Document_and_Entity_Informatio
Document and Entity Information (USD $) | 12 Months Ended | ||
Dec. 31, 2014 | Mar. 01, 2015 | Jun. 30, 2014 | |
Document And Entity Information | |||
Entity Registrant Name | AIR INDUSTRIES GROUP | ||
Entity Central Index Key | 1009891 | ||
Document Type | 10-K | ||
Document Period End Date | 31-Dec-14 | ||
Amendment Flag | FALSE | ||
Current Fiscal Year End Date | -19 | ||
Is Entity a Well-known Seasoned Issuer? | No | ||
Is Entity a Voluntary Filer? | No | ||
Is Entity's Reporting Status Current? | Yes | ||
Entity Filer Category | Smaller Reporting Company | ||
Entity Common Stock, Shares Outstanding | 7,108,677 | ||
Entity Public Float | $68,004,859 | ||
Document Fiscal Period Focus | FY | ||
Document Fiscal Year Focus | 2014 |
Consolidated_Balance_Sheets
Consolidated Balance Sheets (USD $) | Dec. 31, 2014 | Dec. 31, 2013 |
Current Assets | ||
Cash and Cash Equivalents | $1,418,000 | $561,000 |
Accounts Receivable, Net of Allowance for Doubtful Accounts of $1,566,000 and $783,000, respectively | 11,916,000 | 8,584,000 |
Inventory | 28,391,000 | 26,222,000 |
Deferred Tax Asset | 1,421,000 | 1,051,000 |
Prepaid Expenses and Other Current Assets | 875,000 | 510,000 |
Total Current Assets | 44,021,000 | 36,928,000 |
Property and Equipment, net | 9,557,000 | 6,523,000 |
Capitalized Engineering Costs - net of Accumulated Amortization of $4,184,000 and $3,879,000, respectively | 712,000 | 752,000 |
Deferred Financing Costs, net, deposit and other assets | 825,000 | 605,000 |
Intangible Assets, net | 4,513,000 | 4,726,000 |
Deferred Tax Asset | 858,000 | 185,000 |
Goodwill | 5,434,000 | 453,000 |
TOTAL ASSETS | 65,920,000 | 50,172,000 |
Current Liabilities | ||
Notes Payable and Capitalized Lease Obligations - Current Portion | 19,508,000 | 14,969,000 |
Accounts Payable and Accrued Expenses | 6,948,000 | 6,855,000 |
Lease Impairment - Current | 56,000 | 71,000 |
Deferred Gain on Sale - Current Portion | 38,000 | 38,000 |
Customer Deposits | 158,000 | 251,000 |
Dividends Payable | 1,066,000 | 717,000 |
Income Taxes Payable | 71,000 | 1,496,000 |
Total Current Liabilities | 27,845,000 | 24,397,000 |
Long Term Liabilities | ||
Notes Payable and Capitalized Lease Obligations - Net of Current Portion | 8,213,000 | 2,527,000 |
Lease Impairment - Net of Current Portion | 4,000 | 56,000 |
Deferred Gain on Sale - Net of Current Portion | 409,000 | 447,000 |
Deferred Rent | 1,177,000 | 1,132,000 |
TOTAL LIABILITIES | 37,648,000 | 28,559,000 |
Commitments and Contingencies | ||
Stockholders' Equity | ||
Preferred Stock Par Value $.001 - Authorized 1,000,000 Shares None Issued and Outstanding at December 31, 2014 and 2013 | ||
Common Stock - Par Value $.001 - Authorized 25,000,000 Shares, 7,108,677 and 5,844,093 Shares Issued and Outstanding as of December 31, 2014 and 2013, respectively | 7,000 | 6,000 |
Additional Paid-In Capital | 42,790,000 | 36,799,000 |
Accumulated Deficit | -14,525,000 | -15,192,000 |
TOTAL STOCKHOLDERS' EQUITY | 28,272,000 | 21,613,000 |
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | $65,920,000 | $50,172,000 |
Consolidated_Balance_Sheets_Pa
Consolidated Balance Sheets (Parenthetical) (USD $) | Dec. 31, 2014 | Dec. 31, 2013 |
ASSETS | ||
Allowance for Doubtful Accounts | $1,566,000 | $783,000 |
Accumulated Amortization | $4,184,000 | $3,879,000 |
Stockholders Equity | ||
Preferred Stock par value | $0.00 | $0.00 |
Preferred Stock Authorized | 1,000,000 | 1,000,000 |
Common Stock par value | $0.00 | $0.00 |
Common Stock Authorized | 25,000,000 | 25,000,000 |
Common Stock Issued | 7,108,677 | 5,844,093 |
Common Stock Outstanding | 7,108,677 | 5,844,093 |
Consolidated_Statements_of_Inc
Consolidated Statements of Income (USD $) | 12 Months Ended | |
Dec. 31, 2014 | Dec. 31, 2013 | |
Consolidated Statements Of Income | ||
Net Sales | $64,331,000 | $62,833,000 |
Cost of Sales | 50,233,000 | 47,598,000 |
Gross Profit | 14,098,000 | 15,235,000 |
Operating Expenses | 11,960,000 | 10,594,000 |
Acquisition Costs | 403,000 | 28,000 |
Income from Operations | 1,735,000 | 4,613,000 |
Interest and financing costs | -1,295,000 | -1,340,000 |
Other (expense) income, net | -141,000 | 296,000 |
Income before provision for income taxes | 299,000 | 3,569,000 |
Benefit from Income Taxes | 368,000 | 170,000 |
Net income | $667,000 | $3,739,000 |
Income per share - basic | $0.10 | $0.65 |
Income per share - diluted | $0.10 | $0.63 |
Weighted average shares outstanding - basic | 6,591,755 | 5,739,014 |
Weighted average shares outstanding - diluted | 6,915,688 | 5,932,726 |
Consolidated_Statements_of_Sto
Consolidated Statements of Stockholders' Equity (USD $) | Preferred Stock | Common Stock | Additional Paid-In Capital | Accumulated Deficit | Total |
Beginning Balance, Amount at Dec. 31, 2012 | $6,000 | $37,913,000 | ($18,931,000) | $18,988,000 | |
Beginning Balance, Shares at Dec. 31, 2012 | 5,711,093 | ||||
Issuance of Shares For Private Placement, Amount | 997,000 | 997,000 | |||
Issuance of Shares For Private Placement, Shares | 133,000 | ||||
Dividends Paid | -1,432,000 | -1,432,000 | |||
Dividends Payable | -717,000 | -717,000 | |||
Stock compensation expense | 38,000 | 38,000 | |||
Net income | 3,739,000 | 3,739,000 | |||
Ending Balance, Amount at Dec. 31, 2013 | 6,000 | 36,799,000 | -15,192,000 | 21,613,000 | |
Ending Balance, Shares at Dec. 31, 2013 | 5,844,093 | ||||
Issuance of Shares For Public Offering, Amount | 1,000 | 9,561,000 | 9,562,000 | ||
Issuance of Shares For Public Offering ,Shares | 1,170,000 | ||||
Issuance of Shares For Acquisition, Amount | 485,000 | 485,000 | |||
Issuance of Shares For Acquisition, Shares | 50,000 | ||||
Exercise of Options/Warrants, Amount | |||||
Exercise of Options/Warrants ,Shares | 44,584 | ||||
Dividends Paid | -3,031,000 | -3,031,000 | |||
Dividends Payable | -1,066,000 | -1,066,000 | |||
Stock compensation expense | 42,000 | 42,000 | |||
Net income | 667,000 | 667,000 | |||
Ending Balance, Amount at Dec. 31, 2014 | $7,000 | $42,790,000 | ($14,525,000) | $28,272,000 | |
Ending Balance, Shares at Dec. 31, 2014 | 7,108,677 |
Consolidated_Statements_of_Cas
Consolidated Statements of Cash Flows (USD $) | 12 Months Ended | |
Dec. 31, 2014 | Dec. 31, 2013 | |
CASH FLOWS FROM OPERATING ACTIVITIES | ||
Net Income | $667,000 | $3,739,000 |
Adjustments to Reconcile Net Income to Net Cash provided by (used in) Operating Activities | ||
Depreciation of property and equipment | 2,364,000 | 1,709,000 |
Amortization of intangible assets | 1,163,000 | 1,163,000 |
Amortization of capitalized engineering costs | 375,000 | 430,000 |
Bad debt expense | 299,000 | 394,000 |
Non-cash compensation expense | 42,000 | 38,000 |
Amortization of deferred financing costs | 49,000 | 69,000 |
Negative goodwill resulting from the bargain purchase acquisition | -361,000 | |
Gain on sale of real estate | -38,000 | -38,000 |
Deferred Income Taxes | -1,043,000 | -1,236,000 |
Changes in Assets and Liabilities (Increase) Decrease in Operating Assets: | ||
Accounts Receivable | -2,417,000 | 2,871,000 |
Inventory | -1,802,000 | 440,000 |
Prepaid Expenses and Other Current Assets | -244,000 | 35,000 |
Deposits | -46,000 | 134,000 |
Other Assets | -118,000 | 20,000 |
Increase (Decrease) in Operating Liabilities: | ||
Accounts payable and accrued expenses | -577,000 | -892,000 |
Deferred Rent | 45,000 | 75,000 |
Income Taxes payable | -1,425,000 | 48,000 |
Customer Deposits | -93,000 | 251,000 |
NET CASH (USED IN) PROVIDED BY OPERATING ACTIVITIES | -2,799,000 | 8,889,000 |
CASH FLOWS FROM INVESTING ACTIVITIES | ||
Cash paid for acquisitions | -8,930,000 | -457,000 |
Cash acquired in acquisitions | 173,000 | 7,000 |
Capitalized engineering costs | -335,000 | -380,000 |
Purchase of property and equipment | -571,000 | -288,000 |
NET CASH USED IN INVESTING ACTIVITIES | -9,663,000 | -1,118,000 |
CASH FLOWS FROM FINANCING ACTIVITIES | ||
Proceeds from public issuance in 2014 and private placement in 2013 | 9,530,000 | 997,000 |
Costs to raise capital | -968,000 | |
Notes payable - Sellers | -691,000 | -644,000 |
Capital lease obligations | -143,000 | -996,000 |
Note payable - revolver | 3,142,000 | -3,637,000 |
Proceeds from note payable - Term Loans | 7,328,000 | |
Payments of note payable - term loans | -913,000 | -1,800,000 |
Deferred financing costs | -151,000 | -102,000 |
Payments related to Lease Impairment | -67,000 | -85,000 |
Dividends Paid | -3,748,000 | -1,433,000 |
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES | 13,319,000 | -7,700,000 |
NET INCREASE IN CASH AND CASH EQUIVALENTS | 857,000 | 71,000 |
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR | 561,000 | 490,000 |
CASH AND CASH EQUIVALENTS AT END OF YEAR | 1,418,000 | 561,000 |
Supplemental cash flow information | ||
Cash paid during the period for interest | 1,074,000 | 1,188,000 |
Cash paid during the period for income taxes | 2,494,000 | 1,061,000 |
Supplemental schedule of non-cash investing and financing activities | ||
Conversion of junior subordinated notes | 1,000,000 | |
Dividends payable | 1,066,000 | 717,000 |
Purchase of substantially all assets of AMK Welding, Inc. and assumption of liabilities in the acquisition as follows: | ||
Fair Value of Tangible Assets acquired | 5,637,000 | |
Intangible assets, subject to amortization | 950,000 | |
Goodwill | 651,000 | |
Cash acquired | 168,000 | |
Liabilities assumed | -453,000 | |
Due to seller | -2,500,000 | |
Cash paid for acquisition | 4,453,000 | |
Purchase of stock of Woodbine Products, Inc. | ||
Fair value of tangible assets acquired | 309,000 | |
Goodwill | 2,565,000 | |
Liabilities assumed | -19,000 | |
Common Stock Issued | -290,000 | |
Cash paid for acquisition | 2,565,000 | |
Purchase of stock of Eur-Pac Corporation | ||
Fair value of tangible assets acquired | 412,000 | |
Goodwill | 1,656,000 | |
Liabilities assumed | -170,000 | |
Common Stock Issued | -195,000 | |
Cash paid for acquisition | 1,703,000 | |
Purchase of stock of Electronic Connection Corporation | ||
Fair value of tangible assets acquired | 126,000 | |
Goodwill | 109,000 | |
Cash acquired | 5,000 | |
Liabilities assumed | -31,000 | |
Cash paid for acquisition | 209,000 | |
Purchase of certain assets of Decimal Industries, Inc. | ||
Fair Value of Tangible Assets acquired | 975,000 | |
Due to Sellers of Decimal Industries, Inc. | -660,000 | |
Cash paid for acquisition | 315,000 | |
Purchase of stock of Miller Stuart, Inc | ||
Fair Value of Tangible Assets acquired | 506,000 | |
Cash aquired | 7,000 | |
Liabilities Assumed | -10,000 | |
Negative goodwill resulting from the bargain purchase acquisition | -361,000 | |
Cash paid for acquisition | $142,000 |
Consolidated_Statements_of_Cas1
Consolidated Statements of Cash Flows (Parenthetical) (USD $) | 12 Months Ended | |
Dec. 31, 2014 | Dec. 31, 2013 | |
Statement of Cash Flows [Abstract] | ||
Cash paid for acquisitions | $8,930,000 | $457,000 |
FORMATION_AND_BASIS_OF_PRESENT
FORMATION AND BASIS OF PRESENTATION | 12 Months Ended |
Dec. 31, 2014 | |
Notes to Financial Statements | |
FORMATION AND BASIS OF PRESENTATION | |
Organization | |
On August 30, 2013, Air Industries Group, Inc. (“Air Industries Delaware”) changed its state of incorporation from Delaware to Nevada as a result of a merger with and into its recently formed wholly-owned subsidiary, Air Industries Group, a Nevada corporation (“Air Industries Nevada” or “AIRI”) and the surviving entity, pursuant to an Agreement and Plan of Merger. The reincorporation was approved by the stockholders of Air Industries Delaware at its 2013 Annual Meeting of Stockholders. Air Industries Nevada is deemed to be the successor. | |
The accompanying consolidated financial statements presented are those of AIRI, and its wholly-owned subsidiaries; Air Industries Machining Corporation (“AIM”), Welding Metallurgy, Inc. ("WMI" or “Welding”), Miller Stuart, Inc. (“Miller Stuart”), Nassau Tool Works, Inc. (“NTW”), Woodbine Products, Inc. (“Woodbine” or “WPI”) effective April 1, 2014, Eur-Pac Corporation (“Eur-Pac” or “EPC”) effective June 1, 2014, Electronic Connection Corporation (“ECC”), effective September 1, 2014, and AMK Welding, Inc. (“AMK”) effective October 1, 2014 (together, the “Company”). |
ACQUISITION
ACQUISITION | 12 Months Ended | ||||||||||||||||
Dec. 31, 2014 | |||||||||||||||||
Notes to Financial Statements | |||||||||||||||||
ACQUISITION | Decimal | ||||||||||||||||
On July 1, 2013, the Company through its WMI subsidiary acquired certain assets including production equipment, inventory and intangible assets of Decimal Industries, Inc. (“Decimal”). The assets are being operated as part of WMI. Decimal is a long established Long Island based manufacturer of precision welded and brazed aerospace chassis and other components housing avionics, radars and other electronic devices in aircraft and naval vessels. Decimal’s customers include major aerospace contractors. The acquisition not only adds to the existing customer base, but brings new capabilities to WMI and the group. | |||||||||||||||||
The acquisition of Decimal was accounted for under FASB ASC 805, "Business Combinations" ("ASC 805"). The purchase price of the assets was $975,000, which included inventory of approximately $665,000 valued at a percentage of completion including anticipated profit on sale and certain fixed assets with an approximate value of $310,000. The purchase price was paid as follows: $315,000 in cash at closing with the balance payable in eight equal monthly installments without interest in the amount of $76,667 commencing in August 2013, with a final payment in the amount of $46,766. The two owners of Decimal have become employees of the Company and are under contract until June 2018. As part of the transaction, the facility of Decimal had been leased for 12 months until June 2014. The Company combined and relocated the operations of Decimal into WMI’s facility in Hauppauge. At December 31, 2013, $277,000 was owed to the sellers of Decimal and is included in accounts payable and accrued expenses on the consolidated balance sheet. | |||||||||||||||||
Miller Stuart | |||||||||||||||||
On November 6, 2013, the Company, through its WMI subsidiary, acquired all of the common stock of Miller Stuart for $142,000 of which $25,000 was due at the date of closing, with the remainder due on December 6, 2013. As a result of the acquisition, Miller Stuart became a division of WMI. Miller Stuart is a manufacturer of aerospace components whose customers include major aircraft manufacturers and the US Military. Miller Stuart specializes in electromechanical systems, harness and cable assemblies, electronic equipment and printed circuit boards. The acquisition of Miller Stuart will add to the existing customer base of AIRI and enhance the types of parts that AIRI can offer to its existing customers. | |||||||||||||||||
The acquisition of Miller Stuart was accounted for under ASC 805, and its results of operations have been included with WMI. The purchase price allocation is set forth below. | |||||||||||||||||
Fair value of tangible assets acquired (including cash acquired of $7,000) | $ | 513,000 | |||||||||||||||
Liabilities assumed | (10,000 | ) | |||||||||||||||
Negative goodwill resulting from the bargain purchase acquisition | (361,000 | ) | |||||||||||||||
Total | $ | 142,000 | |||||||||||||||
As a result of the acquisition, the Company recognized a non-cash bargain purchase gain of $361,000 which is included in other income (expense), net in the December 31, 2013 consolidated statement of income. | |||||||||||||||||
Woodbine | |||||||||||||||||
On April 1, 2014, the Company, through its wholly-owned subsidiary Welding, acquired all of the common stock of Woodbine for $2.4 million and 30,000 shares of the common stock of AIRI. The common stock was valued at $9.68 per share, which was the closing share price on April 1, 2014. Additionally, a working capital adjustment in the amount of $165,000 was paid to the former stockholders of Woodbine during June of 2014. The Company financed the acquisition of Woodbine by increasing its borrowings on its existing revolving loan and term loan facilities (see Note 9). | |||||||||||||||||
Woodbine, founded in 1954, is a long established manufacturer of aerospace components whose customers include major aircraft component suppliers. Woodbine specializes in welded and brazed chassis structures housing electronics in aircraft. Woodbine’s products and customers are very complementary to those of Decimal, the assets and business of which was acquired in July 2013 as described above. | |||||||||||||||||
The acquisition of Woodbine was accounted for under ASC 805. The purchase price allocation is set forth below. | |||||||||||||||||
Fair value of tangible assets acquired | $ | 309,000 | |||||||||||||||
Goodwill | 2,565,000 | ||||||||||||||||
Liabilities assumed | (19,000 | ) | |||||||||||||||
Total | $ | 2,855,000 | |||||||||||||||
Eur-Pac | |||||||||||||||||
On June 1, 2014, the Company acquired all of the common stock of Eur-Pac for $1.6 million and 20,000 shares of the common stock of AIRI. The common stock was valued at $9.78 per share, which was the closing share price on that date. Additionally, a working capital adjustment in the amount of $78,000 was paid in August 2014. The Company financed the acquisition of Eur-Pac with the proceeds of its Registered Direct Offering (see Note 11). | |||||||||||||||||
Eur-Pac specializes in military packaging and supplies. Eur-Pac’s primary business is “kitting” of supplies for all branches of the United States Defense Department including ordnance parts, hose assemblies, hydraulic, mechanical and electrical assemblies. | |||||||||||||||||
The acquisition of Eur-Pac was accounted for under ASC 805. The purchase price allocation is set forth below. | |||||||||||||||||
Fair Value of tangible assets acquired | $ | 412,000 | |||||||||||||||
Goodwill | 1,656,000 | ||||||||||||||||
Liabilities assumed | (170,000 | ) | |||||||||||||||
Total | $ | 1,898,000 | |||||||||||||||
ECC | |||||||||||||||||
On September 1, 2014, the Company through its wholly-owned subsidiary Eur-Pac, acquired all of the common stock of ECC for $209,000. The Company financed the acquisition from its regular working capital. | |||||||||||||||||
ECC is a manufacturer of stripped, terminated, bonded and tinned lead wires, used by a variety of contractors, manufacturers and OEMs. | |||||||||||||||||
The acquisition of ECC was accounted for under ASC 805. The purchase price allocation is set forth below. | |||||||||||||||||
Fair value of tangible assets acquired | $ | 126,000 | |||||||||||||||
Goodwill | 109,000 | ||||||||||||||||
Cash acquired | 5,000 | ||||||||||||||||
Liabilities assumed | (31,000 | ) | |||||||||||||||
Total | $ | 209,000 | |||||||||||||||
AMK | |||||||||||||||||
On October 1, 2014, the Company acquired all of the common stock of AMK, for $6.9 million. At closing, the Company paid $4,453,000 and issued a Seller Note and Mortgage of $2,500,000. The note bore interest at the rate of 5% per annum and interest and principal were due and payable on or before December 31, 2014. The note was paid in 2014 from the proceeds from the issuance of Term Loan B and the mortgage released in January 2015 (see Note 9). | |||||||||||||||||
AMK is a long established provider of sophisticated welding and machining services for diversified aerospace and industrial customers. | |||||||||||||||||
The acquisition of AMK was accounted for under ASC 805. The purchase price allocation is set forth below. | |||||||||||||||||
Fair value of tangible assets acquired | $ | 5,637,000 | |||||||||||||||
Intangible assets, subject to amortization | 950,000 | ||||||||||||||||
Goodwill | 651,000 | ||||||||||||||||
Cash acquired | 168,000 | ||||||||||||||||
Liabilities assumed | (453,000 | ) | |||||||||||||||
Total | $ | 6,953,000 | |||||||||||||||
