent Accounting Pronouncements Adopted | Recent Accounting Pronouncements Adopted Effective January 1, 2018 the Company adopted ASU 2017-07, “Compensation-Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost,” issued by the Financial Accounting Standards Board (FASB) which requires employers to present the service cost component of net periodic benefit cost in the same income statement line item(s) as other employee compensation costs arising from services rendered during the period. Only the service cost component will be eligible for capitalization in assets. The other components of net periodic benefit cost will be presented separately from the line item(s) that includes the service cost and outside of any subtotal of operating income, if one is presented. ASU 2017-07 allows a practical expedient that permits an entity to use amounts disclosed in its pension and other post retirement requirements. The Company adopted this guidance during the reporting period. The reporting of the annual service costs is expected to be immaterial. Effective January 1, 2018, the Company adopted ASU 2014-09, "Revenue from Contracts with Customers (Topic 606)" using the modified retrospective method. The new revenue recognition standard outlines a comprehensive model for companies to use in accounting for revenue arising from contracts with customers and supersedes most current revenue recognition guidance, including industry-specific guidance. Topic 606 also requires significantly expanded disclosure requirements and applied the standard to all contracts that were not completed as of January 1, 2018. There was no cumulative effect of the adoption recognized. We have obtained an understanding of the new standard and determined that the Company will retain much of the same accounting treatment used to recognize revenue as compared to current standards. See above for the Company’s updated revenue recognition accounting policy. Effective January 1, 2018, the Company adopted Recent Accounting Pronouncements Not Yet Adopted In February 2016, the FASB issued ASU 2016-02, “Leases (Topic 842).” There are elements of the new standard that could impact almost all entities to some extent, although the lessees will likely see the most significant changes. Lessee will need to recognize virtually all of their leases on the balance sheet, by recording the right-of-use asset and a lease liability. Public business entities are required to adopt the new leasing standard for fiscal years, and interim period within those fiscal years, beginning December 15, 2018. For calendar year-end public companies, this means an adoption date of January 1, 2019. Early adoption is permitted. The Company does not believe the adoption will have a material impact on the financial statements and disclosures. |
Business Description and Summ18
Business Description and Summary of Significant Accounting Policies (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Accounting Policies [Abstract] | |
Schedule of property, plant and equipment estimated useful life | Buildings and improvements 5-40 years Machinery and equipment 5-20 years Tooling 3-5 years |
Inventories (Table)
Inventories (Table) | 6 Months Ended |
Jun. 30, 2018 | |
Inventory Disclosure [Abstract] | |
Schedule of inventories | June 30, December 31, 2018 2017 ($000's omitted) Raw material and common parts $ 7,500 $ 8,375 Work-in-process 4,568 2,940 Finished goods 3,011 2,914 15,079 14,229 Less inventory reserve (1,492 ) (1,438 ) Total inventories $ 13,587 $ 12,791 |
Property, Plant and Equipment (
Property, Plant and Equipment (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Property, Plant and Equipment [Abstract] | |
