Document and Entity Information
Document and Entity Information - shares | 6 Months Ended | |
Dec. 31, 2019 | Feb. 12, 2020 | |
Document And Entity Information [Abstract] | ||
Entity Registrant Name | ESPEY MFG & ELECTRONICS CORP | |
Entity Central Index Key | 0000033533 | |
Document Type | 10-Q | |
Document Period End Date | Dec. 31, 2019 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --06-30 | |
Entity Filer Category | Non-accelerated Filer | |
Entity Small Business | true | |
Entity Emerging Growth Company | false | |
Document Fiscal Period Focus | Q2 | |
Document Fiscal Year Focus | 2020 | |
Entity Common Stock, Shares Outstanding | 2,401,033 | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity File Number | 1-4383 | |
Entity Incorportion, State or Country Code | NY | |
Entity Shell Company | false |
Balance Sheets
Balance Sheets - USD ($) | Dec. 31, 2019 | Jun. 30, 2019 |
ASSETS: | ||
Cash and cash equivalents | $ 6,110,846 | $ 1,462,761 |
Investment securities | 5,667,851 | 5,684,240 |
Trade accounts receivable, net of allowance of $3,000 | 4,421,611 | 10,995,783 |
Income tax receivable | 43,903 | |
Inventories: | ||
Raw materials | 2,006,733 | 1,747,449 |
Work-in-process | 680,322 | 408,130 |
Costs related to contracts in process | 12,901,196 | 11,069,558 |
Total inventories | 15,588,251 | 13,225,137 |
Prepaid expenses and other current assets | 1,006,848 | 494,181 |
Total current assets | 32,839,310 | 31,862,102 |
Property, plant and equipment, net | 3,716,688 | 3,825,411 |
Total assets | 36,555,998 | 35,687,513 |
LIABILITIES AND STOCKHOLDERS' EQUITY: | ||
Accounts payable | 1,913,449 | 2,160,433 |
Accrued expenses: | ||
Salaries and wages | 384,139 | 329,890 |
Vacation | 714,709 | 786,870 |
ESOP payable | 158,736 | |
Other | 185,756 | 109,755 |
Payroll and other taxes withheld | 510 | 61,451 |
Contract liabilities | 1,803,340 | 6,054 |
Income taxes payable | 30,481 | |
Total current liabilities | 5,160,639 | 3,484,934 |
Deferred tax liabilities | 258,472 | 277,075 |
Total liabilities | 5,419,111 | 3,762,009 |
Commitments and contingencies (see Note 5) | ||
Common stock, par value $.33-1/3 per share Authorized 10,000,000 shares; Issued 3,029,874 shares as of December 31, 2019 and June 30, 2019. Outstanding 2,401,033 and 2,401,213 as of December 31, 2019 and June 30, 2019, respectively (includes 7,083 and 14,166 Unearned ESOP shares, respectively) | 1,009,958 | 1,009,958 |
Capital in excess of par value | 18,858,202 | 18,731,975 |
Accumulated other comprehensive loss | (1,457) | (1,299) |
Retained earnings | 19,138,895 | 20,022,132 |
Total stockholders equity before ESOP | 39,005,598 | 39,762,766 |
Less: Unearned ESOP shares | (204,706) | (204,706) |
Cost of 628,841 and 628,661 shares of common stock in treasury as of December 31, 2019 and June 30, 2019, respectively | (7,664,005) | (7,632,556) |
Total stockholders' equity | 31,136,887 | 31,925,504 |
Total liabilities and stockholders' equity | $ 36,555,998 | $ 35,687,513 |
Balance Sheets (Parenthetical)
Balance Sheets (Parenthetical) - USD ($) | Dec. 31, 2019 | Jun. 30, 2019 |
Statement of Financial Position [Abstract] | ||
Trade accounts receivable, allowance | $ 3,000 | $ 3,000 |
Common stock, par value | $ 0.3333 | $ 0.3333 |
Common stock, shares authorized | 10,000,000 | 10,000,000 |
Common stock, shares issued | 3,029,874 | 3,029,874 |
Common stock, shares outstanding | 2,401,033 | 2,401,213 |
Unearned ESOP, shares | 7,083 | 14,166 |
Treasury stock, shares | 628,841 | 628,661 |
Statements of Comprehensive Inc
Statements of Comprehensive Income (Unaudited) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2019 | Dec. 31, 2018 | |
Income Statement [Abstract] | ||||
Net sales | $ 7,286,674 | $ 7,303,109 | $ 13,210,493 | $ 15,640,508 |
Cost of sales | 5,806,526 | 5,786,874 | 10,593,997 | 13,131,339 |
Gross profit | 1,480,148 | 1,516,235 | 2,616,496 | 2,509,169 |
Selling, general and administrative expenses | 1,249,742 | 1,295,687 | 2,333,954 | 2,305,231 |