The below table sets forth selected financial information for the 2014 acquisitions for the period from the acquisition date through December 31, 2014. | |||||||||||||||||
Woodbine | Eur-Pac | ECC | AMK | ||||||||||||||
Net sales | $ | 1,047,000 | $ | 2,756,000 | $ | 281,000 | $ | 1,838,000 | |||||||||
Income from operations | $ | 300,000 | $ | 637,000 | $ | 67,000 | $ | 359,000 | |||||||||
SUMMARY_OF_SIGNIFICANT_ACCOUNT
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 12 Months Ended | ||||||||||
Dec. 31, 2014 | |||||||||||
Notes to Financial Statements | |||||||||||
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | Principal Business Activity | ||||||||||
The Company through its AIM subsidiary is primarily engaged in manufacturing aircraft structural parts, and assemblies for prime defense contractors in the aerospace industry in the United States. NTW is a manufacturer of aerospace components, principally landing gear for F-16 and F-18 fighter aircraft. Welding is a specialty welding and products provider whose significant customers include the world's largest aircraft manufacturers, subcontractors, and original equipment manufacturers. Miller Stuart is a manufacturer of aerospace components whose customers include major aircraft manufacturers and the US Military. Miller Stuart specializes in electromechanical systems, harness and cable assemblies, electronic equipment and printed circuit boards. Woodbine is a manufacturer of aerospace components whose customers include major aircraft component suppliers. Woodbine specializes in welded and brazed chassis structures housing electronics in aircraft. Eur-Pac specializes in military packaging and supplies. Eur-Pac’s primary business is “kitting” of supplies for all branches of the United States Defense Department including ordnance parts, hose assemblies, hydraulic, mechanical and electrical assemblies. AMK is a provider of sophisticated welding and machining services for diversified aerospace and industrial customers. The Company’s customers consist mainly of publically-traded companies in the aerospace industry. | |||||||||||
Principles of Consolidation | |||||||||||
The accompanying consolidated financial statements include accounts of the Company and its wholly-owned subsidiaries. Significant intercompany accounts and transactions have been eliminated in consolidation. | |||||||||||
Cash and Cash Equivalents | |||||||||||
Cash and cash equivalents include all highly liquid instruments with an original maturity of three months or less. | |||||||||||
Accounts Receivable | |||||||||||
Accounts receivable are reported at their outstanding unpaid principal balances net of allowances for uncollectible accounts. The Company provides for allowances for uncollectible receivables based on management's estimate of uncollectible amounts considering age, collection history, and any other factors considered appropriate. The Company writes off accounts receivable against the allowance for doubtful accounts when a balance is determined to be uncollectible. | |||||||||||
Inventory Valuation | |||||||||||
The Company values inventory at the lower of cost on a first-in-first-out basis or market. | |||||||||||
The Company generally purchases raw materials and supplies uniquely suited to the production of larger more complex parts, such as landing gear, only when non-cancellable contracts for orders have been received for finished goods. It occasionally produces larger more complex products, such as landing gear, in excess of purchase order quantities in anticipation of future purchase order demand. Historically this excess has been used in fulfilling future purchase orders. The Company purchases supplies and materials useful in a variety of products as deemed necessary even though orders have not been received. The Company periodically evaluates inventory items that are not secured by purchase orders and establishes reserves for obsolescence accordingly. The Company also reserves for excess quantities, slow-moving goods, and for other impairments of value. | |||||||||||
The Company presents inventory net of progress billings in accordance with the specified contractual arrangements with the United States Government, which results in the transfer of title of the related inventory from the Company to the United States Government, when such progress payments are received. | |||||||||||
The Company presents inventory net of progress billings in accordance with the specified contractual arrangements with the United States Government, which results in the transfer of title of the related inventory from the Company to the United States Government, when such progress payments are received. | |||||||||||
Capitalized Engineering Costs | |||||||||||
The Company has contractual agreements with customers to produce parts, which the customers design. Even though the Company has not designed and thus has no proprietary ownership of the parts, the manufacturing of these parts requires pre-production engineering and programming of the Company’s machines. The pre-production costs associated with a particular contract are capitalized and then amortized beginning with the first shipment of product pursuant to such contract. These costs are amortized on a straight-line basis over the estimated length of the contract, or if shorter, three years. | |||||||||||
If the Company is reimbursed for all or a portion of the pre-production expenses associated with a particular contract, only the unreimbursed portion would be capitalized. The Company may also progress bill customers for certain engineering costs being incurred. Such billings are recorded as progress billings (a reduction of the associated inventory) until the appropriate revenue recognition criteria have been met. The Terms and Conditions contained in customer purchase orders may provide for liquidated damages in the event that a stop-work order is issued prior to the final delivery of the product. | |||||||||||
Property and Equipment | |||||||||||
Property and equipment are carried at cost net of accumulated depreciation and amortization. Repair and maintenance charges are expensed as incurred. Property, equipment, and improvements are depreciated using the straight-line method over the estimated useful lives of the assets or the particular improvements. Expenditures for repairs and improvements in excess of $1,000 that add to the productive capacity or extend the useful life of an asset are capitalized. Upon disposition, the cost and related accumulated depreciation are removed from the accounts and any related gain or loss is reflected in earnings. | |||||||||||
Long-Lived and Intangible Assets | |||||||||||
Identifiable intangible assets are amortized using the straight-line method over the period of expected benefit. | |||||||||||
Long-lived assets and intangible assets subject to amortization to be held and used are reviewed for impairment whenever events or changes in circumstances indicate that the related carrying amount may be impaired. The Company records an impairment loss if the undiscounted future cash flows are found to be less than the carrying amount of the asset. If an impairment loss has occurred, a charge is recorded to reduce the carrying amount of the asset to fair value. There has been no impairment as of December 31, 2014 and 2013. | |||||||||||
Deferred Financing Costs | |||||||||||
Costs incurred with obtaining and executing debt arrangements are capitalized and amortized using the effective interest method over the term of the related debt. | |||||||||||
Revenue Recognition | |||||||||||
The Company recognizes revenue in accordance with Staff Accounting Bulletin No. 104, "Revenue Recognition." The Company recognizes revenue when products are shipped and/or the customer takes ownership and assumes risk of loss, collection of the relevant receivable is probable, persuasive evidence of an arrangement exists, and the sales price is fixed or determinable. | |||||||||||
The Company recognizes certain revenues under a bill and hold arrangement with two of its large customers. For any requested bill and hold arrangement, the Company makes an evaluation as to whether the bill and hold arrangement qualifies for revenue recognition as follows: | |||||||||||
· | The customer requests that the transaction be on a bill and hold basis. A customer must initiate the request for any bill and hold arrangement. Upon request for a bill and hold, the Company requires a signed letter from the customer upon which the customer specifically requests the bill and hold arrangement. Upon receipt of the letter, the Company begins its evaluation process to determine whether a bill and hold arrangement can be granted. | ||||||||||
· | The customer has made fixed commitment to purchase in written documentation. All customers’ orders are through firm written purchase orders. | ||||||||||
· | The goods are segregated from other inventory and are not available to fill any other customers’ orders. The Company’s goods are made to customers’ or their customer’s specifications and could not be sold to others. | ||||||||||
· | The risk of ownership has passed to the customer. The product is complete and ready for shipment. The earnings process is complete. An internal evaluation is made as to whether the product is complete and ready for shipment. This involves a review of the purchase order and a completed inspection process by the Company’s quality control department. | ||||||||||
· | The date is determined by which the Company expects payment and the Company has not modified its normal billing and credit terms for this buyer. Payment is expected as if the goods had been shipped. | ||||||||||
· | The customer has the expected risk of loss in the event of a decline in the market value of goods. All goods are made to firm purchase orders with fixed prices. Any decline in value would not affect the pricing of the goods. The Company has not at any point, agreed to a price reduction on a bill and hold arrangement. | ||||||||||
The Company had approximately $772,000 or 1.2% of net sales that were billed but not shipped under such bill and hold arrangements as of December 31, 2014. | |||||||||||
Payments received in advance from customers for products delivered are recorded as customer deposits until earned, at which time revenue is recognized. The Terms and Conditions contained in our customer purchase orders often provide for liquidated damages in the event that a stop work order is issued prior to the final delivery. | |||||||||||
The Company utilizes a Returned Merchandise Authorization or RMA process for determining whether to accept returned products. Customer requests to return products are reviewed by the contracts department and if the request is approved, a credit is issued upon receipt of the product. Net sales represent gross sales less returns and allowances. | |||||||||||
Use of Estimates | |||||||||||
In preparing the financial statements, management is required to make estimates and assumptions that affect the reported amounts in the financial statements and accompanying notes. The more significant management estimates are the useful lives of property and equipment, provisions for inventory obsolescence, accrued expenses and whether to accrue for various contingencies. Actual results could differ from those estimates. Changes in facts and circumstances may result in revised estimates, which are recorded in the period in which they become known. | |||||||||||
Credit and Concentration Risks | |||||||||||
There were two customers that represented 47.3% of total sales, and three customers that represented 56.0% of total sales for the years ended December 31, 2014 and 2013, respectively. This is set forth in the table below. | |||||||||||
Customer | Percentage of Sales | ||||||||||
2014 | 2013 | ||||||||||
1 | 26.8 | 27.7 | |||||||||
2 | 20.5 | 18.3 | |||||||||
3 | * | 10 | |||||||||
* Customer was less than 10% of sales for the year ended December 31, 2014 | |||||||||||
There were three customers that represented 50.4% of gross accounts receivable and two customers that represented 42.9% of gross accounts receivable at December 31, 2014 and 2013, respectively. This is set forth in the table below. | |||||||||||
Customer | Percentage of Receivables | ||||||||||
December | December | ||||||||||
2014 | 2013 | ||||||||||
1 | 29 | 20.1 | |||||||||
2 | 11.4 | * | |||||||||
3 | 10 | 22.8 | |||||||||
* Customer was less than 10% of Gross Accounts | |||||||||||
Receivable at December 31, 2013 | |||||||||||
During the year, the Company had occasionally maintained balances in its bank accounts that were in excess of the FDIC limit. The Company has not experienced any losses on these accounts. | |||||||||||
The Company has several key sole-source suppliers of various parts that are important for one or more of its products. These suppliers are its only source for such parts and, therefore, in the event any of them were to go out of business or be unable to provide parts for any reason, its business could be severely harmed. | |||||||||||
Income Taxes | |||||||||||
The Company accounts for income taxes in accordance with accounting guidance now codified as FASB ASC 740, "Income Taxes," which requires that the Company recognize deferred tax liabilities and assets based on the differences between the financial statement carrying amounts and the tax bases of assets and liabilities, using enacted tax rates in effect in the years the differences are expected to reverse. Deferred income tax benefit (expense) results from the change in net deferred tax assets or deferred tax liabilities. A valuation allowance is recorded when it is more likely than not that some or all deferred tax assets will not be realized. | |||||||||||
The Company accounts for uncertainties in income taxes under the provisions of FASB ASC 740-10-05, "Accounting for Uncertainty in Income Taxes." The ASC clarifies the accounting for uncertainty in income taxes recognized in an enterprise's financial statements. The ASC prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. The ASC provides guidance on de-recognition, classification, interest and penalties, accounting in interim periods, disclosure and transition. | |||||||||||
Earnings per share | |||||||||||
Basic earnings per share is computed by dividing the net income applicable to common stockholders by the weighted-average number of shares of common stock outstanding for the period. Potentially dilutive shares, using the treasury stock method, are included in the diluted per-share calculations for all periods when the effect of their inclusion is dilutive. | |||||||||||
The following is a reconciliation of the denominators of basic and diluted earnings per share computations: | |||||||||||
2014 | 2013 | ||||||||||
Weighted average shares outstanding used to compute basic earnings per share | 6,591,755 | 5,739,014 | |||||||||
Effect of dilutive stock options and warrants | 323,933 | 193,712 | |||||||||
Weighted average shares outstanding and dilutive securities used to compute dilutive earnings per share | 6,915,688 | 5,932,726 | |||||||||
The following securities have been excluded from the calculation as their exercise price was greater than the average market price of the common shares: | |||||||||||
December 31, | December 31, | ||||||||||
2014 | 2013 | ||||||||||
Stock Options | 22,888 | 24,548 | |||||||||
Warrants | 46,800 | - | |||||||||
69,688 | 24,548 | ||||||||||
Stock-Based Compensation | |||||||||||
The Company accounts for stock-based compensation in accordance with FASB ASC 718, "Compensation – Stock Compensation." Under the fair value recognition provision of the ASC, stock-based compensation cost is estimated at the grant date based on the fair value of the award. The Company estimates the fair value of stock options and warrants granted using the Black-Scholes-Merton option pricing model. | |||||||||||
Goodwill | |||||||||||
Goodwill represents the excess of the acquisition cost of businesses over the fair value of the identifiable net assets acquired. The goodwill amount of $5,434,000 relates to the acquisitions of Welding ($291,000), NTW ($162,000), Woodbine ($2,565,000), Eur-PAC ($1,656,000), ECC ($109,000), and AMK ($651,000). Goodwill is not amortized, but is tested at least annually for impairment, or if circumstances occur that more likely than not reduce the fair value of the reporting unit below its carrying amount. | |||||||||||
The Company accounts for the impairment of goodwill under the provisions of ASU 2011-08 (“ASU 2011-08”), “Intangibles Goodwill and Other (Topic 350): Testing Goodwill for Impairment.” ASU 2011-08 updated the guidance on the periodic testing of goodwill for impairment. The updated guidance gives companies the option to perform a qualitative assessment to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount. | |||||||||||
The Company performs impairment testing for goodwill annually, or more frequently when indicators of impairment exist. As discussed above, the Company adopted ASU 2011-08 and performed a qualitative assessment in the fourth quarter of 2014 to determine whether it was more likely than not that the fair value of each of Welding, including Woodbine, NTW, Eur-Pac, ECC, and AMK was less than its carrying amount. | |||||||||||
The Company has determined that there has been no impairment of goodwill at December 31, 2014 and 2013. | |||||||||||
Freight Out | |||||||||||
Freight out is included in operating expenses and amounted to $98,000 and $64,000 for the years ended December 31, 2014 and 2013, respectively. | |||||||||||
JOBS Act | |||||||||||
On April 5, 2012, the JOBS Act was signed into law. The JOBS Act contains provisions that, among other things, reduce certain reporting requirements for qualifying public companies. As an “emerging growth company,” the Company may, under Section 7(a)(2)(B) of the Securities Act, delay adoption of new or revised accounting standards applicable to public companies until such standards would otherwise apply to private companies. An “emerging growth company” is one with less than $1.0 billion in annual sales, has less than $700 million in market value of its shares of common stock held by non-affiliates and issues less than $1.0 billion of non-convertible debt over a three year period. The Company may take advantage of this extended transition period until the first to occur of the date that it (i) is no longer an "emerging growth company" or (ii) affirmatively and irrevocably opts out of this extended transition period. The Company has elected to take advantage of the benefits of this extended transition period. Until the date that it is no longer an "emerging growth company" or affirmatively and irrevocably opts out of the exemption provided by Securities Act Section 7(a)(2)(B), upon issuance of a new or revised accounting standard that applies to its consolidated financial statements and that has a different effective date for public and private companies, the Company will disclose the date on which adoption is required for non-emerging growth companies and the date on which the Company will adopt the recently issued accounting standard. | |||||||||||
Recently Issued Accounting Pronouncements | |||||||||||
Effective January 1, 2014, the Company adopted Accounting Standards Update No. 2013-11, “Income Taxes (Topic 740): Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists” (“ASU 2013-11”). ASU 2013-11 is expected to reduce diversity in practice by providing guidance on the presentation of unrecognized tax benefits and will better reflect the manner in which an entity would settle at the reporting date any additional income taxes that would result from the disallowance of a tax position when net operating loss carryforwards, similar tax losses, or tax credit carryforwards exist. This guidance is effective prospectively for the Company for annual and interim periods beginning January 1, 2014. The adoption of ASU 2013-11 did not have a material effect on the Company's financial position, results of operations or cash flows. | |||||||||||