Schedule of property, plant and equipment | June 30, December 31, 2018 2017 ($000's omitted) Land $ 7 $ 7 Buildings 10,384 10,288 Machinery, equipment and tooling 18,007 17,249 Construction in progress 776 665 29,174 28,209 Less accumulated depreciation (17,672 ) (17,188 ) $ 11,502 $ 11,021 |
Long-Term Debt (Tables)
Long-Term Debt (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Debt Disclosure [Abstract] | |
Schedule of long-term debt | June 30, December 31, 2018 2017 ($000's omitted) Term loan payable to a financial institution; Interest rate option of bank prime or Libor plus 1.4% (3.382% as of June 30, 2018), monthly prinicipal payments of $21,833 through 2021 with a balloon payment of $786,000 due December 1, 2021 $ 1,703 $ 1,835 Term loan payable to a financial institution; Interest rate option of bank prime or Libor plus 1.4% (3.382% as of June 30, 2018), monthly prinicipal payments of $23,810 through December 1, 2021 1,000 1,142 Capital lease obligations; Interest rate fixed for term of each funding based upon the Lender's lease pricing at time of funding. (Interest rate/factor 1.822758% - 1.869304% at time of funding with principal payments made over 60 months) 791 654 3,494 3,631 Less current portion (723 ) (681 ) $ 2,771 $ 2,950 |
schedule of payments for capital lease obligations | June 30, 2018 ($000's omitted) 2018 $ 193 2019 193 2020 193 2021 193 2022 100 Total minimum lease payments 872 Less amount representing interest (81 ) Present value of net minimum lease payment 791 Less current portion (175 ) $ 616 |
Shareholders' Equity (Tables)
Shareholders' Equity (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Equity [Abstract] | |
Schedule of stockholders equity | Common Stock ($000's omitted except for share data) Accumulated Number Capital in Other Total of shares excess of Retained Treasury Comprehensive shareholders' issued Amount par value earnings ESOT stock Loss equity Balance at December 31, 2017 2,614,506 $ 523 $ 14,171 $ 15,709 $ (662 ) $ (1,544 ) $ (32 ) $ 28,165 Net income 1,038 1,038 Purchase of treasury shares - - - - - (150 ) - (150 ) Cash dividend - - - (416 ) - - - (416 ) Stock based compensation, net of tax benefit - - 21 (6 ) - 64 6 85 Balance at June 30, 2018 2,614,506 $ 523 $ 14,192 $ 16,325 $ (662 ) $ (1,630 ) $ (26 ) $ 28,722 |
Schedule of earnings per share | Three Months Ended Six Months Ended June 30, June 30, 2018 2017 2018 2017 ($000's omitted except per share data) Net Income $ 707 $ 105 $ 1,038 $ 131 Weighted average common shares outstanding (basic) 2,267 2,251 2,241 2,251 Unvested restricted stock 83 43 83 43 Weighted average common shares outstanding (diluted) 2,350 2,294 2,324 2,294 Basic Net income per share $ 0.31 $ 0.05 $ 0.46 $ 0.06 Diluted Net income per share $ 0.30 $ 0.05 $ 0.45 $ 0.06 |
Business Segments (Tables)
Business Segments (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Segment Reporting [Abstract] | |
Schedule of information regarding operations in business segment | ($000's omitted) ATG CPG Consolidated Six Months Ended Six Months Ended Six Months Ended June 30, June 30, June 30, 2018 2017 2018 2017 2018 2017 Revenues from unaffiliated customers $ 19,389 $ 15,050 $ 3,116 $ 3,669 $ 22,505 $ 18,719 Cost of goods sold, inclusive of depreciation and amortization (14,635 ) (11,628 ) (2,896 ) (3,446 ) (17,531 ) (15,074 ) Selling, general and administrative (2,655 ) (2,506 ) (986 ) (956 ) (3,641 ) (3,462 ) Interest expense (35 ) (23 ) (17 ) (15 ) (52 ) (38 ) Income (loss) before income tax provision (benefits) 2,064 893 (783 ) (748 ) 1,281 145 Income tax provision (benefits) 392 239 (149 ) (225 ) 243 14 Net