Operating income | 230,406 | 220,548 | 282,542 | 203,938 |
Other income | ||||
Interest income | 33,915 | 42,376 | 66,076 | 94,775 |
Other | 4,849 | 10,985 | 20,177 | 34,657 |
Total other income | 38,764 | 53,361 | 86,253 | 129,432 |
Income before provision for income taxes | 269,170 | 273,909 | 368,795 | 333,370 |
Provision for income taxes | 40,206 | 56,151 | 58,055 | 53,940 |
Net income | 228,964 | 217,758 | 310,740 | 279,430 |
Other comprehensive income, net of tax: | ||||
Unrealized (loss) gain on investment securities | (355) | 907 | (158) | 2,254 |
Total comprehensive income | $ 228,609 | $ 218,665 | $ 310,582 | $ 281,684 |
Net income per share: | ||||
Basic | $ 0.10 | $ 0.09 | $ 0.13 | $ 0.12 |
Diluted | $ 0.10 | $ 0.09 | $ 0.13 | $ 0.12 |
Weighted average number of shares outstanding: | ||||
Basic | 2,391,643 | 2,370,948 | 2,389,526 | 2,365,220 |
Diluted | 2,395,020 | 2,393,933 | 2,395,638 | 2,388,002 |
Dividends per share: | $ 0.25 | $ 0.25 | $ 0.50 | $ 1.50 |
Statements of Changes in Stockh
Statements of Changes in Stockholders' Equity (Unaudited) - USD ($) | Common Stock [Member] | Capital in Excess of Par Value [Member] | Accumulated Other Comprehensive Income (Loss) [Member] | Retained Earnings [Member] | Treasury Stock [Member] | Unearned ESOP Shares [Member] | Total |
Balance, beginning at Jun. 30, 2018 | $ 1,009,958 | $ 18,201,691 | $ (6,349) | $ 22,416,400 | $ (7,718,835) | $ (421,453) | $ 33,481,412 |
Balance, beginning, shares at Jun. 30, 2018 | 2,387,124 | 642,750 | |||||
Net income | 279,430 | 279,430 | |||||
Other comprehensive income, net of tax | 2,254 | 2,254 | |||||
Total comprehensive income | 281,684 | ||||||
Stock options exercised | 124,231 | $ 75,892 | 200,123 | ||||
Stock options exercised, shares | 9,199 | (9,199) | |||||
Stock-based compensation | 77,876 | 77,876 | |||||
Dividends paid on common stock | (3,550,735) | (3,550,735) | |||||
Balance, ending at Dec. 31, 2018 | $ 1,009,958 | 18,403,798 | (4,095) | 19,145,095 | $ (7,642,943) | (421,453) | 30,490,360 |
Balance, ending, common shares at Dec. 31, 2018 | 2,396,323 | 633,551 | |||||
Balance, beginning at Sep. 30, 2018 | $ 1,009,958 | 18,363,293 | (5,002) | 19,482,668 | $ (7,642,943) | (421,453) | 30,786,521 |
Balance, beginning, shares at Sep. 30, 2018 | 2,396,323 | 633,551 | |||||
Net income | 217,758 | 217,758 | |||||
Other comprehensive income, net of tax | 907 | 907 | |||||
Total comprehensive income | 218,665 | ||||||
Stock-based compensation | 40,505 | 40,505 | |||||
Dividends paid on common stock | (555,331) | (555,331) | |||||
Balance, ending at Dec. 31, 2018 | $ 1,009,958 | 18,403,798 | (4,095) | 19,145,095 | $ (7,642,943) | (421,453) | 30,490,360 |
Balance, ending, common shares at Dec. 31, 2018 | 2,396,323 | 633,551 | |||||
Balance, beginning at Jun. 30, 2019 | $ 1,009,958 | 18,731,975 | (1,299) | 20,022,132 | $ (7,632,556) | (204,706) | $ 31,925,504 |
Balance, beginning, shares at Jun. 30, 2019 | 2,401,213 | 628,661 | 2,401,213 | ||||
Net income | 310,740 | $ 310,740 | |||||
Other comprehensive income, net of tax | (158) | (158) | |||||
Total comprehensive income | 310,582 | ||||||
Stock options exercised | 33,780 | $ 16,500 | $ 50,280 | ||||
Stock options exercised, shares | 2,000 | (2,000) | 2,000 | ||||
Stock-based compensation | 92,447 | $ 92,447 | |||||
Dividends paid on common stock | (1,193,977) | (1,193,977) | |||||
Purchase of treasury stock | $ (47,949) | (47,949) | |||||
Purchase of treasury stock, shares | (2,180) | 2,180 | |||||
Balance, ending at Dec. 31, 2019 | $ 1,009,958 | 18,858,202 | (1,457) | 19,138,895 | $ (7,664,005) | (204,706) | $ 31,136,887 |
Balance, ending, common shares at Dec. 31, 2019 | 2,401,033 | 628,841 | 2,401,033 | ||||
Balance, beginning at Sep. 30, 2019 | $ 1,009,958 | 18,812,931 | (1,102) | 19,506,648 | $ (7,624,347) | (204,706) | $ 31,499,382 |
Balance, beginning, shares at Sep. 30, 2019 | 2,402,880 | 626,994 | |||||
Net income | 228,964 | 228,964 | |||||
Other comprehensive income, net of tax | (355) | (355) | |||||