In May 2014, the FASB issued ASU 2014-09, “Revenue from Contracts with Customers” (“ASU 2014-09”). The amendments in ASU 2014-09 affect any entity that either enters into contracts with customers to transfer goods or services or enters into contracts for the transfer of nonfinancial assets unless those contracts are within the scope of other standards (e.g., insurance contracts or lease contracts). This ASU will supersede the revenue recognition requirements in ASC 605, “Revenue Recognition” and most industry-specific guidance and creates ASC 606, “Revenue from Contracts with Customers.” | |||||||||||
The core principle of the guidance is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. To achieve that core principle, an entity should apply the following steps: | |||||||||||
Step 1: Identify the contract(s) with a customer. | |||||||||||
Step 2: Identify the performance obligations in the contract. | |||||||||||
Step 3: Determine the transaction price. | |||||||||||
Step 4: Allocate the transaction price to the performance obligations in the contract. | |||||||||||
Step 5: Recognize revenue when (or as) the entity satisfies a performance obligation. | |||||||||||
ASU 2014-09 is effective for public entities for annual reporting periods beginning after December 15, 2016, including interim periods within that reporting period. The Company is currently evaluating the effects of the adoption of ASU 2014-09 on its consolidated financial statements. | |||||||||||
In November 2014, the FASB issued ASU 2014-17, “Business Combinations: Pushdown Accounting” (“ASU 2014-17”). ASU 2014-17 provides an acquired entity with an option to apply pushdown accounting in its separate financial statements upon occurrence of an event in which an acquirer obtains control of the acquired entity. The acquired entity may elect the option to apply pushdown accounting in the reporting period in which the change-in-control event occurs. If pushdown accounting is not applied in the reporting period in which the change-in-control event occurs, an acquired entity will have the option to elect to apply pushdown accounting in a subsequent reporting period as a change in accounting principle in accordance with ASC Topic 250, “Accounting Changes and Error Corrections”. If pushdown accounting is applied to an individual change-in-control event, that election is irrevocable. ASU 2014-17 also requires an acquired entity that elects the option to apply pushdown accounting in its separate financial statements to disclose information in the current reporting period that enables users of financial statements to evaluate the effect of pushdown accounting. We adopted the amendments in ASU 2014-17, effective November 18, 2014, as the amendments in the update are effective upon issuance. The adoption did not have an impact on our consolidated financial statements and disclosures. | |||||||||||
In January 2015, the FASB issued ASU 2015-01, “Income Statement – Extraordinary and Unusual Items (Subtopic 225-20): Simplifying Income Statement Presentation by Eliminating the Concept of Extraordinary Items" (“ASU 2015-01”). ASU 2015-01 eliminates the concept of an extraordinary item from accounting principles generally accepted in the United States of America. As a result, an entity will no longer be required to segregate extraordinary items from the results of ordinary operations, to separately present an extraordinary item on its income statement, net of tax, after income from continuing operations or to disclose income taxes and earnings-per-share data applicable to an extraordinary item. However, ASU 2015-01 will still retain the presentation and disclosure guidance for items that are unusual in nature and occur infrequently. ASU 2015-01 becomes effective for interim and annual periods beginning on or after December 15, 2015. Early adoption is permitted. The Company is currently evaluating the effects of Adopting ASU 2015-01 on its consolidated financial statements but the adoption is not expected to have a significant impact on the Company’s consolidated financial statements. | |||||||||||
The Company does not believe that any other recently issued, but not yet effective, accounting standards if currently adopted would have a material effect on the accompanying consolidated financial statements. | |||||||||||
Reclassifications | |||||||||||
Certain account balances in 2013 have been reclassified to conform to the current year presentation. | |||||||||||
Subsequent Events | |||||||||||
Management has evaluated subsequent events through the date of this filing. The Company acquired by merger 100% of the stock of The Sterling Engineering Company of Barkhamsted, CT ("Sterling") as of March 1, 2015. The consideration for the merger was approximately $2,900,000 in cash and 425,000 shares of common stock. The cash consideration is subject to adjustment for working capital changes. The number of shares of common stock is subject to increase, but not to decrease, to the extent that the Volume Weighted Average Price of the common stock for the twenty-days following closing (March 2 to March 27, 2015) is less than $10.00 per share. The Company has also entered into employment and non-compete agreements for two and three year periods with three of the principals of Sterling. | |||||||||||
Sterling founded in 1941 manufactures components for aircraft and ground turbine engines. |
ACCOUNTS_RECEIVABLE
ACCOUNTS RECEIVABLE | 12 Months Ended | ||||||||||||||||
Dec. 31, 2014 | |||||||||||||||||
Notes to Financial Statements | |||||||||||||||||
ACCOUNTS RECEIVABLE | |||||||||||||||||
The components of accounts receivable at December 31, are detailed as follows: | |||||||||||||||||
December 31, | December 31, | ||||||||||||||||
2014 | 2013 | ||||||||||||||||
Accounts Receivable Gross | $ | 13,482,000 | $ | 9,367,000 | |||||||||||||
Allowance for Doubtful Accounts | (1,566,000 | ) | (783,000 | ) | |||||||||||||
Accounts Receivable Net | $ | 11,916,000 | $ | 8,584,000 | |||||||||||||
The allowance for doubtful accounts for the years ended December 31, 2014 and 2013 is as follows: | |||||||||||||||||
Balance at | Charged to Costs | Deductions From | Balance at End of | ||||||||||||||
Beginning of Year | and Expenses | Reserves | Year | ||||||||||||||
Year ended December 31, 2014 | |||||||||||||||||
Allowance for Doubtful Accounts | $ | 783,000 | $ | 816,000 | $ | 33,000 | $ | 1,566,000 | |||||||||
Year ended December 31, 2013 | |||||||||||||||||
Allowance for Doubtful Accounts | $ | 705,000 | $ | 400,000 | $ | 322,000 | $ | 783,000 | |||||||||
INVENTORY
INVENTORY | 12 Months Ended | ||||||||
Dec. 31, 2014 | |||||||||
Notes to Financial Statements | |||||||||
INVENTORY | The components of inventory at December 31, consisted of the following: | ||||||||
December 31, | December 31, | ||||||||
2014 | 2013 | ||||||||
Raw Materials | $ | 7,168,000 | $ | 6,002,000 | |||||
Work In Progress | 14,886,000 | 15,665,000 | |||||||
Finished Goods | 10,072,000 | 7,712,000 | |||||||
Progress Payments Received | (260,000 | ) | (416,000 | ) | |||||
Inventory Reserve | (3,475,000 | ) | (2,741,000 | ) | |||||
Total Inventory | $ | 28,391,000 | $ | 26,222,000 | |||||
The Company periodically evaluates inventory and establishes reserves for obsolescence, excess quantities, slow-moving goods, and for other impairment of value. The Company presents inventory net of progress billings in accordance with the specified contractual arrangements with the United States Government, which results in the transfer of title of the related inventory from the Company to the United States Government, when such progress payments are received. | |||||||||
PROPERTY_AND_EQUIPMENT
PROPERTY AND EQUIPMENT | 12 Months Ended | |||||||||
Dec. 31, 2014 | ||||||||||
Notes to Financial Statements | ||||||||||
PROPERTY AND EQUIPMENT | The components of property and equipment at December 31, consisted of the following: | |||||||||
December 31, | December 31, | |||||||||
2014 | 2013 | |||||||||
Land | $ | 200,000 | $ | - | ||||||
Buildings and Improvements | 1,680,000 | - | 31.5 years | |||||||
Machinery and Equipment | 12,514,000 | 6,251,000 | 5 - 8 years | |||||||
Capital Lease Machinery and Equipment | 1,800,000 | 5,261,000 | 5 - 8 years | |||||||
Tools and Instruments | 5,566,000 | 5,009,000 | 1.5 - 7 years | |||||||
Automotive Equipment | 162,000 | 59,000 | 5 years | |||||||
Furniture and Fixtures | 275,000 | 257,000 | 5 - 8 years | |||||||
Leasehold Improvements | 646,000 | 646,000 | Term of Lease | |||||||
Computers and Software | 372,000 | 357,000 | 4-6 years | |||||||
Total Property and Equipment | 23,215,000 | 17,840,000 | ||||||||
Less: Accumulated Depreciation | (13,658,000 | ) | (11,317,000 | ) | ||||||
Property and Equipment, net | $ | 9,557,000 | $ | 6,523,000 | ||||||
Depreciation expense for the years ended December 31, 2014 and 2013 was approximately $2,364,000 and $1,709,000, respectively. |
INTANGIBLE_ASSETS
INTANGIBLE ASSETS | 12 Months Ended | |||||||||
Dec. 31, 2014 | ||||||||||
Notes to Financial Statements | ||||||||||
INTANGIBLE ASSETS | The components of the intangibles assets at December 31, consisted of the following: | |||||||||
December | December | |||||||||
31, | 31, | |||||||||
2014 | 2013 | |||||||||
Customer Relationships | $ | 6,255,000 | $ | 5,815,000 | 5 to 14 years | |||||
Trade Names | 1,280,000 | 770,000 | 20 years | |||||||
Technical Know-how | 660,000 | 660,000 | 10 years | |||||||
Non-Compete | 50,000 | 50,000 | 5 years | |||||||
Professional Certifications | 15,000 | 15,000 | .25 to 2 years | |||||||
Total Intangible Assets | 8,260,000 | 7,310,000 | ||||||||
Less: Accumulated Amortization | (3,747,000 | ) | (2,584,000 | ) | ||||||
Intangible Assets, net | $ | 4,513,000 | $ | 4,726,000 | ||||||
The expense for amortization of the intangibles for both of the years ended December 31, 2014 and 2013 was approximately $1,163,000. | ||||||||||
Future amortization of intangibles is as follows: | ||||||||||
For the year ending | Amount | |||||||||
31-Dec-15 | $ | 1,228,000 | ||||||||
31-Dec-16 | 1,228,000 | |||||||||
30-Dec-17 | 703,000 | |||||||||
31-Dec-18 | 233,000 | |||||||||
31-Dec-19 | 233,000 | |||||||||
Thereafter | 888,000 | |||||||||
Total | $ | 4,513,000 | ||||||||
SALE_AND_LEASEBACK_TRANSACTION
SALE AND LEASEBACK TRANSACTION | 12 Months Ended |
Dec. 31, 2014 | |
Notes to Financial Statements | |
SALE AND LEASEBACK TRANSACTION | |
On October 24, 2006, the Company consummated a Sale - Leaseback Arrangement, whereby the Company sold the buildings and real property comprising its corporate headquarters in Bay Shore, New York (the "Property") for a purchase price of $6,200,000. The Company accounted for the transaction under the provisions of FASB ASC 840-40, “Leases – Sale-Leaseback Transactions.” The Company realized a gain on the sale of $1,051,000 of which $300,000 was recognized during the year ended December 31, 2006. The remaining $751,000 is being recognized ratably over the remaining term of the twenty year lease at approximately $38,000 per year. The gain is included in Other Income in the accompanying Consolidated Statement of Income. The unrecognized portion of the gain in the amount of $447,000 and $485,000 as of December 31, 2014 and 2013, respectively, is classified as Deferred Gain on Sale in the accompanying Consolidated Balance Sheet. | |
Simultaneous with the closing of the sale of the Property, the Company entered into a 20-year triple-net lease (the "Lease") with the Purchaser for the property. Base annual rent is approximately $540,000 for the first five years, $560,000 for the sixth year, and thereafter increases 3% per year. The Lease grants AIM an option to renew the Lease for an additional period of five years. The Company has on deposit with the Purchaser $127,500 as security for the performance of its obligations under the Lease. In addition, the Company deposited $393,000 with the landlord as security for the completion of certain repairs and upgrades to the Property. This amount is included in the caption Deferred Finance costs, net, Deposit and Other Assets on the accompanying Consolidated Balance Sheet. Pursuant to the terms of the Lease, the Company is required to pay all of the costs associated with the operation of the facilities, including, without limitation, insurance, taxes and maintenance. The lease also contains customary representations, warranties, obligations, conditions and indemnification provisions and grants the Purchaser customary remedies upon a breach of the lease by the Company, including the right to terminate the Lease and hold the Company liable for any deficiency in future rent. See Note 13 Commitments and Contingencies. |
NOTES_PAYABLE_AND_CAPITAL_LEAS
NOTES PAYABLE AND CAPITAL LEASE OBLIGATIONS | 12 Months Ended | ||||||||
Dec. 31, 2014 | |||||||||
Notes to Financial Statements | |||||||||
NOTES PAYABLE AND CAPITAL LEASE OBLIGATIONS | Notes payable and capital lease obligations consist of the following: | ||||||||
December 31, | December 31, | ||||||||
2014 | 2013 | ||||||||
Revolving credit note payable to PNC Bank N.A. ("PNC") | $ | 17,672,000 | $ | 12,029,000 | |||||
Term loans, PNC | 8,363,000 | 1,948,000 | |||||||
Capital lease obligations | 1,645,000 | 1,787,000 | |||||||
Notes payable to sellers of WMI | 41,000 | 732,000 | |||||||
Junior subordinated notes | - | 1,000,000 | |||||||
Subtotal | 27,721,000 | 17,496,000 | |||||||
Less: Current portion of notes and capital obligations | (19,508,000 | ) | (14,969,000 | ) | |||||
Notes payable and capital lease obligations, net of current portion | $ | 8,213,000 | $ | 2,527,000 | |||||
PNC Bank N.A. ("PNC") | |||||||||
The Company has a credit facility with PNC (the "Loan Facility") secured by substantially all of its assets. The Loan Facility has been amended many times during its term. The Company entered into the latest amendment to the Loan Facility in December 2014 and paid an amendment fee of $25,000. The Loan Facility now provides for maximum borrowings of approximately $32,000,000 consisting of the following at December 31, 2014: | |||||||||
(i) | a $23,000,000 revolving loan (includes inventory sub-limit of $15,000,000) and | ||||||||
(ii) | Three term loans (Term Loan A, Term Loan B, and Term Loan C). | ||||||||
Under the terms of the Loan Facility the revolving credit note now bears interest at (a) the sum of the Alternate Base Rate plus three quarters of one percent (0.75%) with respect to Domestic Rate Loans and (b) the sum of the Eurodollar Rate plus two and one half of one percent (2.50%) with respect to LIBOR Rate Loans. Prior to the amendment the revolving credit note bore interest at the sum of the Alternate Base Rate plus three quarters of one percent (0.75%) with respect to Domestic Rate Loans and (b) the sum of the Eurodollar Rate plus two and three quarters of one percent (2.75%) with respect to Eurodollar Rate Loans. The revolving credit note had an interest rate of 4.0% and 5.50% per annum at December 31, 2014 and 2013, respectively, and an outstanding balance of $17,672,000 and $12,029,000, respectively. The maturity date of the revolving credit note is November 30, 2016. | |||||||||
Each day, the Company's cash collections are swept directly by the bank to reduce the revolving loans and we then borrow according to a borrowing base. As such, the Company generally has no cash on hand. Cash shown on the balance sheet at any date reflects drawdowns against the revolving credit loan for disbursement checks written that have not yet been presented for payment. Because the revolving loans contain a subjective acceleration clause which could permit PNC to require repayment prior to maturity, the loans are classified with the current portion of notes and capital lease obligations. | |||||||||
The repayment terms of Term Loan A were amended in 2014. On April 1, 2014, the Company borrowed an additional $1,328,000 to partially fund the acquisition of Woodbine. The repayment terms of Term Loan A now consists of thirty-two consecutive monthly principal installments, the first thirty-one of which shall be in the amount of $31,859 commencing on the first business day of May 2014, and continuing on the first business day of each month thereafter, with a thirty-second and final payment of any unpaid balance of principal and interest on the last business day of November 2016. Term Loans A and B bear interest at (a) the sum of the Alternate Base Rate plus one and three quarters of one percent (1.75%) with respect to Domestic Rate Loans and (b) the sum of the LIBOR Rate plus three percent (3.00%) with respect to LIBOR Rate Loans. At December 31, 2014 and 2013, the balance due under Term Loan A was $1,073,704 and $1,948,000, respectively. | |||||||||
On October 1, 2014, the Company borrowed $3,500,000 under Term Loan B for the acquisition of AMK. The repayment of Term Loan B consists of sixty consecutive monthly principal installments, the first fifty-nine of which shall be in the amount of $58,333 commencing on the first business day of December 2014, and continuing on the first business day of each month thereafter, with a sixtieth and final payment of any unpaid balance of principal and interest on the last business day of November 2019. Term Loan B bears interest at the same rate as Term Loan A. The first interest payment was on the first business day of November 2014. At December 31, 2014, the balance due under Term Loan B was $3,441,667. | |||||||||
On December 31, 2014, the Company borrowed $2,500,000 under Term Loan C to refinance the Seller Note and Mortgage of $2,500,000 issued as part of the acquisition of AMK. The maturity date of the Term Loan C is the first business day of January 2021, and it is to be paid in seventy two consecutive monthly principal installments, which commence on the first business day of February 2015, and continue on the first business day of each month thereafter. The first seventy-one of the installments shall be in the amount of $34,722 with a seventy second and final payment of any unpaid principal and interest on the first business day of January 2021. Term Loan C bears interest at (a) the sum of the Alternate Base Rate plus two percent (2.00%) with respect to Domestic Rate Loans and (b) the sum of the LIBOR Rate plus three and one-quarter percent (3.25%) with respect to LIBOR Rate Loans. At December 31, 2014, the balance due under Term Loan C was $2,500,000. | |||||||||
To the extent that the Company disposes of collateral used to secure the Loan Facility, other than inventory, the Company must promptly repay the draws on the credit facility in the amount equal to the net proceeds of such sale. | |||||||||
The terms of the Loan Facility require that, among other things, the Company maintain a specified Fixed Charge Coverage Ratio. In addition, the Company is limited in the amount of Capital Expenditures it can make. The Company is also limited to the amount of Dividends it can pay its shareholders as defined in the Loan Facility. As of both December 31, 2014 and 2013, the Company was in compliance with all terms of the Loan Facility. | |||||||||
The Company's receivables are payable directly into a lockbox controlled by PNC (subject to the terms of the Loan Facility). PNC may use some elements of subjective business judgment in determining whether a material adverse change has occurred in the Company's condition, results of operations, assets, business, properties or prospects allowing it to demand repayment of the Loan Facility. | |||||||||
As of December 31, 2014 the future minimum principal payments for the term loans are as follows: | |||||||||
For the year ending | Amount | ||||||||
31-Dec-15 | $ | 1,464,000 | |||||||
31-Dec-16 | 3,156,000 | ||||||||
31-Dec-17 | 1,117,000 | ||||||||
31-Dec-18 | 1,117,000 | ||||||||