income (loss) $ 1,672 $ 654 $ (634 ) $ (523 ) $ 1,038 $ 131 Capital expenditures $ 845 $ 495 $ 139 $ 76 $ 984 $ 571 ($000's omitted) ATG CPG Consolidated Three Months Ended Three Months Ended Three Months Ended June 30, June 30, June 30, 2018 2017 2018 2017 2018 2017 Revenues from unaffiliated customers $ 10,274 $ 7,630 $ 1,672 $ 1,986 $ 11,946 $ 9,616 Cost of goods sold, inclusive of depreciation and amortization (7,552 ) (6,024 ) (1,470 ) (1,806 ) (9,022 ) (7,830 ) Selling, general and administrative (1,426 ) (1,173 ) (587 ) (449 ) (2,013 ) (1,622 ) Interest expense (18 ) (8 ) (9 ) (7 ) (27 ) (15 ) Income (loss) before income tax provision (benefits) 1,278 425 (394 ) (276 ) 884 149 Income tax provision (benefits) 262 127 (85 ) (83 ) 177 44 Net income (loss) $ 1,016 $ 298 $ (309 ) $ (193 ) $ 707 $ 105 Capital expenditures $ 440 $ 314 $ 33 $ 74 $ 473 $ 388 |
Business Description and Summ24
Business Description and Summary of Significant Accounting Policies - Estimated useful lives of depreciable properties (Details) | 6 Months Ended |
Jun. 30, 2018 | |
Buildings and improvements | Minimum | |
Property, Plant and Equipment [Line Items] | |
Estimated useful lives of depreciable properties | 5 years |
Buildings and improvements | Maximum | |
Property, Plant and Equipment [Line Items] | |
Estimated useful lives of depreciable properties | 40 years |
Machinery and equipment | Minimum | |
Property, Plant and Equipment [Line Items] | |
Estimated useful lives of depreciable properties | 5 years |
Machinery and equipment | Maximum | |
Property, Plant and Equipment [Line Items] | |
Estimated useful lives of depreciable properties | 20 years |
Tooling | Minimum | |
Property, Plant and Equipment [Line Items] | |
Estimated useful lives of depreciable properties | 3 years |
Tooling | Maximum | |
Property, Plant and Equipment [Line Items] | |
Estimated useful lives of depreciable properties | 5 years |
Business Description and Summ25
Business Description and Summary of Significant Accounting Policies (Detail Textuals) - USD ($) | 6 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2017 | Dec. 31, 2017 | |
Accounting Policies [Abstract] | |||
Allowance for doubtful accounts | $ 149,000 | $ 149,000 | |
Inventory reserve | 1,492,000 | $ 1,438,000 | |
Income taxes paid | 775,000 | $ 165,000 | |
Interest paid | 52,000 | $ 38,000 | |
Accumulated other comprehensive loss to retained earnings due to change in corporate tax rate | $ 6,000 |
Inventories - Summary of invent
Inventories - Summary of inventories (Details) - USD ($) $ in Thousands | Jun. 30, 2018 | Dec. 31, 2017 |
Inventory Disclosure [Abstract] | ||
Raw material and common parts | $ 7,500 | $ 8,375 |
Work-in-process | 4,568 | 2,940 |
Finished goods | 3,011 | 2,914 |
Inventory, Gross | 15,079 | 14,229 |
Inventory reserve | (1,492) | (1,438) |
Total inventories | $ 13,587 | $ 12,791 |
Property, Plant and Equipment -
Property, Plant and Equipment - Summary of property, plant and equipment (Details) - USD ($) $ in Thousands | Jun. 30, 2018 | Dec. 31, 2017 |
Property, Plant and Equipment [Line Items] | ||
Property, plant and equipment, Gross | $ 29,174 | $ 28,209 |
Less accumulated depreciation | (17,672) | (17,188) |
Total property, plant and equipment | 11,502 | 11,021 |
Land | ||
Property, Plant and Equipment [Line Items] | ||
Property, plant and equipment, Gross | 7 | 7 |
Buildings | ||
Property, Plant and Equipment [Line Items] | ||
Property, plant and equipment, Gross | 10,384 | 10,288 |
Machinery, equipment and tooling | ||
Property, Plant and Equipment [Line Items] | ||
Property, plant and equipment, Gross | 18,007 | 17,249 |
Construction in progress | ||
Property, Plant and Equipment [Line Items] | ||
Property, plant and equipment, Gross | $ 776 | $ 665 |
Property, Plant and Equipment28
Property, Plant and Equipment (Detail Textuals) - USD ($) | Mar. 09, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | Dec. 31, 2017 |
Property, Plant and Equipment [Line Items] | ||||||
Sell unused commercial real property in Franklinville, New York | $ 180,000 | |||||
Depreciation and amortization expense | $ 244,000 | $ 218,000 | $ 502,000 | $ 428,000 | ||
Depreciation | 224,000 | 215,000 | 465,000 | 421,000 | ||
Amortization | 20,000 | $ 3,000 | 37,000 | $ 7,000 | ||
Advanced Technology Group ("ATG") and the Consumer Products Group ("CPG") | ||||||
Property, Plant and Equipment [Line Items] | ||||||
Construction in progress | $ 776,000 | $ 776,000 | $ 665,000 |
Long-Term Debt - Summary of lon
Long-Term Debt - Summary of long term debt (Details) - USD ($) $ in Thousands | Jun. 30, 2018 | Dec. 31, 2017 |
Debt Instrument [Line Items] | ||
Long-term debt | $ 3,494 | $ 3,631 |
Less current portion | (723) | (681) |
Long-term debt, Noncurrent | 2,771 | 2,950 |
Term loan payable to a financial institution; Interest rate option of bank prime or Libor plus 1.4% (3.382% as of June 30, 2018), monthly principal payments of $21,833 through 2021 with a balloon payment of $786,000 due December 1, 2021 | ||
Debt Instrument [Line Items] | ||
Long-term debt | 1,703 | 1,835 |
Term loan payable to a financial institution; Interest rate option of bank prime or Libor plus 1.4% (3.382% as of June 30, 2018), monthly principal payments of $23,810 through December 1, 2021 | ||
Debt Instrument [Line Items] | ||
Long-term debt | 1,000 | 1,142 |
Capital lease obligations; Interest rate fixed for term of each funding based upon the Lender's lease pricing at time of funding. (Interest rate/factor 1.822758% - 1.869304% at time of funding with principal payments made over 60 months) | ||
Debt Instrument [Line Items] | ||
Long-term debt | $ 791 | $ 654 |
Long-Term Debt - Summary of l30
Long-Term Debt - Summary of long term debt (Parentheticals) (Details) | 6 Months Ended |
Jun. 30, 2018USD ($) | |
Term loan payable to a financial institution; Interest rate option of bank prime or Libor plus 1.4% (3.382% as of June 30, 2018), monthly principal payments of $21,833 through 2021 with a balloon payment of $786,000 due December 1, 2021 | |
Debt Instrument [Line Items] | |
Description of rate basis | Libor |
Percentage of floating interest rate payable | 1.40% |
Percentage of fixed interest rate payable | 3.382% |
Frequency of principal payments | monthly |
Monthly principal payments | $ 21,833 |
Balloon payment due December 1, 2021 | $ 786,000 |
Term loan payable to a financial institution; Interest rate option of bank prime or Libor plus 1.4% (3.382% as of June 30, 2018), monthly principal payments of $23,810 through December 1, 2021 | |
Debt Instrument [Line Items] | |
Description of rate basis | Libor |
Percentage of floating interest rate payable | 1.40% |
Percentage of fixed interest rate payable | 3.382% |
Frequency of principal payments | monthly |
Monthly principal payments | $ 23,810 |
Capital lease obligations; Interest rate fixed for term of each funding based upon the Lender's lease pricing at time of funding. (Interest rate/factor 1.822758% - 1.869304% at time of funding with principal payments made over 60 months) | |
Debt Instrument [Line Items] | |
Period of principal payments | 60 months |
Capital lease obligations; Interest rate fixed for term of each funding based upon the Lender's lease pricing at time of funding. (Interest rate/factor 1.822758% - 1.869304% at time of funding with principal payments made over 60 months) | Minimum | |