31-Dec-19 | 1,058,000 | ||||||||
Thereafter | 451,000 | ||||||||
PNC Term Loans payable | 8,363,000 | ||||||||
Less: Current portion | (1,464,000 | ) | |||||||
Long-term portion | $ | 6,899,000 | |||||||
Interest expense related to these credit facilities amounted to approximately $853,000 and $928,000 for the years ended December 31, 2014 and 2013, respectively. | |||||||||
On March 9, 2015, the Company borrowed $3,500,000 under Term Loan D for the acquisition of Sterling. The repayment of Term Loan D consists of twenty consecutive monthly principal installments, the first nineteen of which shall be in the amount of $62,847 commencing on the first business day of April 2015, and continuing on the first business day of each month thereafter, with a twentieth and final payment of any unpaid balance of principal and interest on the last business day of November 2016. Term Loan D bears interest at (a) the sum of the Alternate Base Rate plus two and one quarter percent (2.25%) with respect to Domestic Rate Loans and (b) the sum of the LIBOR Rate plus three and one-half percent (3.5%) with respect to LIBOR Rate Loans. | |||||||||
Capital Leases Payable – Equipment | |||||||||
The Company is committed under several capital leases for manufacturing and computer equipment. All leases have bargain purchase options exercisable at the termination of each lease. Capital lease obligations totaled $1,645,000 and $1,787,000 as of December 31, 2014 and 2013, respectively, with various interest rates ranging from approximately 4% to 7%. | |||||||||
As of December 31, 2014, the aggregate future minimum lease payments, including imputed interest, with remaining terms of greater than one year are as follows: | |||||||||
For the year ending | Amount | ||||||||
31-Dec-15 | $ | 416,000 | |||||||
31-Dec-16 | 416,000 | ||||||||
31-Dec-17 | 416,000 | ||||||||
31-Dec-18 | 400,000 | ||||||||
31-Dec-19 | 225,000 | ||||||||
Thereafter | 7,000 | ||||||||
Total future minimum lease payments | 1,880,000 | ||||||||
Less: imputed interest | (235,000 | ) | |||||||
Less: current portion | (331,000 | ) | |||||||
Total Long Term Portion | $ | 1,314,000 | |||||||
On July 1, 2013, coincident with the acquisition of Decimal, the Company satisfied approximately $454,000 of capital leases that had maturities of less than one year remaining. As a result of this satisfaction, PNC now has the first lien on the equipment that was previously leased under the capital leases. | |||||||||
Notes Payable - Sellers | |||||||||
As of December 31, 2014 and 2013, the balance owed to the sellers of Welding is: | |||||||||
December 31, | December 31, | ||||||||
2014 | 2013 | ||||||||
Former Welding Stockholders | $ | 41,000 | $ | 732,000 | |||||
Less: Current Portion | (41,000 | ) | (691,000 | ) | |||||
Total long-term portion | $ | - | $ | 41,000 | |||||
In connection with the acquisition of Welding on August 24, 2007, the Company incurred a note payable (“Note”) to the former stockholders of Welding. Our obligation under the Note is subordinate to our indebtedness to PNC. | |||||||||
The Note and payment terms were adjusted and/or amended several times. On October 1, 2010, the Company entered into a letter agreement with the former stockholders of Welding. It was agreed that all interest that had been accrued and not yet paid under prior arrangements would be capitalized into the principal balance of the Note, making the new balance of the Note $2,397,967. Payments on the Note began on October 1, 2010. It was further agreed that payments would be made according to the following schedule: equal monthly installments of $40,000 on the first business day of each month until December 31, 2011, followed by equal monthly installments of $60,000 on the first business day of each month commencing on January 1, 2012 and continuing until the entire principal amount of the obligation is paid in full. Interest shall accrue at the rate of 7% per annum, and each payment will first apply to interest and then to principal. At December 31, 2014 and 2013, the balance owed under the Note was $41,000 and $732,000, respectively. On January 5, 2015 the remaining balance of $41,000 was paid and the obligation was extinguished. | |||||||||
Interest expense related the Note was $30,000 and $76,000 for the years ended December 31, 2014 and 2013, respectively. | |||||||||
Junior Subordinated Notes | |||||||||
In 2008 and 2009, the Company sold in a series of private placements to accredited investors $5,990,000 of principal amount in Junior Subordinated Notes. The notes bear interest at the rate of 1% per month (or 12% per annum). | |||||||||
In connection with the offering of the Company's Junior Subordinated Notes, the Company issued to Taglich Brothers, Inc. ("Taglich Brothers"), as placement agent, a Junior Subordinated Note in the principal amount of $510,000. The terms of the note issued to Taglich Brothers are identical to the notes. In connection with the amounts raised in 2009, the Company issued to Taglich Brothers a Junior Subordinated Note on the same terms as the Junior Subordinated Notes referred to above for commission of $44,500. | |||||||||
In conjunction with the Private Placement of our common stock to raise money for the NTW Acquisition, the Company solicited the holders of our Junior Subordinated Notes to convert their notes to Common Stock at a price of $6.00 per share. On June 29, 2012, the Company issued 867,461 shares of its Common Stock in exchange for approximately $5,204,000 of its Junior Subordinated Notes. On July 26, 2012, the Company repaid $115,000 of its Junior Subordinated Notes along with the accrued interest thereon of approximately $1,000. | |||||||||
The due dates of the remaining Junior Subordinated Notes were extended from November 18, 2013 to mature on November 30, 2016 and are subordinated to the Company's obligations to PNC. The Junior Subordinated Notes were satisfied in June 2014. | |||||||||
The balance owed on the Junior Subordinated Notes is $0 and $1,000,000 at December 31, 2014 and 2013, respectively. | |||||||||
Interest expense on the Junior Subordinated Notes amounted to $61,000 and $120,000 for the years ended December 31, 2014 and 2013, respectively. |
ACCOUNTS_PAYABLE_AND_ACCRUED_E
ACCOUNTS PAYABLE AND ACCRUED EXPENSES | 12 Months Ended | ||||||||
Dec. 31, 2014 | |||||||||
Notes to Financial Statements | |||||||||
ACCOUNTS PAYABLE AND ACCRUED EXPENSES | The components of accounts payable at December 31, are detailed as follows: | ||||||||
December 31, | December 31, | ||||||||
2014 | 2013 | ||||||||
Accounts Payable | $ | 5,636,000 | $ | 5,142,000 | |||||
Accrued Expenses | 812,000 | 793,000 | |||||||
Other Payables | 500,000 | 920,000 | |||||||
$ | 6,948,000 | $ | 6,855,000 |
STOCKHOLDERS_EQUITY
STOCKHOLDERS' EQUITY | 12 Months Ended |
Dec. 31, 2014 | |
Notes to Financial Statements | |
STOCKHOLDERS' EQUITY | |
Common Stock Issuances | |
During the year ended December 31, 2014, the Company issued 26,972 shares of its common stock pursuant to the cashless exercise of Warrants and 17,612 shares of its common stock pursuant to the cashless exercise of Stock Options. | |
On April 1, 2014, in connection with the acquisition of Woodbine, the Company issued 30,000 shares of its common stock to the former stockholders of Woodbine. | |
On June 3, 2014, in connection with its Registered Direct Offering (“the Offering”), the Company issued 1,170,000 shares of its common stock. These securities were offered pursuant to the Company’s effective “shelf” registration statement on Form S-3 (File NO. 333-191748), which was declared effective by the Securities and Exchange Commission on December 11, 2013. Taglich Brothers acted as the exclusive placement agent for the Offering (see Note 16). The gross proceeds of the offering were $10,530,000 comprised of $9,530,000 in cash and $1,000,000 in the conversion of our Junior Subordinated Notes (see Note 9). The Company paid to Taglich Brothers a commission of approximately $842,000 and warrants to purchase up to 46,800 shares of common stock at a per share price of $11.25. Additionally, the Company paid legal fees on behalf of Taglich Brothers in the amount of $75,000 and paid a qualified independent underwriter approximately $50,000 for their services. The Company netted cash of approximately $8,562,000 from the Offering. A portion of these funds were used to finance the acquisition of Eur-Pac Corporation (see Note 2). | |
On June 4, 2014, in connection with the acquisition of Eur-Pac, the Company issued 20,000 shares of its common stock to the former stockholders of Eur-Pac. | |
On October 28, 2013, the Company sold 133,000 shares of its common stock pursuant to a Common Stock Purchase Agreement for $7.50 a share for gross proceeds of $997,000. | |
Dividends | |
On March 11, 2013, the Board of Directors approved and the Company announced a quarterly dividend of $0.0625 per common share to be paid on April 1, 2013 to all shareholders of record as of the close of business on March 15, 2013. The approximate amount of the dividend was $359,000. | |
On June 20, 2013, the Board of Directors approved and the Company announced a quarterly dividend of $0.0625 per common share paid on July 5, 2013 to all shareholders of record as of the close of business on July 1, 2013. The approximate amount of the dividend was $358,000. | |
On September 17, 2013, the Board of Directors approved and the Company announced a quarterly dividend of $0.125 per common share paid on October 15, 2013 to all shareholders of record as of the close of business on September 30, 2013. The approximate amount of the dividend was $716,000. | |
On December 30, 2013, the Board of Directors approved and the Company announced a quarterly dividend of $0.125 per common share paid on January 24, 2014 to all shareholders of record as of the close of business on January 9, 2014. The approximate amount of the divided was $717,000. | |
On March 26, 2014, the Board of Directors approved and the Company announced a quarterly dividend of $0.15 per common share paid on April 22, 2014 to all shareholders of record as of the close of business on April 15, 2014. The approximate amount of the dividend was $885,000. | |
On June 19, 2014, the Board of Directors approved and the Company announced a quarterly dividend of $0.15 per common share paid on July 10, 2014 to all shareholders of record as of the close of business on June 30, 2014. The approximate amount of the dividend was $1,064,000. | |
On October 10, 2014, the Board of Directors approved and the Company announced a quarterly dividend of $0.15 per common share paid on November 3, 2014 to all shareholders of record as of the close of business on October 20, 2014. The approximate amount of the dividend was $1,065,000. | |
On December 19, 2014, the Board of Directors approved and the Company announced a quarterly dividend of $0.15 per common share paid on January 15, 2015 to all shareholders of record as of the close of business on January 2, 2015. The approximate amount of the dividend was $1,066,000. | |
Derivative Liabilities | |
In connection with the issuances of equity instruments or debt, the Company may issue options or warrants to purchase common stock. In certain circumstances, these options or warrants may be classified as liabilities, rather than as equity. In addition, the equity instrument or debt may contain embedded derivative instruments, such as conversion options or listing requirements, which in certain circumstances may be required to be bifurcated from the associated host instrument and accounted for separately as a derivative liability instrument. The Company accounts for derivative liability instruments under the provisions of FASB ASC 815, “Derivatives and Hedging.” | |
Warrants Issued To Taglich Brothers | |
As discussed above, the Company issued warrants to Taglich Brothers. Such warrants contain “cashless exercise” provisions. As a result, the value of the warrants has to be recognized as a liability. In addition, the Company would be required to revalue the derivative liability at the end of each reporting period with the change in value reported on the consolidated statement of income. The Company did not account for the derivative liability in its consolidated financial statements as it was determined to not be material. |
EMPLOYEE_BENEFITS_PLANS
EMPLOYEE BENEFITS PLANS | 12 Months Ended |
Dec. 31, 2014 | |
Notes to Financial Statements | |
EMPLOYEE BENEFITS PLANS | |
The Company employs both union and non-union employees and maintains several benefit plans. | |
Union | |
Substantially the entire workforce at AIM is subject to a union contract with the United Service Workers Union TUJAT Local 355, EIN 11-1772919 (the "Union"). The contract expires on December 31, 2015. | |
Medical benefits for union employees are provided through a policy with Insperity, the costs of which are substantially borne by the Company. In addition, the Company is obligated to make contributions for union dues and a security fund (defined contribution plan) for the benefit of each union employee. Contributions to the security fund amounted to $242,000 and $247,000 for the years ended December 31, 2014 and 2013, respectively. | |
The Company adopted ASU No. 2011-09, "Compensation - Retirement Benefits-Multiemployer Plans (Subtopic 715-80): Disclosures about an Employer's Participation in a Multiemployer Plan" ("ASU 2011-09"). ASU 2011-09 requires additional disclosures about an employer's participation in a multiemployer pension plan. Previously, disclosures were limited primarily to the historical contributions made to the plans. ASU 2011-09 applies to nongovernmental entities that participate in multiemployer plans. The Union’s retirement plan is a defined contribution plan. As such, the Company is not responsible for the obligations of other companies in the Union’s retirement plan and no further disclosures are required. | |
Others | |
All other Company employees, are covered under a co-employment agreement with Insperity. | |
The Company has two defined contribution plans under Section 401(k) of the Internal Revenue Code (the "Plans"). Pursuant to the Plans, qualified employees may contribute a percentage of their pretax eligible compensation to the Plan. The Company does not match any contributions that employees may make to either Plan. |
COMMITMENTS_AND_CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 12 Months Ended | ||||||||||||||||||||||||||||
Dec. 31, 2014 | |||||||||||||||||||||||||||||
Notes to Financial Statements | |||||||||||||||||||||||||||||
COMMITMENTS AND CONTINGENCIES | |||||||||||||||||||||||||||||
Real Estate Leases | |||||||||||||||||||||||||||||
The Company leases its facilities under various operating lease agreements, which contain renewal options and escalation provisions. Rent expense was $2,270,000 and $1,978,000 for the years ended December 31, 2014 and 2013, respectively. The Company is responsible for paying all operating costs under the terms of the leases. As of December 31, 2014, the aggregate future minimum lease payments are as follows: | |||||||||||||||||||||||||||||
For the year ending | Plant | Fifth | Lamar | Motor | Porter | Old Willets | Total | ||||||||||||||||||||||
Avenue | Street | Street | Parkway | Street | Path | Rents | |||||||||||||||||||||||
Annual | Annual | Annual | AnnualRent | Annual | Annual | ||||||||||||||||||||||||
Rent | Rent | Rent | Rent | Rent | |||||||||||||||||||||||||
31-Dec-15 | $ | 633,000 | $ | 684,000 | $ | 360,000 | $ | 117,000 | $ | 115,000 | $ | 22,000 | $ | 1,931,000 | |||||||||||||||
31-Dec-16 | 615,000 | 704,000 | 360,000 | 103,000 | 115,000 | - | 1,897,000 | ||||||||||||||||||||||
31-Dec-17 | 543,000 | 725,000 | 360,000 | 106,000 | 115,000 | - | 1,849,000 | ||||||||||||||||||||||
31-Dec-18 | 559,000 | 747,000 | 300,000 | 110,000 | 115,000 | - | 1,831,000 | ||||||||||||||||||||||
31-Dec-19 | 576,000 | 769,000 | - | 113,000 | 48,000 | - | 1,506,000 | ||||||||||||||||||||||
Thereafter | 3,865,000 | 5,832,000 | - | 219,000 | - | - | 9,916,000 | ||||||||||||||||||||||
Total Rents | $ | 6,791,000 | $ | 9,461,000 | $ | 1,380,000 | $ | 768,000 | $ | 508,000 | $ | 22,000 | $ | 18,930,000 | |||||||||||||||
The leases provide for scheduled increases in base rent. Rent expense is charged to operations using the straight-line method over the term of the lease which results in rent expense being charged to operations at inception of the lease in excess of required lease payments. This excess is shown as deferred rent in the accompanying consolidated balance sheets. | |||||||||||||||||||||||||||||
One of the Company’s former subsidiaries was located in the Plant Avenue facility and following the discontinuance of its operations, a portion of the facility was vacant. The Company recorded a charge for $579,000 at December 31, 2009 representing the estimated discounted future cost of part of the Plant Avenue facility. | |||||||||||||||||||||||||||||
As of December 31, 2014, the estimated discounted future cost of the Plant Avenue lease that will be charged to expense for the year ending December 31, 2015 will be $56,000. | |||||||||||||||||||||||||||||
On July 1, 2010, the Company entered into a sublease with a third party to rent a portion of the vacant space at the Plant Avenue facility. Under the terms of the sublease, the sub-tenant occupied approximately 17,787 square feet for the months of July 2010 through October 2010. Beginning in November 2010, the sub-tenant occupied approximately 27,787 square feet. The space was being subleased for $3.00 per square foot, with a discount in the first month of 50%. The sublease was a month-to-month lease and could be terminated by either party with 90 days written notice. This sublease was terminated on June 30, 2013. |
INCOME_TAXES
INCOME TAXES | 12 Months Ended | ||||||||
Dec. 31, 2014 | |||||||||
Notes to Financial Statements | |||||||||
INCOME TAXES | |||||||||
The provision for income taxes as at December 31, are set forth below: | |||||||||
2014 | 2013 | ||||||||
Current | |||||||||
Federal | $ | 939,000 | $ | 1,135,000 | |||||
State | 16,000 | 339,000 | |||||||
Prior year overaccruals | |||||||||
Federal | 10,000 | -185,000 | |||||||
State | -290,000 | -223,000 | |||||||
Total Expense | 675,000 | 1,066,000 | |||||||
Deferred Tax Benefit | (1,043,000 | ) | -1,236,000 | ||||||
Net Benefit from Income Taxes | $ | (368,000 | ) | $ | -170,000 | ||||
The following is a reconciliation of our income tax rate computed using the federal statutory rate to our actual income tax rate as of December 31, | |||||||||
2014 | 2013 | ||||||||
Federal Tax Rate | 34 | % | 34 | % | |||||
Effect of State Taxes | 6 | % | 6 | % | |||||
State Franchise Taxes | 4 | % | 1 | % | |||||
Permanent Differences | -12 | % | -3 | % | |||||
Prior Year Over Accrual and Others | -155 | % | -8 | % | |||||
Change in Valuation Allowance | 0 | % | -35 | % | |||||
Total | -123 | % | -5 | % | |||||
The components of net deferred tax assets as of December 31, are set forth below: | |||||||||
December 31, | December 31, | ||||||||
2014 | 2013 | ||||||||
Deferred tax assets: | |||||||||
Current: | |||||||||
Bad debts | $ | 650,000 | $ | 313,000 | |||||
Inventory - 263A adjustment | 762,000 | 729,000 | |||||||
Account payable, accrued expenses and reserves | 9,000 | 9,000 | |||||||
Total current deferred tax asset before valuation allowance | 1,421,000 | 1,051,000 | |||||||
Valuation Allowance | - | - | |||||||
Total current deferred tax asset after valuation allowance | $ | 1,421,000 | $ | 1,051,000 | |||||
Non-Current | |||||||||
Capital loss carry forwards | $ | 1,088,000 | $ | 1,088,000 | |||||
Section 1231 loss carry forward | 4,000 | 4,000 | |||||||
Stock based compensation - options and restricted stock | 527,000 | 521,000 | |||||||
Capitalized engineering costs | 522,000 | 503,000 | |||||||
Deferred rent | 483,000 | 453,000 | |||||||
Amortization - NTW Transaction | 663,000 | 475,000 | |||||||
Lease impairment | 22,000 | 51,000 | |||||||
Deferred gain on sale of real estate | 179,000 | 194,000 | |||||||
Total deferred tax assets before valuation allowance | 3,488,000 | 3,289,000 | |||||||
Valuation allowance | (1,092,000 | ) | (1,092,000 | ) | |||||
Total deferred tax assets after valuation allowance | $ | 2,396,000 | $ | 2,197,000 | |||||
Deferred tax liabilities: | |||||||||
Property and equipment | $ | (1,082,000 | ) | $ | (1,497,000 | ) | |||
Goodwill - NTW Transaction | (11,000 | ) | (7,000) | ||||||
Goodwill - AMK Transaction | -4,000 | - | |||||||
Amortization - Welding Transaction | (441,000 | ) | (508,000 | ) | |||||
Total Deferred Tax Liability | (1,538,000 | ) | (2,012,000 | ) | |||||
Net deferred tax asset | $ | 858,000 | $ | 185,000 | |||||
During 2013, the Company determined that it no longer needed to provide a valuation allowance on the net deferred tax assets except for the capital loss and section 1231 loss carryforwards. This was based upon the fact that management believes that the net deferred tax assets are more likely than not to be realized. The valuation allowance at December 31, 2014 and 2013 amounted to $1,092,000. | |||||||||
The Company has a capital loss carry forward from the sale of Sigma Metals, Inc., a former subsidiary of the Company, of $2,719,000 which will expire in fiscal 2015. | |||||||||
At December 31, 2014 and 2013, the Company had no material unrecognized tax benefits and no adjustments to liabilities or operations were required. The Company does not expect that its unrecognized tax benefits will materially increase within the next twelve months. The Company recognizes interest and penalties related to uncertain tax positions in interest expense. As of December 31, 2014 and 2013, the Company has not recorded any provisions for accrued interest and penalties related to uncertain tax positions. | |||||||||
In certain cases, the Company's uncertain tax positions are related to tax years that remain subject to examination by the relevant tax authorities. The Company files federal and state income tax returns in jurisdictions with varying statutes of limitations. The 2011 through 2014 tax years generally remain subject to examination by federal and state tax authorities. |
STOCK_OPTIONS_AND_WARRANTS
STOCK OPTIONS AND WARRANTS | 12 Months Ended | ||||||||||||
Dec. 31, 2014 | |||||||||||||
Notes to Financial Statements | |||||||||||||
Note 15. STOCK OPTIONS AND WARRANTS | Stock-Based Compensation | ||||||||||||
On June 3, 2013, the Company's Board of Directors adopted and on July 29, 2013, the Company’s stockholders approved the 2013 Equity Incentive Plan (the “2013 Plan”). The 2013 Plan is virtually identical to and replaced the 2010 Equity Incentive Plan which was adopted in July 2010. The Company reserved 600,000 shares of its Common Stock for various issuances. The 2013 Plan permits the Company to grant non-qualified and incentive stock options to employees, directors, and consultants. | |||||||||||||
During the years ended December 31, 2014 and 2013, the Board of Directors approved the issuance of 24,000 and 13,500 options, respectively, to the non-employee members of the Company’s Board of Directors. These options vested immediately. | |||||||||||||
On December 1, 2014, the Board of Directors approved the issuance of 120,000 options to the Company's chief executive officer. These options vest ratably over three years. | |||||||||||||
On October 1, 2013, the Board of Directors approved the issuance of 99,747 options to certain management employees. These options vest ratably over three years. | |||||||||||||
The Company recorded expenses of $42,000 and $38,000 in its consolidated statement of income for the years ended December 31, 2014 and 2013, respectively, and such amounts were included as a component of general and administrative expense. | |||||||||||||
The fair values of stock options granted were estimated using the Black-Sholes option-pricing model with the following assumptions for the years ended December 31: | |||||||||||||
2014 | 2013 | ||||||||||||
Risk-free interest rates | 1.55% - 1.68 | % | 0.71% - 1.75 | % | |||||||||
Expected life (in years) | 7-May | 5 | |||||||||||
Expected volatility | 25 | % | 25 | % | |||||||||
Dividend yield | 5.6% - 6.1% | 5.60% | |||||||||||
Weighted-average grant date fair value per share | $1.10 | $0.83 | |||||||||||
The expected life is the number of years that the Company estimates, based upon history, that the options will be outstanding prior to exercise or forfeiture. Expected life is determined using the “simplified method” permitted by Staff Accounting Bulletin No. 107. In addition to the inputs referenced above regarding the option pricing model, the Company adjusts the stock-based compensation expense for estimated forfeiture rates that are revised prospectively according to forfeiture experience. The stock volatility factor is based on the New York Stock Exchange ARCA Defense Index. The Company did not use the volatility rate for its common stock as the Company determined that its common stock is thinly traded. | |||||||||||||
A summary of the status of the Company's stock options as of December 31, 2014, and changes during the two years then ended are presented below. | |||||||||||||
Options | Wtd. Avg. Exercise Price | ||||||||||||
Balance, December 31, 2012 | 327,338 | $ | 9.97 | ||||||||||
Granted during the period | 113,247 | 6.85 | |||||||||||
Exercised during the period | -18,253 | 4.5 | |||||||||||
Terminated/Expired during the period | - | - | |||||||||||
Balance, December 31, 2013 | 422,332 | 9.34 | |||||||||||
Granted during the period | 144,000 | 10.13 | |||||||||||
Exercised during the period | (33,133 | ) | 4.74 | ||||||||||
Terminated/Expired during the period | -4,660 | 81.72 | |||||||||||
Balance, December 31, 2014 | 528,539 | $ | 8.98 | ||||||||||
Exercisable at December 31, 2014 | 396,627 | $ | 9.28 | ||||||||||
The following table summarizes information about stock options at December 31, 2014: | |||||||||||||
Range of Exercise | Remaining | Wtd. Avg. | Wtd. Avg. | ||||||||||
Prices | Number | Life | Exercise Price | ||||||||||
Outstanding | |||||||||||||
$ | 0.00 - $5.00 | 246,168 | .8 years | $ | 4.39 | ||||||||
$ | 5.01 - $90.00 | 272,831 | 5.9 years | 8.88 | |||||||||
$ | 90.01 - $100.00 | 3,000 | . 8 years | 90 | |||||||||
$ | 100.01 - $110.00 | - | - | - | |||||||||
$ | 110.01 - $170.00 | 3,216 | .3 years | 122.78 | |||||||||
$ | 170.01 - $200.00 | 3,325 | .7 years | 179.16 | |||||||||
528,539 | 3.4 years | $ | 8.98 | ||||||||||
As of December 31, 2014, there was $175,000 of unrecognized compensation cost related to non-vested stock option awards, which is to be recognized over the remaining weighted average vesting period of three years. | |||||||||||||
The aggregate intrinsic value at December 31, 2014 was based on the Company's closing stock price of $10.52 was $2,177,000. The aggregate intrinsic value was calculated based on the positive difference between the closing market price of the Company’s Common Stock and the exercise price of the underlying options. The total number of in-the-money options exercisable as of December 31, 2014 was 531,401. | |||||||||||||
The weighted average fair value of options granted during the years ended December 31, 2014 and 2013 was $1.10 and $0.83 per share, respectively. The total intrinsic value of options exercised during the years ended December 31, 2014 and 2013 was $178,191 and $61,350, respectively. The total fair value of shares vested during the years ended December 31, 2014 and 2013 was $51,828 and $19,806, respectively. | |||||||||||||
Warrants | |||||||||||||
The following tables summarize the Company's outstanding warrants as of December 31, 2014 and changes during the two years then ended: | |||||||||||||
Warrants | Wtd. Avg. Exercise Price | ||||||||||||
Balance, December 31, 2012 | 118,835 | $ | 6.38 | ||||||||||
Granted during the period | - | - | |||||||||||
Exercised during the period | - | - | |||||||||||
Terminated/Expired during the period | (250 | ) | 43.6 | ||||||||||
Balance, December 31, 2013 | 118,585 | 6.3 | |||||||||||
Granted during the period | 56,800 | 10.8 | |||||||||||
Exercised during the period | (10,800 | ) | 6.3 | ||||||||||
Terminated/Expired during the period | - | - | |||||||||||
Balance, December 31, 2014 | 164,585 | $ | 7.85 | ||||||||||
Exercisable at December 31, 2014 | 164,585 | $ | 7.85 | ||||||||||
The following table summarizes information about warrants at December 31, 2014: | |||||||||||||
Exercise Price | Warrants | Wtd. Avg. | Wtd. Avg. Exercise Price | ||||||||||
Life | |||||||||||||
$6.30 | 107,785 | 2.5 years | $6.30 | ||||||||||
$8.72 - $11.25 | 56,800 | 4.4 years | $10.80 | ||||||||||
$6.30 - $11.25 | 164,585 | 3.2 years | $7.85 | ||||||||||
RELATED_PARTY_TRANSACTIONS
RELATED PARTY TRANSACTIONS | 12 Months Ended |
Dec. 31, 2014 | |
Notes to Financial Statements | |
RELATED PARTY TRANSACTIONS | Taglich Brothers is a corporation co-founded by two of the directors of the Company. In addition, a third director of the Company is a vice president of Taglich Brothers. |
On January 1, 2014, we entered into a Capital Market Advisory Agreement with Taglich Brothers pursuant to which Taglich Brothers provides us, on a non-exclusive basis, business advisory services for a monthly fee of $7,000, a warrant to purchase 10,000 shares of our common stock at an exercise price of $8.72 per share, vesting quarterly over a one-year period and any reasonable out of pocket expenses. | |
As discussed above, in connection with our public offering of 1,170,000 shares of common stock completed on June 3, 2014, we paid Taglich Brothers, which acted as placement agent for the offering, $842,400, representing 8% of the gross proceeds of the offering as a sales commission, plus an additional $75,000 in reimbursement of expenses, including counsel fees. In addition, we granted Taglich Brothers placement agent warrants to purchase 46,800 shares of common stock, representing 4% of the shares sold in the offering as additional compensation. The Warrants are exercisable for cash or on a cashless basis at a per share exercise price equal to $11.25, commencing May 29, 2015 and expiring May 28, 2019. |
SEGMENT_REPORTING
SEGMENT REPORTING | 12 Months Ended | |||||||||
Dec. 31, 2014 | ||||||||||
Notes to Financial Statements | ||||||||||
SEGMENT REPORTING | In accordance with FASB ASC 280, “Segment Reporting” ("ASC 280"), the Company discloses financial and descriptive information about its reportable operating segments. Operating segments are components of an enterprise about which separate financial information is available and regularly evaluated by the chief operating decision maker in deciding how to allocate resources and in assessing performance. | |||||||||
The Company follows ASC 280, which establishes standards for reporting information about operating segments in annual and interim financial statements, and requires that companies report financial and descriptive information about their reportable segments based on a management approach. ASC 280 also establishes standards for related disclosures about products and services, geographic areas and major customers. | ||||||||||
The Company currently divides its operations into three operating segments: Complex Machining which consists of AIM and NTW; Aerostructures and Electronics which consists of WMI, WPI, MSI, Eur-Pac and ECC; and beginning in 2014, Turbine Engine Components which includes AMK and beginning March 2015 will include Sterling. Along with our operating subsidiaries, we report the results of our corporate division as an independent segment. | ||||||||||
The accounting policies of each of the segments are the same as those described in the Summary of Significant Accounting Policies. The Company evaluates performance based on revenue, gross profit contribution and assets employed. Operating costs that are not directly attributable to a particular segment are included in corporate. These costs include corporate costs such as legal, audit, tax and other professional fees including those related to being a public company. | ||||||||||
Year Ended December 31, | ||||||||||
2014 | 2013 | |||||||||
COMPLEX | ||||||||||
MACHINING | ||||||||||
Net Sales | $ | 44,220,000 | $ | 49,203,000 | ||||||
Gross Profit | 8,691,000 | 11,753,000 | ||||||||
Pre Tax Income | 1,074,000 | 4,273,000 | ||||||||
Assets | 60,409,000 | 33,207,000 | ||||||||
AEROSTRUCTURES | ||||||||||
AND ELECTRONICS | ||||||||||
Net Sales | 18,273,000 | 13,630,000 | ||||||||
Gross Profit | 4,812,000 | 3,482,000 | ||||||||
Pre Tax Loss | (554,000 | ) | -203,000 | |||||||
Assets | 21,386,000 | 11,619,000 | ||||||||
TURBINE ENGINE COMPONENTS | ||||||||||
Net Sales | 1,838,000 | - | ||||||||
Gross Profit | 595,000 | - | ||||||||
Pre Tax Income | 142,000 | - | ||||||||
Assets | 8,150,000 | - | ||||||||
CORPORATE | ||||||||||
Net Sales | - | - | ||||||||
Gross Profit | - | - | ||||||||
Pre Tax Loss | (363,000 | ) | (501,000 | ) | ||||||
Assets | 20,066,000 | 9,647,000 | ||||||||
CONSOLIDATED | ||||||||||
Net Sales | 64,331,000 | 62,833,000 | ||||||||
Gross Profit | 14,098,000 | 15,235,000 | ||||||||
Pre Tax Income | 299,000 | 3,569,000 | ||||||||
Provision for Taxes | (368,000 | ) | -170,000 | |||||||
Net Income | 667,000 | 3,739,000 | ||||||||
Elimination of Assets | (44,091,000 | ) | (4,301,000 | ) | ||||||
Assets | $ | 65,920,000 | $ | 50,172,000 | ||||||
SUMMARY_OF_SIGNIFICANT_ACCOUNT1
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 12 Months Ended | ||||||||||
Dec. 31, 2014 | |||||||||||
Summary Of Significant Accounting Policies Policies | |||||||||||
Principal Business Activity | Principal Business Activity | ||||||||||
The Company through its AIM subsidiary is primarily engaged in manufacturing aircraft structural parts, and assemblies for prime defense contractors in the aerospace industry in the United States. NTW is a manufacturer of aerospace components, principally landing gear for F-16 and F-18 fighter aircraft. Welding is a specialty welding and products provider whose significant customers include the world's largest aircraft manufacturers, subcontractors, and original equipment manufacturers. Miller Stuart is a manufacturer of aerospace components whose customers include major aircraft manufacturers and the US Military. Miller Stuart specializes in electromechanical systems, harness and cable assemblies, electronic equipment and printed circuit boards. Woodbine is a manufacturer of aerospace components whose customers include major aircraft component suppliers. Woodbine specializes in welded and brazed chassis structures housing electronics in aircraft. Eur-Pac specializes in military packaging and supplies. Eur-Pac’s primary business is “kitting” of supplies for all branches of the United States Defense Department including ordnance parts, hose assemblies, hydraulic, mechanical and electrical assemblies. AMK is a provider of sophisticated welding and machining services for diversified aerospace and industrial customers. The Company’s customers consist mainly of publically-traded companies in the aerospace industry. | |||||||||||
Principles of Consolidation | Principles of Consolidation | ||||||||||
The accompanying consolidated financial statements include accounts of the Company and its wholly-owned subsidiaries. Significant intercompany accounts and transactions have been eliminated in consolidation. | |||||||||||
Cash and Cash Equivalents | Cash and Cash Equivalents | ||||||||||
Cash and cash equivalents include all highly liquid instruments with an original maturity of three months or less. | |||||||||||
Accounts Receivable | Accounts Receivable | ||||||||||
Accounts receivable are reported at their outstanding unpaid principal balances net of allowances for uncollectible accounts. The Company provides for allowances for uncollectible receivables based on management's estimate of uncollectible amounts considering age, collection history, and any other factors considered appropriate. The Company writes off accounts receivable against the allowance for doubtful accounts when a balance is determined to be uncollectible. | |||||||||||
Inventory Valuation | Inventory Valuation | ||||||||||
The Company values inventory at the lower of cost on a first-in-first-out basis or market. | |||||||||||
The Company generally purchases raw materials and supplies uniquely suited to the production of larger more complex parts, such as landing gear, only when non-cancellable contracts for orders have been received for finished goods. It occasionally produces larger more complex products, such as landing gear, in excess of purchase order quantities in anticipation of future purchase order demand. Historically this excess has been used in fulfilling future purchase orders. The Company purchases supplies and materials useful in a variety of products as deemed necessary even though orders have not been received. The Company periodically evaluates inventory items that are not secured by purchase orders and establishes reserves for obsolescence accordingly. The Company also reserves for excess quantities, slow-moving goods, and for other impairments of value. | |||||||||||
The Company presents inventory net of progress billings in accordance with the specified contractual arrangements with the United States Government, which results in the transfer of title of the related inventory from the Company to the United States Government, when such progress payments are received. | |||||||||||
The Company presents inventory net of progress billings in accordance with the specified contractual arrangements with the United States Government, which results in the transfer of title of the related inventory from the Company to the United States Government, when such progress payments are received. | |||||||||||
Capitalized Engineering Costs | Capitalized Engineering Costs | ||||||||||
The Company has contractual agreements with customers to produce parts, which the customers design. Even though the Company has not designed and thus has no proprietary ownership of the parts, the manufacturing of these parts requires pre-production engineering and programming of the Company’s machines. The pre-production costs associated with a particular contract are capitalized and then amortized beginning with the first shipment of product pursuant to such contract. These costs are amortized on a straight-line basis over the estimated length of the contract, or if shorter, three years. | |||||||||||
If the Company is reimbursed for all or a portion of the pre-production expenses associated with a particular contract, only the unreimbursed portion would be capitalized. The Company may also progress bill customers for certain engineering costs being incurred. Such billings are recorded as progress billings (a reduction of the associated inventory) until the appropriate revenue recognition criteria have been met. The Terms and Conditions contained in customer purchase orders may provide for liquidated damages in the event that a stop-work order is issued prior to the final delivery of the product. | |||||||||||
Property and Equipment | Property and Equipment | ||||||||||
Property and equipment are carried at cost net of accumulated depreciation and amortization. Repair and maintenance charges are expensed as incurred. Property, equipment, and improvements are depreciated using the straight-line method over the estimated useful lives of the assets or the particular improvements. Expenditures for repairs and improvements in excess of $1,000 that add to the productive capacity or extend the useful life of an asset are capitalized. Upon disposition, the cost and related accumulated depreciation are removed from the accounts and any related gain or loss is reflected in earnings. | |||||||||||