Debt Instrument [Line Items] | |
Percentage of floating interest rate payable | 1.82276% |
Capital lease obligations; Interest rate fixed for term of each funding based upon the Lender's lease pricing at time of funding. (Interest rate/factor 1.822758% - 1.869304% at time of funding with principal payments made over 60 months) | Maximum | |
Debt Instrument [Line Items] | |
Percentage of floating interest rate payable | 1.8693% |
Long-Term Debt (Details 1)
Long-Term Debt (Details 1) $ in Thousands | Jun. 30, 2018USD ($) |
Debt Disclosure [Abstract] | |
2,018 | $ 193 |
2,019 | 193 |
2,020 | 193 |
2,021 | 193 |
2,022 | 100 |
Total minimum lease payments | 872 |
Less amount representing interest | (81) |
Present value of net minimum lease payment | 791 |
Less current portion | (175) |
Principal payments for the capital lease obligations | $ 616 |
Long-Term Debt (Detail Textuals
Long-Term Debt (Detail Textuals) | 6 Months Ended |
Jun. 30, 2018USD ($) | |
Debt Disclosure [Abstract] | |
Line of credit | $ 2,000,000 |
Lease line of credit | $ 1,000,000 |
lease term for equipment covered by lease line of credit | 60 months |
Buy out at end of term | $ 1 |
Line of credit outstanding | $ 791,000 |
Stockholders' Equity - Summary
Stockholders' Equity - Summary of common shareholders' equity (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||
Balance at December 31, 2017 | $ 28,165 | |||
Balance at December 31, 2017 (shares) | 2,614,506 | |||
Net Income | $ 707 | $ 105 | $ 1,038 | $ 131 |
Purchase of treasury shares | (150) | |||
Cash dividend | (416) | |||
Stock based compensation, net of tax benefit | 85 | |||
Balance at June 30, 2018 | $ 28,722 | $ 28,722 | ||
Balance at June 30, 2018 (shares) | 2,614,506 | 2,614,506 | ||
Common Stock | ||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||
Balance at December 31, 2017 | $ 523 | |||
Balance at December 31, 2017 (shares) | 2,614,506 | |||
Purchase of treasury shares | $ 0 | |||
Cash dividend | 0 | |||
Stock based compensation, net of tax benefit | 0 | |||
Balance at June 30, 2018 | $ 523 | $ 523 | ||
Balance at June 30, 2018 (shares) | 2,614,506 | 2,614,506 | ||
Capital in excess of par value | ||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||
Balance at December 31, 2017 | $ 14,171 | |||
Purchase of treasury shares | 0 | |||
Cash dividend | 0 | |||
Stock based compensation, net of tax benefit | 21 | |||
Balance at June 30, 2018 | $ 14,192 | 14,192 | ||
Retained earnings | ||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||
Balance at December 31, 2017 | 15,709 | |||
Net Income | 1,038 | |||
Purchase of treasury shares | 0 | |||
Cash dividend | (416) | |||
Stock based compensation, net of tax benefit | (6) | |||
Balance at June 30, 2018 | 16,325 | 16,325 | ||
ESOT | ||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||
Balance at December 31, 2017 | (662) | |||
Purchase of treasury shares | 0 | |||
Cash dividend | 0 | |||
Stock based compensation, net of tax benefit | 0 | |||
Balance at June 30, 2018 | (662) | (662) | ||
Treasury stock | ||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||
Balance at December 31, 2017 | (1,544) | |||
Purchase of treasury shares | (150) | |||
Cash dividend | 0 | |||
Stock based compensation, net of tax benefit | 64 | |||
Balance at June 30, 2018 | (1,630) | (1,630) | ||
Accumulated Other Comprehensive Loss | ||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||
Balance at December 31, 2017 | (32) | |||
Purchase of treasury shares | 0 | |||
Cash dividend | 0 | |||
Stock based compensation, net of tax benefit | 6 | |||
Balance at June 30, 2018 | $ (26) | $ (26) |