Long-Lived and Intangible Assets | Long-Lived and Intangible Assets | ||||||||||
Identifiable intangible assets are amortized using the straight-line method over the period of expected benefit. | |||||||||||
Long-lived assets and intangible assets subject to amortization to be held and used are reviewed for impairment whenever events or changes in circumstances indicate that the related carrying amount may be impaired. The Company records an impairment loss if the undiscounted future cash flows are found to be less than the carrying amount of the asset. If an impairment loss has occurred, a charge is recorded to reduce the carrying amount of the asset to fair value. There has been no impairment as of December 31, 2014 and 2013. | |||||||||||
Deferred Financing Costs | Deferred Financing Costs | ||||||||||
Costs incurred with obtaining and executing debt arrangements are capitalized and amortized using the effective interest method over the term of the related debt. | |||||||||||
Revenue Recognition | Revenue Recognition | ||||||||||
The Company recognizes revenue in accordance with Staff Accounting Bulletin No. 104, "Revenue Recognition." The Company recognizes revenue when products are shipped and the customer takes ownership and assumes risk of loss, collection of the relevant receivable is probable, persuasive evidence of an arrangement exists, and the sales price is fixed or determinable. | |||||||||||
The Company recognizes certain revenues under a bill and hold arrangement with two of its large customers. For any requested bill and hold arrangement, the Company makes an evaluation as to whether the bill and hold arrangement qualifies for revenue recognition as follows: | |||||||||||
· | The customer requests that the transaction be on a bill and hold basis. A customer must initiate the request for any bill and hold arrangement. Upon request for a bill and hold, the Company requires a signed letter from the customer upon which the customer specifically requests the bill and hold arrangement. Upon receipt of the letter, the Company begins its evaluation process to determine whether a bill and hold arrangement can be granted. | ||||||||||
· | The customer has made fixed commitment to purchase in written documentation. All customers’ orders are through firm written purchase orders. | ||||||||||
· | The goods are segregated from other inventory and are not available to fill any other customers’ orders. The Company’s goods are made to customers’ or their customer’s specifications and could not be sold to others. | ||||||||||
· | The risk of ownership has passed to the customer. The product is complete and ready for shipment. The earnings process is complete. An internal evaluation is made as to whether the product is complete and ready for shipment. This involves a review of the purchase order and a completed inspection process by the Company’s quality control department. | ||||||||||
· | The date is determined by which the Company expects payment and the Company has not modified its normal billing and credit terms for this buyer. Payment is expected as if the goods had been shipped. | ||||||||||
· | The customer has the expected risk of loss in the event of a decline in the market value of goods. All goods are made to firm purchase orders with fixed prices. Any decline in value would not affect the pricing of the goods. The Company has not at any point, agreed to a price reduction on a bill and hold arrangement. | ||||||||||
The Company had approximately $772,00 or 1.2% of net sales that were billed but not shipped under such bill and hold arrangements as of December 31, 2014. | |||||||||||
Payments received in advance from customers for products delivered are recorded as customer deposits until earned, at which time revenue is recognized. The Terms and Conditions contained in our customer purchase orders often provide for liquidated damages in the event that a stop work order is issued prior to the final delivery. | |||||||||||
The Company utilizes a Returned Merchandise Authorization or RMA process for determining whether to accept returned products. Customer requests to return products are reviewed by the contracts department and if the request is approved, a credit is issued upon receipt of the product. Net sales represent gross sales less returns and allowances. | |||||||||||
Use of Estimates | Use of Estimates | ||||||||||
In preparing the financial statements, management is required to make estimates and assumptions that affect the reported amounts in the financial statements and accompanying notes. The more significant management estimates are the useful lives of property and equipment, provisions for inventory obsolescence, accrued expenses and whether to accrue for various contingencies. Actual results could differ from those estimates. Changes in facts and circumstances may result in revised estimates, which are recorded in the period in which they become known. | |||||||||||
Credit and Concentration Risks | Credit and Concentration Risks | ||||||||||
There were two customers that represented 47.3% of total sales, and three customers that represented 56.0% of total sales for the years ended December 31, 2014 and 2013, respectively. This is set forth in the table below. | |||||||||||
Customer | Percentage of Sales | ||||||||||
2014 | 2013 | ||||||||||
1 | 26.8 | 27.7 | |||||||||
2 | 20.5 | 18.3 | |||||||||
3 | * | 10 | |||||||||
* Customer was less than 10% of sales for the year ended December 31, 2014 | |||||||||||
There were three customers that represented 50.4% of gross accounts receivable and two customers that represented 42.9% of gross accounts receivable at December 31, 2014 and 2013, respectively. This is set forth in the table below. | |||||||||||
Customer | Percentage of Receivables | ||||||||||
December | December | ||||||||||
2013 | 2012 | ||||||||||
1 | 29 | 20.1 | |||||||||
2 | 11.4 | * | |||||||||
3 | 10 | 22.8 | |||||||||
* Customer was less than 10% of Gross Accounts | |||||||||||
Receivable at December 31, 2013 | |||||||||||
During the year, the Company had occasionally maintained balances in its bank accounts that were inexcess of the FDIC limit. The Company has not experienced any losses on these accounts. | |||||||||||
The Company has several key sole-source suppliers of various parts that are important for one or more of its products. These suppliers are its only source for such parts and, therefore, in the event any of them were to go out of business or be unable to provide parts for any reason, its business could be severely harmed. | |||||||||||
Income Taxes | Income Taxes | ||||||||||
The Company accounts for income taxes in accordance with accounting guidance now codified as FASB ASC 740, "Income Taxes," which requires that the Company recognize deferred tax liabilities and assets based on the differences between the financial statement carrying amounts and the tax bases of assets and liabilities, using enacted tax rates in effect in the years the differences are expected to reverse. Deferred income tax benefit (expense) results from the change in net deferred tax assets or deferred tax liabilities. A valuation allowance is recorded when it is more likely than not that some or all deferred tax assets will not be realized. | |||||||||||
The Company accounts for uncertainties in income taxes under the provisions of FASB ASC 740-10-05, "Accounting for Uncertainty in Income Taxes." The ASC clarifies the accounting for uncertainty in income taxes recognized in an enterprise's financial statements. The ASC prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. The ASC provides guidance on de-recognition, classification, interest and penalties, accounting in interim periods, disclosure and transition. | |||||||||||
Earnings per share | Earnings per share | ||||||||||
Basic earnings per share is computed by dividing the net income applicable to common stockholders by the weighted-average number of shares of common stock outstanding for the period. Potentially dilutive shares, using the treasury stock method, are included in the diluted per-share calculations for all periods when the effect of their inclusion is dilutive. | |||||||||||
The following is a reconciliation of the denominators of basic and diluted earnings per share computations: | |||||||||||
2014 | 2013 | ||||||||||
Weighted average shares outstanding used to compute basic earnings per share | 6,591,755 | 5,739,014 | |||||||||
Effect of dilutive stock options and warrants | 323,933 | 193,712 | |||||||||
Weighted average shares outstanding and dilutive securities used to compute dilutive earnings per share | 6,915,688 | 5,932,726 | |||||||||
The following securities have been excluded from the calculation as their exercise price was greater than the average market price of the common shares: | |||||||||||
December 31, | December 31, | ||||||||||
2014 | 2013 | ||||||||||
Stock Options | 22,888 | 24,548 | |||||||||
Warrants | 46,800 | - | |||||||||
69,688 | 24,548 | ||||||||||
Stock-Based Compensation | Stock-Based Compensation | ||||||||||
The Company accounts for stock-based compensation in accordance with FASB ASC 718, "Compensation – Stock Compensation." Under the fair value recognition provision of the ASC, stock-based compensation cost is estimated at the grant date based on the fair value of the award. The Company estimates the fair value of stock options and warrants granted using the Black-Scholes-Merton option pricing model. | |||||||||||
Goodwill | Goodwill | ||||||||||
Goodwill represents the excess of the acquisition cost of businesses over the fair value of the identifiable net assets acquired. The goodwill amount of $5,434,000 relates to the acquisitions of Welding ($291,000), NTW ($162,000), Woodbine ($2,565,000), Eur-PAC ($1,656,000), ECC ($109,000), and AMK ($651,000). Goodwill is not amortized, but is tested at least annually for impairment, or if circumstances occur that more likely than not reduce the fair value of the reporting unit below its carrying amount. | |||||||||||
The Company accounts for the impairment of goodwill under the provisions of ASU 2011-08 (“ASU 2011-08”), “Intangibles Goodwill and Other (Topic 350): Testing Goodwill for Impairment.” ASU 2011-08 updated the guidance on the periodic testing of goodwill for impairment. The updated guidance gives companies the option to perform a qualitative assessment to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount. | |||||||||||
The Company performs impairment testing for goodwill annually, or more frequently when indicators of impairment exist. As discussed above, the Company adopted ASU 2011-08 and performed a qualitative assessment in the fourth quarter of 2014 to determine whether it was more likely than not that the fair value of each of Welding, including Woodbine, NTW, Eur-Pac, ECC, and AMK was less than its carrying amount. | |||||||||||
The Company has determined that there has been no impairment of goodwill at December 31, 2014 and 2013. | |||||||||||
Freight Out | Freight Out | ||||||||||
Freight out is included in operating expenses and amounted to $98,000 and $64,000 for the years ended December 31, 2014 and 2013, respectively. | |||||||||||
JOBS Act | JOBS Act | ||||||||||
On April 5, 2012, the JOBS Act was signed into law. The JOBS Act contains provisions that, among other things, reduce certain reporting requirements for qualifying public companies. As an “emerging growth company,” the Company may, under Section 7(a)(2)(B) of the Securities Act, delay adoption of new or revised accounting standards applicable to public companies until such standards would otherwise apply to private companies. An “emerging growth company” is one with less than $1.0 billion in annual sales, has less than $700 million in market value of its shares of common stock held by non-affiliates and issues less than $1.0 billion of non-convertible debt over a three year period. The Company may take advantage of this extended transition period until the first to occur of the date that it (i) is no longer an "emerging growth company" or (ii) affirmatively and irrevocably opts out of this extended transition period. The Company has elected to take advantage of the benefits of this extended transition period. Until the date that it is no longer an "emerging growth company" or affirmatively and irrevocably opts out of the exemption provided by Securities Act Section 7(a)(2)(B), upon issuance of a new or revised accounting standard that applies its consolidated financial statements and that has a different effective date for public and private companies, the Company will disclose the date on which adoption is required for non-emerging growth companies and the date on which the Company will adopt the recently issued accounting standard. | |||||||||||
Recently Issued Accounting Pronouncements | Recently Issued Accounting Pronouncements | ||||||||||
Effective January 1, 2014, the Company adopted Accounting Standards Update No. 2013-11, “Income Taxes (Topic 740): Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists” (“ASU 2013-11”). ASU 2013-11 is expected to reduce diversity in practice by providing guidance on the presentation of unrecognized tax benefits and will better reflect the manner in which an entity would settle at the reporting date any additional income taxes that would result from the disallowance of a tax position when net operating loss carryforwards, similar tax losses, or tax credit carryforwards exist. This guidance is effective prospectively for the Company for annual and interim periods beginning January 1, 2014. The adoption of ASU 2013-11 did not have a material effect on the Company's financial position, results of operations or cash flows. | |||||||||||
In May 2014, the FASB issued ASU 2014-09, “Revenue from Contracts with Customers” (“ASU 2014-09”). The amendments in ASU 2014-09 affect any entity that either enters into contracts with customers to transfer goods or services or enters into contracts for the transfer of nonfinancial assets unless those contracts are within the scope of other standards (e.g., insurance contracts or lease contracts). This ASU will supersede the revenue recognition requirements in ASC 605, “Revenue Recognition” and most industry-specific guidance and creates ASC 606, “Revenue from Contracts with Customers.” | |||||||||||
The core principle of the guidance is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. To achieve that core principle, an entity should apply the following steps: | |||||||||||
Step 1: Identify the contract(s) with a customer. | |||||||||||
Step 2: Identify the performance obligations in the contract. | |||||||||||
Step 3: Determine the transaction price. | |||||||||||
Step 4: Allocate the transaction price to the performance obligations in the contract. | |||||||||||
Step 5: Recognize revenue when (or as) the entity satisfies a performance obligation. | |||||||||||
ASU 2014-09 is effective for public entities for annual reporting periods beginning after December 15, 2016, including interim periods within that reporting period. The Company is currently evaluating the effects of the adoption of ASU 2014-09 on its consolidated financial statements. | |||||||||||
In November 2014, the FASB issued ASU 2014-17, “Business Combinations: Pushdown Accounting” (“ASU 2014-17”). ASU 2014-17 provides an acquired entity with an option to apply pushdown accounting in its separate financial statements upon occurrence of an event in which an acquirer obtains control of the acquired entity. The acquired entity may elect the option to apply pushdown accounting in the reporting period in which the change-in-control event occurs. If pushdown accounting is not applied in the reporting period in which the change-in-control event occurs, an acquired entity will have the option to elect to apply pushdown accounting in a subsequent reporting period as a change in accounting principle in accordance with ASC Topic 250, “Accounting Changes and Error Corrections”. If pushdown accounting is applied to an individual change-in-control event, that election is irrevocable. ASU 2014-17 also requires an acquired entity that elects the option to apply pushdown accounting in its separate financial statements to disclose information in the current reporting period that enables users of financial statements to evaluate the effect of pushdown accounting. We adopted the amendments in ASU 2014-17, effective November 18, 2014, as the amendments in the update are effective upon issuance. The adoption did not have an impact on our consolidated financial statements and disclosures. | |||||||||||
In January 2015, the FASB issued ASU 2015-01, “Income Statement – Extraordinary and Unusual Items (Subtopic 225-20): Simplifying Income Statement Presentation by Eliminating the Concept of Extraordinary Items" (“ASU 2015-01”). ASU 2015-01 eliminates the concept of an extraordinary item from accounting principles generally accepted in the United States of America. As a result, an entity will no longer be required to segregate extraordinary items from the results of ordinary operations, to separately present an extraordinary item on its income statement, net of tax, after income from continuing operations or to disclose income taxes and earnings-per-share data applicable to an extraordinary item. However, ASU 2015-01 will still retain the presentation and disclosure guidance for items that are unusual in nature and occur infrequently. ASU 2015-01 becomes effective for interim and annual periods beginning on or after December 15, 2015. Early adoption is permitted. The Company is currently evaluating the effects of Adopting ASU 2015-01 on its consolidated financial statements but the adoption is not expected to have a significant impact on the Company’s consolidated financial statements. | |||||||||||
The Company does not believe that any other recently issued, but not yet effective, accounting standards if currently adopted would have a material effect on the accompanying consolidated financial statements. | |||||||||||
Reclassifications | Reclassifications | ||||||||||
Certain account balances in 2013 have been reclassified to conform to the current period presentation. | |||||||||||
Subsequent Events | Subsequent Events | ||||||||||
Management has evaluated subsequent events through the date of this filing. The Company acquired by merger 100% of the stock of The Sterling Engineering Company of Barkhamsted, CT ("Sterling") as of March 1, 2015. The consideration for the merger was approximately $2,900,000 in cash and 425,000 shares of common stock. The cash consideration is subject to adjustment for working capital changes. The number of shares of common stock is subject to increase, but not to decrease, to the extent that the Volume Weighted Average Price of the common stock for the twenty-days following closing (March 2 to March 27, 2015) is less than $10.00 per share. The Company has also entered into employment and non-compete agreements for two and three year periods with three of the principals of Sterling. | |||||||||||
Sterling founded in 1941 manufactures components for aircraft and ground turbine engines. |
ACQUISITION_Tables
ACQUISITION (Tables) | 12 Months Ended | ||||||||||||||||
Dec. 31, 2014 | |||||||||||||||||
Selected financial information | Woodbine | Eur-Pac | ECC | AMK | |||||||||||||
Net sales | $ | 1,047,000 | $ | 2,756,000 | $ | 281,000 | $ | 1,838,000 | |||||||||
Income from operations | $ | 300,000 | $ | 637,000 | $ | 67,000 | $ | 359,000 | |||||||||
Miller Stuart [Member] | |||||||||||||||||
Purchase price allocation | Fair value of tangible assets acquired (including cash acquired of $7,000) | $ | 513,000 | ||||||||||||||
Liabilities assumed | (10,000 | ) | |||||||||||||||
Negative goodwill resulting from the bargain purchase acquisition | (361,000 | ) | |||||||||||||||
Total | $ | 142,000 | |||||||||||||||
Woodbine [Member] | |||||||||||||||||
Purchase price allocation | Fair value of tangible assets acquired | $ | 309,000 | ||||||||||||||
Goodwill | 2,565,000 | ||||||||||||||||
Liabilities assumed | (19,000 | ) | |||||||||||||||
Total | $ | 2,855,000 | |||||||||||||||
Eur-Pac [Member] | |||||||||||||||||
Purchase price allocation | Fair Value of tangible assets acquired | $ | 412,000 | ||||||||||||||
Goodwill | 1,656,000 | ||||||||||||||||
Liabilities assumed | (170,000 | ) | |||||||||||||||
Total | $ | 1,898,000 | |||||||||||||||
ECC [Member] | |||||||||||||||||
Purchase price allocation | Fair value of tangible assets acquired | $ | 126,000 | ||||||||||||||
Goodwill | 109,000 | ||||||||||||||||
Cash acquired | 5,000 | ||||||||||||||||
Liabilities assumed | (31,000 | ) | |||||||||||||||
Total | $ | 209,000 | |||||||||||||||
AMK [Member] | |||||||||||||||||
Purchase price allocation | Fair value of tangible assets acquired | $ | 5,637,000 | ||||||||||||||
Intangible assets, subject to amortization | 950,000 | ||||||||||||||||
Goodwill | 651,000 | ||||||||||||||||
Cash acquired | 168,000 | ||||||||||||||||
Liabilities assumed | (453,000 | ) | |||||||||||||||
Total | $ | 6,953,000 |
SUMMARY_OF_SIGNIFICANT_ACCOUNT2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables) | 12 Months Ended | ||||||||||
Dec. 31, 2014 | |||||||||||
Summary Of Significant Accounting Policies Tables | |||||||||||
Credit and Concentration Risks | There were two customers that represented 47.3% of total sales, and three customers that represented 56.0% of total sales for the years ended December 31, 2014 and 2013, respectively. This is set forth in the table below. | ||||||||||
Customer | Percentage of Sales | ||||||||||
2014 | 2013 | ||||||||||
1 | 26.8 | 27.7 | |||||||||
2 | 20.5 | 18.3 | |||||||||
3 | * | 10 | |||||||||
* Customer was less than 10% of sales for the year ended December 31, 2014 | |||||||||||
There were three customers that represented 50.4% of gross accounts receivable and two customers that represented 42.9% of gross accounts receivable at December 31, 2014 and 2013, respectively. This is set forth in the table below. | |||||||||||
Customer | Percentage of Receivables | ||||||||||
December | December | ||||||||||
2013 | 2012 | ||||||||||
1 | 29 | 20.1 | |||||||||
2 | 11.4 | * | |||||||||
3 | 10 | 22.8 | |||||||||
* Customer was less than 10% of Gross Accounts | |||||||||||
Receivable at December 31, 2013 | |||||||||||
Earnings per share | The following is a reconciliation of the denominators of basic and diluted earnings per share computations: | ||||||||||
2014 | 2013 | ||||||||||
Weighted average shares outstanding used to compute basic earnings per share | 6,591,755 | 5,739,014 | |||||||||
Effect of dilutive stock options and warrants | 323,933 | 193,712 | |||||||||
Weighted average shares outstanding and dilutive securities used to compute dilutive earnings per share | 6,915,688 | 5,932,726 | |||||||||
Anti-dilutive Securities | The following securities have been excluded from the calculation as their effect would be anti-dilutive: | ||||||||||
December 31, | December 31, | ||||||||||
2014 | 2013 | ||||||||||
Stock Options | 22,888 | 24,548 | |||||||||
Warrants | 46,800 | - | |||||||||
69,688 | 24,548 |
ACCOUNTS_RECEIVABLE_Tables
ACCOUNTS RECEIVABLE (Tables) | 12 Months Ended | ||||||||||||||||
Dec. 31, 2014 | |||||||||||||||||
Notes to Financial Statements | |||||||||||||||||
Components of accounts receivable | The components of accounts receivable at December 31, are detailed as follows: | ||||||||||||||||
December 31, | December 31, | ||||||||||||||||
2014 | 2013 | ||||||||||||||||
Accounts Receivable Gross | $ | 13,482,000 | $ | 9,367,000 | |||||||||||||
Allowance for Doubtful Accounts | (1,566,000 | ) | (783,000 | ) | |||||||||||||
Accounts Receivable Net | $ | 11,916,000 | $ | 8,584,000 | |||||||||||||
Allowance for doubtful accounts | Balance at | Charged to Costs | Deductions From | Balance at End of | |||||||||||||
Beginning of Year | and Expenses | Reserves | Year | ||||||||||||||
Year ended December 31, 2014 | |||||||||||||||||
Allowance for Doubtful Accounts | $ | 783,000 | $ | 816,000 | $ | 33,000 | $ | 1,566,000 | |||||||||
Year ended December 31, 2013 | |||||||||||||||||
Allowance for Doubtful Accounts | $ | 705,000 | $ | 400,000 | $ | 322,000 | $ | 783,000 |
INVENTORY_Tables
INVENTORY (Tables) | 12 Months Ended | ||||||||
Dec. 31, 2014 | |||||||||
Inventory Tables | |||||||||
Components of inventory | The components of inventory at December 31, consisted of the following: | ||||||||
December 31, | December 31, | ||||||||
2014 | 2013 | ||||||||
Raw Materials | $ | 7,168,000 | $ | 6,002,000 | |||||
Work In Progress | 14,886,000 | 15,665,000 | |||||||
Finished Goods | 10,072,000 | 7,712,000 | |||||||
Progress Payments Received | (260,000 | ) | (416,000 | ) | |||||
Inventory Reserve | (3,475,000 | ) | (2,741,000 | ) | |||||
Total Inventory | $ | 28,391,000 | $ | 26,222,000 | |||||
PROPERTY_AND_EQUIPMENT_Tables
PROPERTY AND EQUIPMENT (Tables) | 12 Months Ended | |||||||||
Dec. 31, 2014 | ||||||||||
Property And Equipment Tables | ||||||||||
Property and equipment | December 31, | December 31, | ||||||||
2014 | 2013 | |||||||||
Land | $ | 200,000 | $ | - | ||||||
Buildings and Improvements | 1,680,000 | - | 31.5 years | |||||||
Machinery and Equipment | 12,514,000 | 6,251,000 | 5 - 8 years | |||||||
Capital Lease Machinery and Equipment | 1,800,000 | 5,261,000 | 5 - 8 years | |||||||
Tools and Instruments | 5,566,000 | 5,009,000 | 1.5 - 7 years | |||||||
Automotive Equipment | 162,000 | 59,000 | 5 years | |||||||
Furniture and Fixtures | 275,000 | 257,000 | 5 - 8 years | |||||||
Leasehold Improvements | 646,000 | 646,000 | Term of Lease | |||||||
Computers and Software | 372,000 | 357,000 | 4-6 years | |||||||
Total Property and Equipment | 23,215,000 | 17,840,000 | ||||||||
Less: Accumulated Depreciation | (13,658,000 | ) | (11,317,000 | ) | ||||||
Property and Equipment, net | $ | 9,557,000 | $ | 6,523,000 |
INTANGIBLE_ASSETS_Tables
INTANGIBLE ASSETS (Tables) | 12 Months Ended | |||||||||
Dec. 31, 2014 | ||||||||||
Intangible Assets Tables | ||||||||||
Intangible assets | The components of the intangibles assets at December 31, consisted of the following: | |||||||||
December | December | |||||||||
31, | 31, | |||||||||
2014 | 2013 | |||||||||
Customer Relationships | $ | 6,255,000 | $ | 5,815,000 | 5 to 14 years | |||||
Trade Names | 1,280,000 | 770,000 | 20 years | |||||||
Technical Know-how | 660,000 | 660,000 | 10 years | |||||||
Non-Compete | 50,000 | 50,000 | 5 years | |||||||
Professional Certifications | 15,000 | 15,000 | .25 to 2 years | |||||||
Total Intangible Assets | 8,260,000 | 7,310,000 | ||||||||
Less: Accumulated Amortization | (3,747,000 | ) | (2,584,000 | ) | ||||||
Intangible Assets, net | $ | 4,513,000 | $ | 4,726,000 | ||||||
Future amortization of intangibles | Future amortization of intangibles is as follows: | |||||||||
For the year ending | Amount | |||||||||
31-Dec-15 | $ | 1,228,000 | ||||||||
31-Dec-16 | 1,228,000 | |||||||||
30-Dec-17 | 703,000 | |||||||||
31-Dec-18 | 233,000 | |||||||||
31-Dec-19 | 233,000 | |||||||||
Thereafter | 888,000 | |||||||||
Total | $ | 4,513,000 |
NOTES_PAYABLE_AND_CAPITAL_LEAS1
NOTES PAYABLE AND CAPITAL LEASE OBLIGATIONS (Tables) | 12 Months Ended | ||||||||
Dec. 31, 2014 | |||||||||
Notes Payable And Capital Lease Obligations Tables | |||||||||
Notes payable and capital lease obligations | December 31, | December 31, | |||||||
2014 | 2013 | ||||||||
Revolving credit note payable to PNC Bank N.A. ("PNC") | $ | 17,672,000 | $ | 12,029,000 | |||||
Term loans, PNC | 8,363,000 | 1,948,000 | |||||||
Capital lease obligations | 1,645,000 | 1,787,000 | |||||||
Notes payable to sellers of WMI | 41,000 | 732,000 | |||||||
Junior subordinated notes | - | 1,000,000 | |||||||
Subtotal | 27,721,000 | 17,496,000 | |||||||
Less: Current portion of notes and capital obligations | (19,508,000 | ) | (14,969,000 | ) | |||||
Notes payable and capital lease obligations, net of current portion | $ | 8,213,000 | $ | 2,527,000 | |||||
Future minimum principal payments for term loan | For the year ending | Amount | |||||||
31-Dec-15 | $ | 1,464,000 | |||||||
31-Dec-16 | 3,156,000 | ||||||||
31-Dec-17 | 1,117,000 | ||||||||
31-Dec-18 | 1,117,000 | ||||||||
31-Dec-19 | 1,058,000 | ||||||||
Thereafter | 451,000 | ||||||||
PNC Term Loans payable | 8,363,000 | ||||||||
Less: Current portion | (1,464,000 | ) | |||||||
Long-term portion | $ | 6,899,000 | |||||||
Future minimum lease payments, including imputed interest | As of December 31, 2014, the aggregate future minimum lease payments, including imputed interest, with remaining terms of greater than one year are as follows: | ||||||||
For the year ending | Amount | ||||||||
31-Dec-15 | $ | 416,000 | |||||||
31-Dec-16 | 416,000 | ||||||||
31-Dec-17 | 416,000 | ||||||||
31-Dec-18 | 400,000 | ||||||||
31-Dec-19 | 225,000 | ||||||||
Thereafter | 7,000 | ||||||||
Total future minimum lease payments | 1,880,000 | ||||||||
Less: imputed interest | (235,000 | ) | |||||||
Less: current portion | (331,000 | ) | |||||||
Total Long Term Portion | $ | 1,314,000 | |||||||
Notes Payable - Sellers | December 31, | December 31, | |||||||
2014 | 2013 | ||||||||
Former Welding Stockholders | $ | 41,000 | $ | 732,000 | |||||
Less: Current Portion | (41,000 | ) | (691,000 | ) | |||||
Total long-term portion | $ | - | $ | 41,000 |
ACCOUNTS_PAYABLE_AND_ACCRUED_E1
ACCOUNTS PAYABLE AND ACCRUED EXPENSES (Tables) | 12 Months Ended | ||||||||
Dec. 31, 2014 | |||||||||
Payables and Accruals [Abstract] | |||||||||
Components of accounts payable | The components of accounts payable at December 31, are detailed as follows: | ||||||||
December 31, | December 31, | ||||||||
2014 | 2013 | ||||||||
Accounts Payable | $ | 5,636,000 | $ | 5,142,000 | |||||
Accrued Expenses | 812,000 | 793,000 | |||||||
Due to NTW sellers | 500,000 | 920,000 | |||||||
$ | 6,948,000 | $ | 6,855,000 |
COMMITMENTS_AND_CONTINGENCIES_
COMMITMENTS AND CONTINGENCIES (Tables) | 12 Months Ended | ||||||||||||||||||||||||||||
Dec. 31, 2014 | |||||||||||||||||||||||||||||
Commitments And Contingencies Tables | |||||||||||||||||||||||||||||
Future minimum lease payments | As of December 31, 2014, the aggregate future minimum lease payments are as follows: | ||||||||||||||||||||||||||||
For the year ending | Plant | Fifth | Lamar | Motor | Porter | Old Willets | Total | ||||||||||||||||||||||
Avenue | Street | Street | Parkway | Street | Path | Rents | |||||||||||||||||||||||
Annual | Annual | Annual | AnnualRent | Annual | Annual | ||||||||||||||||||||||||
Rent | Rent | Rent | Rent | Rent | |||||||||||||||||||||||||
31-Dec-15 | $ | 633,000 | $ | 684,000 | $ | 360,000 | $ | 117,000 | $ | 115,000 | $ | 22,000 | $ | 1,931,000 | |||||||||||||||
31-Dec-16 | 615,000 | 704,000 | 360,000 | 103,000 | 115,000 | - | 1,897,000 | ||||||||||||||||||||||
31-Dec-17 | 543,000 | 725,000 | 360,000 | 106,000 | 115,000 | - | 1,849,000 | ||||||||||||||||||||||
31-Dec-18 | 559,000 | 747,000 | 300,000 | 110,000 | 115,000 | - | 1,831,000 | ||||||||||||||||||||||
31-Dec-19 | 576,000 | 769,000 | - | 113,000 | 48,000 | - | 1,506,000 | ||||||||||||||||||||||
Thereafter | 3,865,000 | 5,832,000 | - | 219,000 | - | - | 9,916,000 | ||||||||||||||||||||||
Total Rents | $ | 6,791,000 | $ | 9,461,000 | $ | 1,380,000 | $ | 768,000 | $ | 508,000 | $ | 22,000 | $ | 18,930,000 |
INCOME_TAXES_Tables
INCOME TAXES (Tables) | 12 Months Ended | ||||||||
Dec. 31, 2014 | |||||||||
Income Taxes Tables | |||||||||
Provision for income | The provision for income taxes as at December 31, are set forth below: | ||||||||
2014 | 2013 | ||||||||
Current | |||||||||
Federal | $ | 939,000 | $ | 1,135,000 | |||||
State | 16,000 | 339,000 | |||||||
Prior year overaccruals | |||||||||
Federal | 10,000 | -185,000 | |||||||
State | -290,000 | -223,000 | |||||||
Total Expense | 675,000 | 1,066,000 | |||||||
Deferred Tax Benefit | (1,043,000 | ) | -1,236,000 | ||||||
Net Benefit from Income Taxes | $ | (368,000 | ) | $ | -170,000 | ||||
Reconciliation of our income tax rate | The following is a reconciliation of our income tax rate computed using the federal statutory rate to our actual income tax rate as of December 31, | ||||||||
2014 | 2013 | ||||||||
Federal Tax Rate | 34 | % | 34 | % | |||||
Effect of State Taxes | 6 | % | 6 | % | |||||
State Franchise Taxes | 4 | % | 1 | % | |||||
Permanent Differences | -12 | % | -3 | % | |||||
Prior Year Over Accrual and Others | -155 | % | -8 | % | |||||
Change in Valuation Allowance | 0 | % | -35 | % | |||||
Total | -123 | % | -5 | % | |||||
Deferred tax assets | The components of net deferred tax assets as of December 31, are set forth below: | ||||||||
December 31, | December 31, | ||||||||
2014 | 2013 | ||||||||
Deferred tax assets: | |||||||||
Current: | |||||||||
Bad debts | $ | 650,000 | $ | 313,000 | |||||
Inventory - 263A adjustment | 762,000 | 729,000 | |||||||
Account payable, accrued expenses and reserves | 9,000 | 9,000 | |||||||
Total current deferred tax asset before valuation allowance | 1,421,000 | 1,051,000 | |||||||
Valuation Allowance | - | - | |||||||
Total current deferred tax asset after valuation allowance | $ | 1,421,000 | $ | 1,051,000 | |||||
Non-Current | |||||||||
Capital loss carry forwards | $ | 1,088,000 | $ | 1,088,000 | |||||
Section 1231 loss carry forward | 4,000 | 4,000 | |||||||
Stock based compensation - options and restricted stock | 527,000 | 521,000 | |||||||
Capitalized engineering costs | 522,000 | 503,000 | |||||||
Deferred rent | 483,000 | 453,000 | |||||||
Amortization - NTW Transaction | 663,000 | 475,000 | |||||||
Lease impairment | 22,000 | 51,000 | |||||||
Deferred gain on sale of real estate | 179,000 | 194,000 | |||||||
Total deferred tax assets before valuation allowance | 3,488,000 | 3,289,000 | |||||||
Valuation allowance | (1,092,000 | ) | (1,092,000 | ) | |||||
Total deferred tax assets after valuation allowance | $ | 2,396,000 | $ | 2,197,000 | |||||
Deferred tax liabilities: | |||||||||
Property and equipment | $ | (1,082,000 | ) | $ | (1,497,000 | ) | |||
Goodwill - NTW Transaction | (11,000 | ) | (7,000) | ||||||
Goodwill - AMK Transaction | -4,000 | - | |||||||
Amortization - Welding Transaction | (441,000 | ) | (508,000 | ) | |||||
Total Deferred Tax Liability | (1,538,000 | ) | (2,012,000 | ) | |||||
Net deferred tax asset | $ | 858,000 | $ | 185,000 |
STOCK_OPTIONS_AND_WARRANTS_Tab
STOCK OPTIONS AND WARRANTS (Tables) | 12 Months Ended | ||||||||||||
Dec. 31, 2014 | |||||||||||||
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |||||||||||||
Fair values of stock options granted | 2014 | 2013 | |||||||||||
Risk-free interest rates | 1.55% - 1.68 | % | 0.71% - 1.75 | % | |||||||||
Expected life (in years) | 7-May | 5 | |||||||||||
Expected volatility | 25 | % | 25 | % | |||||||||
Dividend yield | 5.6% - 6.1% | 5.60% | |||||||||||
Weighted-average grant date fair value per share | $1.10 | $0.83 | |||||||||||
Company's stock options | Options | Wtd. Avg. Exercise Price | |||||||||||
Balance, December 31, 2012 | 327,338 | $ | 9.97 | ||||||||||
Granted during the period | 113,247 | 6.85 | |||||||||||
Exercised during the period | -18,253 | 4.5 | |||||||||||
Terminated/Expired during the period | - | - | |||||||||||
Balance, December 31, 2013 | 422,332 | 9.34 | |||||||||||
Granted during the period | 144,000 | 10.13 | |||||||||||
Exercised during the period | (33,133 | ) | 4.74 | ||||||||||
Terminated/Expired during the period | -4,660 | 81.72 | |||||||||||
Balance, December 31, 2014 | 528,539 | $ | 8.98 | ||||||||||
Exercisable at December 31, 2014 | 396,627 | $ | 9.28 | ||||||||||
Summary information about stock options | Range of Exercise | Remaining | Wtd. Avg. | Wtd. Avg. | |||||||||
Prices | Number | Life | Exercise Price | ||||||||||
Outstanding | |||||||||||||
$ | 0.00 - $5.00 | 246,168 | .8 years | $ | 4.39 | ||||||||
$ | 5.01 - $90.00 | 272,831 | 5.9 years | 8.88 | |||||||||
$ | 90.01 - $100.00 | 3,000 | . 8 years | 90 | |||||||||
$ | 100.01 - $110.00 | - | - | - | |||||||||
$ | 110.01 - $170.00 | 3,216 | .3 years | 122.78 | |||||||||
$ | 170.01 - $200.00 | 3,325 | .7 years | 179.16 | |||||||||
528,539 | 3.4 years | $ | 8.98 | ||||||||||
Company's outstanding warrants | Warrants | Wtd. Avg. Exercise Price | |||||||||||
Balance, December 31, 2012 | 118,835 | $ | 6.38 | ||||||||||
Granted during the period | - | - | |||||||||||
Exercised during the period | - | - | |||||||||||
Terminated/Expired during the period | (250 | ) | 43.6 | ||||||||||
Balance, December 31, 2013 | 118,585 | 6.3 | |||||||||||
Granted during the period | 56,800 | 10.8 | |||||||||||
Exercised during the period | (10,800 | ) | 6.3 | ||||||||||
Terminated/Expired during the period | - | - | |||||||||||
Balance, December 31, 2014 | 164,585 | $ | 7.85 | ||||||||||
Exercisable at December 31, 2014 | 164,585 | $ | 7.85 | ||||||||||
Warrants | Exercise Price | Warrants | Wtd. Avg. | Wtd. Avg. Exercise Price | |||||||||
Life | |||||||||||||
$6.30 | 107,785 | 2.5 years | $6.30 | ||||||||||
$8.72 - $11.25 | 56,800 | 4.4 years | $10.80 | ||||||||||
$6.30 - $11.25 | 164,585 | 3.2 years | $7.85 |
SEGMENT_REPORTING_Tables
SEGMENT REPORTING (Tables) | 12 Months Ended | |||||||||
Dec. 31, 2014 | ||||||||||
Segment Reporting Tables | ||||||||||
Operating segments | Year Ended December 31, | |||||||||
2014 | 2013 | |||||||||
COMPLEX | ||||||||||
MACHINING | ||||||||||
Net Sales | $ | 44,220,000 | $ | 49,203,000 | ||||||
Gross Profit | 8,691,000 | 11,753,000 | ||||||||
Pre Tax Income | 1,074,000 | 4,273,000 | ||||||||
Assets | 60,409,000 | 33,207,000 | ||||||||
AEROSTRUCTURES | ||||||||||
AND ELECTRONICS | ||||||||||
Net Sales | 18,273,000 | 13,630,000 | ||||||||
Gross Profit | 4,812,000 | 3,482,000 | ||||||||
Pre Tax Loss | (554,000 | ) | -203,000 | |||||||
Assets | 21,386,000 | 11,619,000 | ||||||||
TURBINE ENGINE COMPONENTS | ||||||||||
Net Sales | 1,838,000 | - | ||||||||
Gross Profit | 595,000 | - | ||||||||
Pre Tax Income | 142,000 | - | ||||||||
Assets | 8,150,000 | - | ||||||||
CORPORATE | ||||||||||
Net Sales | - | - | ||||||||
Gross Profit | - | - | ||||||||
Pre Tax Loss | (363,000 | ) | (501,000 | ) | ||||||
Assets | 20,066,000 | 9,647,000 | ||||||||
CONSOLIDATED | ||||||||||
Net Sales | 64,331,000 | 62,833,000 | ||||||||
Gross Profit | 14,098,000 | 15,235,000 | ||||||||
Pre Tax Income | 299,000 | 3,569,000 | ||||||||
Provision for Taxes | (368,000 | ) | -170,000 | |||||||
Net Income | 667,000 | 3,739,000 | ||||||||
Elimination of Assets | (44,091,000 | ) | (4,301,000 | ) | ||||||
Assets | $ | 65,920,000 | $ | 50,172,000 |
ACQUISITION_Details
ACQUISITION (Details) (USD $) | 12 Months Ended | |
Dec. 31, 2014 | Dec. 31, 2013 | |
Goodwill | $5,434,000 | $453,000 |
Cash acquired | 173,000 | 7,000 |
Miller Stuart [Member] | ||
Fair Value of Tangible Assets acquired | 513,000 | |
Liabilities assumed | -10,000 | |
Negative goodwill resulting from the bargain purchase acquisition | -361,000 | |
Total | 142,000 | |
Woodbine [Member] | ||
Fair Value of Tangible Assets acquired | 309,000 | |
Goodwill | 2,565,000 | |
Liabilities assumed | -19,000 | |
Total | 2,855,000 | |
Eur-Pac [Member] | ||
Fair Value of Tangible Assets acquired | 412,000 | |
Goodwill | 1,656,000 | |
Liabilities assumed | -170,000 | |
Total | 1,898,000 | |
ECC [Member] | ||
Fair Value of Tangible Assets acquired | 126,000 | |
Goodwill | 109,000 | |
Cash acquired | 5,000 | |
Liabilities assumed | -31,000 | |
Total | 209,000 | |
AMK [Member] | ||
Fair Value of Tangible Assets acquired | 5,637,000 | |
Intangible assets, subject to amortization | 950,000 | |
Goodwill | 651,000 | |
Cash acquired | 168,000 | |
Liabilities assumed | -453,000 | |
Total | $6,953,000 |
SUMMARY_OF_SIGNIFICANT_ACCOUNT3
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details) | 12 Months Ended | ||
Dec. 31, 2014 | Dec. 31, 2013 | ||
Summary Of Significant Accounting Policies Details | |||