Shareholders' Equity - Calculat
Shareholders' Equity - Calculation of earning per share (Details 1) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | |
Equity [Abstract] | ||||
Net Income | $ 707 | $ 105 | $ 1,038 | $ 131 |
Weighted average common shares outstanding (basic) (in shares) | 2,267 | 2,251 | 2,241 | 2,251 |
Unvested restricted stock (in shares) | 83 | 43 | 83 | 43 |
Weighted average common shares outstanding (diluted) (in shares) | 2,350 | 2,294 | 2,324 | 2,294 |
Basic | ||||
Net income per share (in dollars per share) | $ 0.31 | $ 0.05 | $ 0.46 | $ 0.06 |
Diluted | ||||
Net income per share (in dollars per share) | $ 0.30 | $ 0.05 | $ 0.45 | $ 0.06 |
Shareholders' Equity (Detail Te
Shareholders' Equity (Detail Textuals) | 6 Months Ended |
Jun. 30, 2018shares | |
Equity, Class of Treasury Stock [Line Items] | |
Shares purchased during period | 3,350 |
Share Repurchase Program | |
Equity, Class of Treasury Stock [Line Items] | |
Number of common shares authorized to be purchased | 450,000 |
Shares purchased during period | 352,680 |
Remaining number of shares authorized to be purchased | 97,320 |
Shareholders' Equity (Detail 36
Shareholders' Equity (Detail Textuals 1) - 2012 Long-Term Incentive Plan - USD ($) | Apr. 11, 2016 | May 25, 2018 | Jan. 31, 2018 | Apr. 18, 2013 | Jun. 30, 2018 | Jun. 30, 2017 |
Executive Officers | ||||||
Deferred Compensation Arrangement with Individual, Share-based Payments [Line Items] | ||||||
Number of restricted stock issued | 51,000 | 78,750 | 165,000 | |||
Number of shares authorized for issuance | 300,000 | |||||
Vesting period of restricted share awards | 4 years | |||||
Compensation expense not yet recognized | $ 406,000 | $ 735,000 | $ 1,336,500 | |||
Service period | 4 years | |||||
Expense recognized for issuance of restricted shares | $ 85,000 | $ 107,000 | ||||
Number of restricted stock shares vested | 28,500 | |||||
Number of shares withheld and repurchased | 11,341 | |||||
Value of shares withheld and repurchased | $ 117,000 | |||||
Non-employee directors | ||||||
Deferred Compensation Arrangement with Individual, Share-based Payments [Line Items] | ||||||
Number of restricted stock issued | 4,288 | |||||
Compensation expense not yet recognized | $ 40,000 | |||||
Service period | 12 months | |||||
Chairman and CEO | ||||||
Deferred Compensation Arrangement with Individual, Share-based Payments [Line Items] | ||||||
Number of shares vested | 15,000 |
Shareholders' Equity (Detail 37
Shareholders' Equity (Detail Textuals 2) - USD ($) $ / shares in Units, $ in Thousands | May 18, 2018 | Jun. 30, 2018 |
Equity [Abstract] | ||
Dividends declaration date | May 18, 2018 | |
Per share cash dividend | $ 0.16 | |
Date of dividends to be paid | Jul. 16, 2018 | |
Dividends payable record date | Jun. 30, 2018 | |
Aggregate dividend payable | $ 416 | $ 416 |
Commitments and Contingencies (
Commitments and Contingencies (Detail Textuals) - USD ($) | 6 Months Ended | |
Jun. 30, 2018 | Dec. 31, 2017 | |
Loss Contingencies [Line Items] | ||
Post retirement obligation | $ 1,007,000 | $ 1,007,000 |
Arbitration-related expense | $ 367,000 | |
Employment Agreement | ||
Loss Contingencies [Line Items] | ||
Minimum age limit | 65 years | |
Term of maintaining employment level | 5 years | |
Employment Agreement | Kenneth Trbovich | ||
Loss Contingencies [Line Items] | ||
Post retirement obligation | $ 792,000 | $ 736,000 |
CPG | ||
Loss Contingencies [Line Items] | ||
Amount of grant received from Cattaraugus County, New York | $ 300,000 |
Litigation (Detail Textuals)
Litigation (Detail Textuals) - Aero, Inc. | 6 Months Ended |
Jun. 30, 2018USD ($) | |