Customer 1 percentage of sales | 26.80% | 27.70% | |
Customer 2 percentage of sales | 20.50% | 18.30% | |
Customer 3 percentage of sales | 0.00% | [1] | 10.00% |
[1] | Customer was less than 10% of sales for the year ended December 31. 2014 |
SUMMARY_OF_SIGNIFICANT_ACCOUNT4
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details 1) | Dec. 31, 2014 | Dec. 31, 2013 | |
Summary Of Significant Accounting Policies Details 1 | |||
Customer 1 percentage of receivables | 29.00% | 20.10% | |
Customer 2 percentage of receivables | 11.40% | 0.00% | [1] |
Customer 3 percentage of receivables | 10.00% | 22.80% | |
[1] | Customer was less than 10% of gross accounts receivable at December 31. 2013 |
SUMMARY_OF_SIGNIFICANT_ACCOUNT5
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details 2) | 12 Months Ended | |
Dec. 31, 2014 | Dec. 31, 2013 | |
Summary Of Significant Accounting Policies Details 2 | ||
Weighted average shares outstanding used to compute basic earning per share | 6,591,755 | 5,739,014 |
Effect of dilutive stock options and warrants | 323,933 | 193,712 |
Weighted average shares outstanding and dilutive securities used to compute dilutive earnings per share | 6,915,688 | 5,932,726 |
SUMMARY_OF_SIGNIFICANT_ACCOUNT6
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details 3) | Dec. 31, 2014 | Dec. 31, 2013 |
Summary Of Significant Accounting Policies Details 3 | ||
Stock Options | 22,888 | 24,548 |
Warrants | 46,800 | |
Anti dilutive Securities | 69,688 | 24,548 |
SUMMARY_OF_SIGNIFICANT_ACCOUNT7
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details Narrative) (USD $) | 12 Months Ended | |
Dec. 31, 2014 | Dec. 31, 2013 | |
Customer | Customer | |
Summary Of Significant Accounting Policies Details Narrative | ||
Net Sales not shipped | The Company had approximately $772,00 or 1.2% of net sales that were billed but not shipped under such bill and hold arrangements as of December 31, 2014. | |
Customers represented percentage of total sales | 47.30% | 56.00% |
Number of Customers represented percentage of total sales | 2 | 3 |
Customers represented percentage of gross accounts receivable | 50.40% | 42.90% |
Number of Customers represented percentage of gross accounts receivable | 3 | 2 |
Impairment of goodwill | $0 | $0 |
Freight out | $98,000 | $64,000 |
ACCOUNTS_RECEIVABLE_Details
ACCOUNTS RECEIVABLE (Details) (USD $) | Dec. 31, 2014 | Dec. 31, 2013 |
Receivables [Abstract] | ||
Accounts Receivable Gross | $13,482,000 | $9,367,000 |
Allowance for Doubtful Accounts | -1,566,000 | -783,000 |
Accounts Receivable Net | $11,916,000 | $8,584,000 |
ACCOUNTS_RECEIVABLE_Details_1
ACCOUNTS RECEIVABLE (Details 1) (USD $) | 12 Months Ended | |
Dec. 31, 2014 | Dec. 31, 2013 | |
Receivables [Abstract] | ||
Allowance for Doubtful Accounts Beginning Balance | $783,000 | $705,000 |
Allowance for Doubtful Accounts Charged to Costs and Expenses | 816,000 | 400,000 |
Allowance for Doubtful Accounts Deductions From Reserves | 33,000 | 322,000 |
Allowance for Doubtful Accounts Ending Balance | $1,566,000 | $783,000 |
INVENTORY_Details
INVENTORY (Details) (USD $) | Dec. 31, 2014 | Dec. 31, 2013 |
Inventory Details | ||
Raw Materials | $7,168,000 | $6,002,000 |
Work In Progress | 14,886,000 | 15,665,000 |
Finished Goods | 10,072,000 | 7,712,000 |
Progress Payments Received | -260,000 | -416,000 |
Inventory Reserve | -3,475,000 | -2,741,000 |
Total Inventory | $28,391,000 | $26,222,000 |
PROPERTY_AND_EQUIPMENT_Details
PROPERTY AND EQUIPMENT (Details) (USD $) | 12 Months Ended | |
Dec. 31, 2014 | Dec. 31, 2013 | |
Total Property and Equipment | $23,215,000 | $17,840,000 |
Less: Accumulated Depreciation | -13,658,000 | -11,317,000 |
Property and Equipment, net | 9,557,000 | 6,523,000 |
Land [Member] | ||
Total Property and Equipment | 200,000 | |
Property Plant And Equipment Useful Life | 0 years | |
Building Improvements [Member] | ||
Total Property and Equipment | 1,680,000 | |
Property Plant And Equipment Useful Life | 31 years 6 months | |
Machinery and Equipment | ||
Total Property and Equipment | 12,514,000 | 6,251,000 |
Machinery and Equipment | Minimum | ||
Property Plant And Equipment Useful Life | 5 years | |
Machinery and Equipment | Maximum | ||
Property Plant And Equipment Useful Life | 8 years | |
Capital Lease Machinery and Equipment | ||
Total Property and Equipment | 1,800,000 | 5,261,000 |
Capital Lease Machinery and Equipment | Minimum | ||
Property Plant And Equipment Useful Life | 5 years | |
Capital Lease Machinery and Equipment | Maximum | ||
Property Plant And Equipment Useful Life | 8 years | |
Tools and Instruments | ||
Total Property and Equipment | 5,566,000 | 5,009,000 |
Tools and Instruments | Minimum | ||
Property Plant And Equipment Useful Life | 1 year 6 months | |
Tools and Instruments | Maximum | ||
Property Plant And Equipment Useful Life | 7 years | |
Automotive Equipment | ||
Total Property and Equipment | 162,000 | 59,000 |
Property Plant And Equipment Useful Life | 5 years | |
Furniture and Fixtures | ||
Total Property and Equipment | 275,000 | 257,000 |
Furniture and Fixtures | Minimum | ||
Property Plant And Equipment Useful Life | 5 years | |
Furniture and Fixtures | Maximum | ||
Property Plant And Equipment Useful Life | 8 years | |
Leasehold Improvements | ||
Total Property and Equipment | 646,000 | 646,000 |
Computers and Software | ||
Total Property and Equipment | $372,000 | $357,000 |
Computers and Software | Minimum | ||
Property Plant And Equipment Useful Life | 4 years | |
Computers and Software | Maximum | ||
Property Plant And Equipment Useful Life | 6 years |
PROPERTY_AND_EQUIPMENT_Details1
PROPERTY AND EQUIPMENT (Details Narrative) (USD $) | 12 Months Ended | |
Dec. 31, 2014 | Dec. 31, 2013 | |
Property, Plant and Equipment [Abstract] | ||
Depreciation expense | $2,364,000 | $1,709,000 |
INTANGIBLE_ASSETS_Details
INTANGIBLE ASSETS (Details) (USD $) | 12 Months Ended | |
Dec. 31, 2014 | Dec. 31, 2013 | |
Customer Relationships | 6,255,000 | $5,815,000 |
Trade Names | 1,280,000 | 770,000 |
Technical Know-how | 660,000 | 660,000 |
Non-Compete | 50,000 | 50,000 |
Professional Certifications | 15,000 | 15,000 |
Total Intangible Assets | 8,260,000 | 7,310,000 |
Less: Accumulated Amortization | -3,747,000 | -2,584,000 |
Intangible Assets, net | 4,513,000 | $4,726,000 |
Customer Relationships [Member] | Minimum | ||
Intangible Assets Useful Life | 5 years | |
Customer Relationships [Member] | Maximum | ||
Intangible Assets Useful Life | 14 years | |
Trade Names [Member] | ||
Intangible Assets Useful Life | 20 years | |
Technical Know How [Member] | ||
Intangible Assets Useful Life | 10 years | |
Non Compete [Member] | ||
Intangible Assets Useful Life | 5 years | |
Professional Certifications [Member] | Minimum | ||
Intangible Assets Useful Life | 3 months | |
Professional Certifications [Member] | Maximum | ||
Intangible Assets Useful Life | 2 years |
INTANGIBLE_ASSETS_Details_1
INTANGIBLE ASSETS (Details 1) (USD $) | Dec. 31, 2014 |
Goodwill and Intangible Assets Disclosure [Abstract] | |
31-Dec-15 | $1,228,000 |
31-Dec-16 | 1,228,000 |
31-Dec-17 | 703,000 |
31-Dec-18 | 233,000 |
31-Dec-19 | 233,000 |
Thereafter | 888,000 |
Total | $4,513,000 |
INTANGIBLE_ASSETS_Details_Narr
INTANGIBLE ASSETS (Details Narrative) (USD $) | 12 Months Ended | |
Dec. 31, 2014 | Dec. 31, 2013 | |
Notes to Financial Statements | ||
Amortization of the intangibles | $1,163,000 | $1,163,000 |
SALE_AND_LEASEBACK_TRANSACTION1
SALE AND LEASEBACK TRANSACTION (Details Narrative) (USD $) | Dec. 31, 2014 | Dec. 31, 2013 |
Sale And Leaseback Transaction Details Narrative | ||
Unrecognized portion of the Sale and Leaseback gain | $447,000 | $485,000 |
NOTES_PAYABLE_AND_CAPITAL_LEAS2
NOTES PAYABLE AND CAPITAL LEASE OBLIGATIONS (Details) (USD $) | Dec. 31, 2014 | Dec. 31, 2013 |
Notes Payable And Capital Lease Obligations Details | ||
Revolving credit note payable to PNC Bank N.A. ("PNC") | $17,672,000 | $12,029,000 |
Term loan, PNC | 8,363,000 | 1,948,000 |
Capital lease obligations | 1,645,000 | 1,787,000 |
Notes payable to sellers of WMI | 41,000 | 732,000 |
Junior subordinated notes | 1,000,000 | |
Subtotal | 27,721,000 | 17,496,000 |
Less: Current portion of notes and capital obligations | -19,508,000 | -14,969,000 |
Notes payable and capital lease obligations, net of current portion | $8,213,000 | $2,527,000 |
NOTES_PAYABLE_AND_CAPITAL_LEAS3
NOTES PAYABLE AND CAPITAL LEASE OBLIGATIONS (Details 1) (USD $) | Dec. 31, 2014 |
Notes Payable And Capital Lease Obligations Details 1 | |
31-Dec-15 | $1,464,000 |
31-Dec-16 | 3,156,000 |
31-Dec-17 | 1,117,000 |
31-Dec-18 | 1,117,000 |
31-Dec-19 | 1,058,000 |
Thereafter | 451,000 |
PNC Term Loan payable | 8,363,000 |
Less: current portion | -1,464,000 |
Long-term portion | $6,899,000 |
NOTES_PAYABLE_AND_CAPITAL_LEAS4
NOTES PAYABLE AND CAPITAL LEASE OBLIGATIONS (Details 2) (USD $) | Dec. 31, 2014 |
31-Dec-16 | $1,931,000 |
31-Dec-17 | 1,897,000 |
31-Dec-18 | 1,849,000 |
31-Dec-19 | 1,831,000 |
Thereafter | 9,916,000 |
Total future minimum lease payments | 18,930,000 |
Capital Leases Payable - Equipment | |
31-Dec-15 | 416,000 |
31-Dec-16 | 416,000 |
31-Dec-17 | 416,000 |
31-Dec-18 | 400,000 |
31-Dec-19 | 225,000 |
Thereafter | 7,000 |
Total future minimum lease payments | 1,880,000 |
Less: imputed interest | -235,000 |
Less: current portion | -331,000 |
Total Long Term Portion | $1,314,000 |
NOTES_PAYABLE_AND_CAPITAL_LEAS5
NOTES PAYABLE AND CAPITAL LEASE OBLIGATIONS (Details 3) (USD $) | Dec. 31, 2014 | Dec. 31, 2013 |
Notes Payable And Capital Lease Obligations Details 3 | ||
Former Welding Stockholders | $41,000 | $732,000 |
Less: Current Portion | -41,000 | -691,000 |
Total long-term portion | $41,000 |
ACCOUNTS_PAYABLE_AND_ACCRUED_E2
ACCOUNTS PAYABLE AND ACCRUED EXPENSES (Details) (USD $) | Dec. 31, 2014 | Dec. 31, 2013 |
Payables and Accruals [Abstract] | ||
Accounts Payable | $5,636,000 | $5,142,000 |
Accrued Expenses | 812,000 | 793,000 |
Other payables | 500,000 | 920,000 |
Accounts Payable and Accrued Expenses | $6,948,000 | $6,855,000 |
EMPLOYEE_BENEFITS_PLANS_Detail
EMPLOYEE BENEFITS PLANS (Details Narrative) (USD $) | 12 Months Ended | |
Dec. 31, 2014 | Dec. 31, 2013 | |
Compensation and Retirement Disclosure [Abstract] | ||
Employee Benefits Plans Contributions to security fund | $242,000 | $247,000 |
COMMITMENTS_AND_CONTINGENCIES_1
COMMITMENTS AND CONTINGENCIES (Details) (USD $) | Dec. 31, 2014 |
31-Dec-15 | $1,931,000 |
31-Dec-16 | 1,897,000 |
31-Dec-17 | 1,849,000 |
31-Dec-18 | 1,831,000 |
31-Dec-19 | 1,506,000 |
Thereafter | 9,916,000 |
Total Rents | 18,930,000 |
Plant Avenue Annual Rent [Member] | |
31-Dec-15 | 633,000 |
31-Dec-16 | 615,000 |
31-Dec-17 | 543,000 |
31-Dec-18 | 559,000 |
31-Dec-19 | 576,000 |
Thereafter | 3,865,000 |
Total Rents | 6,791,000 |
Fifth Avenue Annual Rent [Member] | |
31-Dec-15 | 684,000 |
31-Dec-16 | 704,000 |
31-Dec-17 | 725,000 |
31-Dec-18 | 747,000 |
31-Dec-19 | 769,000 |
Thereafter | 5,832,000 |
Total Rents | 9,461,000 |
Lamar Street Annual Rent [Member] | |
31-Dec-15 | 360,000 |
31-Dec-16 | 360,000 |
31-Dec-17 | 360,000 |
31-Dec-18 | 300,000 |
31-Dec-19 | |
Thereafter | |
Total Rents | 1,380,000 |
Motor Parkway Annual Rent [Member] | |
31-Dec-15 | 117,000 |
31-Dec-16 | 103,000 |
31-Dec-17 | 106,000 |
31-Dec-18 | 110,000 |
31-Dec-19 | 113,000 |
Thereafter | 219,000 |
Total Rents | 768,000 |
Porter Street Annual Rent [Member] | |
31-Dec-15 | 115,000 |
31-Dec-16 | 115,000 |
31-Dec-17 | 115,000 |
31-Dec-18 | 115,000 |
31-Dec-19 | 48,000 |
Thereafter | |
Total Rents | 508,000 |
Old Willets Path Annual Rent [Member] | |
31-Dec-15 | 22,000 |
31-Dec-16 | |
31-Dec-17 | |
31-Dec-18 | |
31-Dec-19 | |
Thereafter | |
Total Rents | $22,000 |
COMMITMENTS_AND_CONTINGENCIES_2
COMMITMENTS AND CONTINGENCIES (Details Narrative) (USD $) | 12 Months Ended | |
Dec. 31, 2014 | Dec. 31, 2013 | |
Commitments And Contingencies Details Narrative | ||
Rent expense | $2,270,000 | $1,978,000 |
INCOME_TAXES_Details
INCOME TAXES (Details) (USD $) | 12 Months Ended | |
Dec. 31, 2014 | Dec. 31, 2013 | |
Current | ||
Federal | $939,000 | $1,135,000 |
State | 16,000 | 339,000 |
Prior year overaccruals | ||
Federal | 10,000 | -185,000 |
State | -290,000 | -223,000 |
Total Expense | 675,000 | 1,066,000 |
Deferred Tax Benefit | -1,043,000 | -1,236,000 |
Net Benefit from Income Taxes | ($368,000) | ($170,000) |
INCOME_TAXES_Details_1
INCOME TAXES (Details 1) | Dec. 31, 2014 | Dec. 31, 2013 |
Income Taxes Details 1 | ||
Federal Tax Rate | 34.00% | 34.00% |
Effect of State Taxes | 6.00% | 6.00% |
State Franchise Taxes | 4.00% | 1.00% |
Permanent Differences | -12.00% | -3.00% |
Prior Year over accrual - Federal | -155.00% | -8.00% |
Change in Valuation Allowance | 0.00% | -35.00% |
Total | -123.00% | -5.00% |
INCOME_TAXES_Details_2
INCOME TAXES (Details 2) (USD $) | Dec. 31, 2014 | Dec. 31, 2013 |
Current: | ||
Bad debts | $650,000 | $313,000 |
Inventory - 263A adjustment | 762,000 | 729,000 |
Account payable, accrued expenses and reserves | 9,000 | 9,000 |
Total current deferred tax assets before valuation allowance | 1,421,000 | 1,051,000 |
Valuation Allowance | ||
Total current deferred tax assets after valuation allowance | 1,421,000 | 1,051,000 |
Non- Current: | ||
Capital loss carry forwards | 1,088,000 | 1,088,000 |
Section 1231 loss carryover | 4,000 | 4,000 |
Stock based compensation - options and restricted stock | 527,000 | 521,000 |
Capitalized engineering costs | 522,000 | 503,000 |
Deferred rent | 483,000 | 453,000 |
Amortization - NTW Transaction | 663,000 | 475,000 |
Lease Impairment | 22,000 | 51,000 |
Deferred gain on sale of real estate | 179,000 | 194,000 |
Total deferred tax assets before valuation allowance | 3,488,000 | 3,289,000 |
Valuation allowance | -1,092,000 | -1,092,000 |
Total deferred tax assets after valuation allowance | 2,396,000 | 2,197,000 |
Deferred tax liabilities: | ||
Property and equipment | -1,082,000 | -1,497,000 |
Goodwill - NTW Transaction | -11,000 | -7,000 |
Goodwill - AMK Transaction | -4,000 | |
Amortization - Welding Transaction | -441,000 | -508,000 |
Total Deferred Tax Liability | -1,538,000 | -2,012,000 |
Net deferred tax asset | $858,000 | $185,000 |
INCOME_TAXES_Details_Narrative
INCOME TAXES (Details Narrative) (USD $) | Dec. 31, 2014 | Dec. 31, 2013 |
Income Taxes Details Narrative | ||
Valuation allowance | $1,092,000 | $1,092,000 |
STOCK_OPTIONS_AND_WARRANTS_Det
STOCK OPTIONS AND WARRANTS (Details) (USD $) | 12 Months Ended | |
Dec. 31, 2014 | Dec. 31, 2013 | |
Expected life (in years) | 5 years | |
Expected volatility | 25.00% | 25.00% |
Dividend yield | 5.60% | |
Weighted-average grant date fair value per share | $1.10 | $0.83 |
Minimum | ||
Risk-free interest rates | 1.55% | 0.71% |
Expected life (in years) | 5 years | |
Dividend yield | 5.60% | |
Maximum | ||
Risk-free interest rates | 1.68% | 1.75% |
Expected life (in years) | 7 years | |
Dividend yield | 6.10% |
STOCK_OPTIONS_AND_WARRANTS_Det1
STOCK OPTIONS AND WARRANTS (Details 1) (USD $) | 12 Months Ended | |
Dec. 31, 2014 | Dec. 31, 2013 | |
Granted during the period, Options | 120,000 | 99,747 |
Ending Balance | 528,539 | |
Ending Balance, Weighted-Average Exercise Price | $8.98 | |
Stock option | ||
Begining Balance | 422,332 | 327,338 |
Granted during the period, Options | 144,000 | 113,247 |
Exercised during the period, Options | -33,133 | -18,253 |
Terminated/Expired during the period, Options | -4,660 | |
Ending Balance | 528,539 | 422,332 |
Exercisable at December 31, 2014 | 396,627 | |
Begining Balance, Weighted-Average Exercise Price | $9.34 | 9.97 |
Granted during the period, Weighted-Average Exercise Price | $10.13 | 6.85 |
Exercised during the period, Weighted-Average Exercise Price | $4.74 | 4.5 |
Terminated/Expired during the period, Weighted-Average Exercise Price | $81.72 | |
Ending Balance, Weighted-Average Exercise Price | $8.98 | 9.34 |
Exercisable at December 31, 2014 | $9.28 |
STOCK_OPTIONS_AND_WARRANTS_Det2
STOCK OPTIONS AND WARRANTS (Details 2) (USD $) | 12 Months Ended |
Dec. 31, 2014 | |
Remaining Number Outstanding | 528,539 |
Wtd. Avg. Life | 3 years 4 months 24 days |
Wtd. Avg. Exercise Price | $8.98 |
Range One | |
Range of Exercise Prices, lower limit | $0 |
Range of Exercise Prices, upper limit | $5 |
Remaining Number Outstanding | 246,168 |
Wtd. Avg. Life | 9 months 18 days |
Wtd. Avg. Exercise Price | $4.39 |
Range Two | |
Range of Exercise Prices, lower limit | $5.01 |
Range of Exercise Prices, upper limit | $90 |
Remaining Number Outstanding | 272,831 |
Wtd. Avg. Life | 5 years 10 months 24 days |
Wtd. Avg. Exercise Price | $8.88 |
Range Three | |
Range of Exercise Prices, lower limit | $90.01 |
Range of Exercise Prices, upper limit | $100 |
Remaining Number Outstanding | 3,000 |
Wtd. Avg. Life | 9 months 18 days |
Wtd. Avg. Exercise Price | $90 |
Range Four | |
Range of Exercise Prices, lower limit | $100.01 |
Range of Exercise Prices, upper limit | $110 |
Remaining Number Outstanding | |
Wtd. Avg. Life | 0 years |
Wtd. Avg. Exercise Price | |
Range Five | |
Range of Exercise Prices, lower limit | $110.01 |
Range of Exercise Prices, upper limit | $170 |
Remaining Number Outstanding | 3,216 |
Wtd. Avg. Life | 3 months 18 days |
Wtd. Avg. Exercise Price | $122.78 |
Range Six | |
Range of Exercise Prices, lower limit | $170.01 |
Range of Exercise Prices, upper limit | $200 |
Remaining Number Outstanding | 3,325 |
Wtd. Avg. Life | 8 months 12 days |
Wtd. Avg. Exercise Price | $179.16 |
STOCK_OPTIONS_AND_WARRANTS_Det3
STOCK OPTIONS AND WARRANTS (Details 3) (USD $) | 12 Months Ended | |
Dec. 31, 2014 | Dec. 31, 2013 | |
Warrant | ||
Beginning Balance | 118,585 | 118,835 |
Granted during the period, Warrants | 56,800 | |
Exercised during the period, Warrants | -10,800 | |
Terminated/Expired during the period, Warrants | -250 | |
Ending Balance | 164,585 | 118,585 |
Exercisable at December 31, 2014, Warrants | 164,585 | |
Begining Balance, Weighted-Average Exercise Price | $6.30 | $6.38 |
Granted during the period, Weighted-Average Exercise Price | $10.80 | |
Exercised during the period, Weighted-Average Exercise Price | $6.30 | |
Terminated/Expired during the period, Weighted-Average Exercise Price | $43.60 | |
Ending Balance, Weighted-Average Exercise Price | $7.85 | $6.30 |
Exercisable at December 31, 2014, Weighted-Average Exercise Price | $7.85 |
STOCK_OPTIONS_AND_WARRANTS_Det4
STOCK OPTIONS AND WARRANTS (Details Narrative) (USD $) | 12 Months Ended | |
Dec. 31, 2014 | Dec. 31, 2013 | |
Stock Options And Warrants Details Narrative | ||
Granted during the period, Options | 120,000 | 99,747 |
Stock compensation expense | $42,000 | $38,000 |
Unrecognized compensation cost related to non-vested stock option awards | 175,000 | |
Unrecognized compensation cost related to non-vested stock option awards, period | 3 years | |
Intrinsic value | $2,177,000 |
SEGMENT_REPORTING_Details
SEGMENT REPORTING (Details) (USD $) | 12 Months Ended | |
Dec. 31, 2014 | Dec. 31, 2013 | |
Gross Profit | $14,098,000 | $15,235,000 |
Corporate | ||
Net Sales | ||
Gross Profit | ||
Pre Tax Income Loss | -363,000 | -501,000 |
Assets | 20,066,000 | 9,647,000 |
Consolidated | ||
Net Sales | 64,331,000 | 62,833,000 |
Gross Profit | 14,098,000 | 15,235,000 |
Pre Tax Income Loss | 299,000 | 3,569,000 |
Provision for Taxes | -368,000 | -170,000 |
Net Income | 667,000 | 3,739,000 |
Elimination of Assets | -44,091,000 | -4,301,000 |
Assets | 65,920,000 | 50,172,000 |
COMPLEX MACHINING | ||
Net Sales | 44,220,000 | 49,203,000 |
Gross Profit | 8,691,000 | 11,753,000 |
Pre Tax Income Loss | 1,074,000 | 4,273,000 |
Assets | 60,409,000 | 33,207,000 |
AEROSTRUCTURES & ELECTRONICS | ||
Net Sales | 18,273,000 | 13,630,000 |
Gross Profit | 4,812,000 | 3,482,000 |
Pre Tax Income Loss | -554,000 | -203,000 |
Assets | 21,386,000 | 11,619,000 |
TURBINE ENGINE COMPONENTS | ||
Net Sales | 1,838,000 | |
Gross Profit | 595,000 | |
Pre Tax Income Loss | 142,000 | |
Assets | $8,150,000 |