Litigation [Line Items] | |
Amount of alleged damages | $ 3,000,000 |
Amount of counter claim | $ 3,191,000 |
Related Party Transactions (Det
Related Party Transactions (Detail Textuals) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | |
Related Party Transactions [Abstract] | ||||
Legal fees and disbursements | $ 48,000 | $ 94,000 | $ 95,000 | $ 144,000 |
Accrued additional legal fees | $ 32,000 | $ 23,000 | $ 32,000 | $ 23,000 |
Business Segments - Summary of
Business Segments - Summary of company's operations (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | |
Segment Reporting Information [Line Items] | ||||
Revenues from unaffiliated customers | $ 11,946 | $ 9,616 | $ 22,505 | $ 18,719 |
Cost of goods sold, inclusive of depreciation and amortization | (9,022) | (7,830) | (17,531) | (15,074) |
Selling, general and administrative | (2,013) | (1,622) | (3,641) | (3,462) |
Interest expense | (27) | (15) | (52) | (38) |
Income (loss) before income tax provision (benefits) | 884 | 149 | 1,281 | 145 |
Income tax provision (benefits) | 177 | 44 | 243 | 14 |
Net income (loss) | 707 | 105 | 1,038 | 131 |
Capital expenditures | 984 | 571 | ||
Operating Segments | ||||
Segment Reporting Information [Line Items] | ||||
Revenues from unaffiliated customers | 11,946 | 9,616 | 22,505 | 18,719 |
Cost of goods sold, inclusive of depreciation and amortization | (9,022) | (7,830) | (17,531) | (15,074) |
Selling, general and administrative | (2,013) | (1,622) | (3,641) | (3,462) |
Interest expense | (27) | (15) | (52) | (38) |
Income (loss) before income tax provision (benefits) | 884 | 149 | 1,281 | 145 |
Income tax provision (benefits) | 177 | 44 | 243 | 14 |
Net income (loss) | 707 | 105 | 1,038 | 131 |
Capital expenditures | 473 | 388 | 984 | 571 |
Operating Segments | Advanced Technology Group ("ATG") | ||||
Segment Reporting Information [Line Items] | ||||
Revenues from unaffiliated customers | 10,274 | 7,630 | 19,389 | 15,050 |
Cost of goods sold, inclusive of depreciation and amortization | (7,552) | (6,024) | (14,635) | (11,628) |
Selling, general and administrative | (1,426) | (1,173) | (2,655) | (2,506) |
Interest expense | (18) | (8) | (35) | (23) |
Income (loss) before income tax provision (benefits) | 1,278 | 425 | 2,064 | 893 |
Income tax provision (benefits) | 262 | 127 | 392 | 239 |
Net income (loss) | 1,016 | 298 | 1,672 | 654 |
Capital expenditures | 440 | 314 | 845 | 495 |
Operating Segments | CPG | ||||
Segment Reporting Information [Line Items] | ||||
Revenues from unaffiliated customers | 1,672 | 1,986 | 3,116 | 3,669 |
Cost of goods sold, inclusive of depreciation and amortization | (1,470) | (1,806) | (2,896) | (3,446) |
Selling, general and administrative | (587) | (449) | (986) | (956) |
Interest expense | (9) | (7) | (17) | (15) |
Income (loss) before income tax provision (benefits) | (394) | (276) | (783) | (748) |
Income tax provision (benefits) | (85) | (83) | (149) | (225) |
Net income (loss) | (309) | (193) | (634) | (523) |
Capital expenditures | $ 33 | $ 74 | $ 139 | $ 76 |
Business Segments (Detail Textu
Business Segments (Detail Textuals) | 6 Months Ended | 12 Months Ended |
Jun. 30, 2018USD ($)Segment | Dec. 31, 2017USD ($)Segment | |
Segment Reporting Information [Line Items] | ||
Total identifiable assets | $ 39,614,000 | $ 37,986,000 |
Number of operating segments | Segment | 2 | 2 |
Operating Segments | Advanced Technology Group ("ATG") | ||
Segment Reporting Information [Line Items] | ||
Total identifiable assets | $ 28,666,000 | $ 26,331,000 |
Operating Segments | CPG | ||
Segment Reporting Information [Line Items] | ||
Total identifiable assets | $ 10,948,000 | $ 11,655,000 |