Total comprehensive income | 228,609 | ||||||
Stock-based compensation | 45,271 | 45,271 | |||||
Dividends paid on common stock | (596,717) | (596,717) | |||||
Purchase of treasury stock | $ (39,658) | (39,658) | |||||
Purchase of treasury stock, shares | (1,847) | 1,847 | |||||
Balance, ending at Dec. 31, 2019 | $ 1,009,958 | $ 18,858,202 | $ (1,457) | $ 19,138,895 | $ (7,664,005) | $ (204,706) | $ 31,136,887 |
Balance, ending, common shares at Dec. 31, 2019 | 2,401,033 | 628,841 | 2,401,033 |
Statements of Changes in Stoc_2
Statements of Changes in Stockholders' Equity (Unaudited) (Parenthetical) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2019 | Dec. 31, 2018 | |
Statement of Stockholders' Equity [Abstract] | ||||
Other comprehensive income, tax portion | $ (94) | $ 241 | $ (42) | $ 599 |
Dividends paid per share | $ 0.25 | $ 0.25 | $ 0.50 | $ 1.50 |
Statements of Cash Flows (Unaud
Statements of Cash Flows (Unaudited) - USD ($) | 6 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Cash Flows from Operating Activities: | ||
Net income | $ 310,740 | $ 279,430 |
Adjustments to reconcile net income to net cash provided by (used in) operating activities: | ||
Bad debt expense | 69,010 | |
Stock-based compensation | 92,447 | 77,876 |
Depreciation | 286,549 | 256,186 |
ESOP compensation expense | 165,820 | 203,809 |
Deferred income tax (benefit) expense | (18,561) | 91,220 |
Changes in assets and liabilities: | ||
Decrease (increase) in trade receivable, net | 6,574,172 | (1,339,155) |
Increase in income taxes receivable | (43,903) | (116,081) |
Increase in inventories, net | (2,363,114) | (4,326,042) |
(Increase) decrease in prepaid expenses and other current assets | (512,667) | 1,122,186 |
(Decrease) increase in accounts payable | (246,984) | 784,204 |
Increase (decrease) in accrued salaries and wages | 54,249 | (35,294) |
(Decrease) increase in vacation accrual | (72,161) | 8,079 |
Decrease in ESOP payable | (7,084) | (43,749) |
Increase in other accrued expenses | 76,001 | 48,208 |
(Decrease) increase in payroll and other taxes withheld | (60,941) | 1,372 |
Increase (decrease) in contract liabilities | 1,797,286 | (96,870) |
Decrease in income tax payable | (30,481) | |
Net cash provided by (used in) operating activities | 6,001,368 | (3,015,611) |
Cash Flows from Investing Activities: | ||
Additions to property, plant and equipment | (177,826) | (354,933) |
Purchase of investment securities | (6,063,558) | (3,103,004) |
Proceeds from sale/maturity of investment securities | 6,079,747 | 8,837,220 |
Net cash (used in) provided by investing activities | (161,637) | 5,379,283 |
Cash Flows from Financing Activities: | ||
Dividends on common stock | (1,193,977) | (3,550,735) |
Purchase of treasury stock | (47,949) | |
Proceeds from exercise of stock options | 50,280 | 200,123 |
Net cash used in financing activities | (1,191,646) | (3,350,612) |
Increase (decrease) in cash and cash equivalents | 4,648,085 | (986,940) |
Cash and cash equivalents, beginning of period | 1,462,761 | 4,298,796 |
Cash and cash equivalents, end of period | 6,110,846 | 3,311,856 |
Supplemental Schedule of Cash Flow Information: | ||
Income taxes paid | $ 151,000 | $ 80,000 |
Basis of Presentation
Basis of Presentation | 6 Months Ended |
Dec. 31, 2019 | |
Basis of Presentation [Abstract] | |
Basis of Presentation | Note 1. Basis of Presentation In the opinion of management the accompanying unaudited financial statements contain all adjustments (consisting of normal recurring adjustments) necessary for a fair presentation of the results for such periods. The results for any interim period are not necessarily indicative of the results to be expected for the full fiscal year. Certain information and footnote disclosures normally included in financial statements prepared in accordance with United States generally accepted accounting principles have been condensed or omitted. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of assets and liabilities. On an ongoing basis, we evaluate our estimates and judgments, including those related to revenue recognition, inventories, income taxes, and stock-based compensation. Specific to inventories, including work-in-process and contracts in process, management evaluates, quarterly, those estimates used in determining the cost to complete for each contract on Espey Mfg. & Electronics Corp. (the Company's) sales backlog. The change in estimates may affect the reported amount of inventories and gross profit in the current or a future period. Management bases its estimates on historical experience and on various other factors that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying amounts of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions. These financial statements should be read in conjunction with the Company's most recent audited financial statements included in its report on Form 10-K for the year ended June 30, 2019. Certain reclassifications may have been made to the prior year financial statements to conform to the current year presentation. |
Investment Securities
Investment Securities | 6 Months Ended |
Dec. 31, 2019 | |
Investments, Debt and Equity Securities [Abstract] | |
Investment Securities | Note 2. Investment Securities ASC 820 establishes a fair value hierarchy which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The standard describes three levels of inputs that may be used to measure fair value: § Level 1: Quoted prices (unadjusted) for identical assets or liabilities in active markets that the entity has the ability to access as of the measurement date. § Level 2: Significant other observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data. § Level 3: Significant unobservable inputs that reflect a reporting entity’s own assumptions about the assumptions that market participants would use in pricing an asset or liability. The carrying amounts of financial instruments, including cash and cash equivalents, short term investment securities, accounts receivable, accounts payable and accrued expenses, approximated fair value as of December 31, 2019 and June 30, 2019 because of the immediate or short-term maturity of these financial instruments. Investment securities at December 31, 2019 and June 30, 2019 consist of certificates of deposit and municipal bonds which are classified as available-for-sale securities and have been determined to be level 1 assets. The cost, gross unrealized gains, gross unrealized losses and fair value of available-for-sale securities by major security type at December 31, 2019 and June 30, 2019 are as follows: Gross Gross Amortized Unrealized Unrealized Fair Cost Gains Losses Value December 31, 2019 Certificates of deposit $ 5,034,847 $ $ $ 5,034,847 Municipal bonds 631,860 1,449 (305 ) 633,004 Total investment securities $ 5,666,707 $ 1,449 $ (305 ) $ 5,667,851 June 30, 2019 Certificates of deposit $ 5,046,627 $ — $ — $ 5,046,627 Municipal bonds 636,269 1,576 (232 ) 637,613 Total investment securities $ 5,682,896 $ 1,576 $ (232 ) $ 5,684,240 The portfolio is diversified and highly liquid and primarily consists of investment grade fixed income instruments. At December 31, 2019, the Company did not have any investments in individual securities that have been in a continuous loss position considered to be other than temporary. As of December 31, 2019 and June 30, 2019, the remaining contractual maturities of available-for-sale securities were as follows: Years to Maturity Less than One to One Year Five Years Total December 31, 2019 Available-for-sale $ 5,512,298 $ 155,553 $ 5,667,851 June 30, 2019 Available-for-sale $ 5,549,460 $ 134,780 $ 5,684,240 |
Net Income per Share
Net Income per Share | 6 Months Ended |
Dec. 31, 2019 | |
Net Income per Share [Abstract] | |
Net Income per Share | Note 3. Net Income per Share Basic net income per share excludes dilution and is computed by dividing net income available to common stockholders by the weighted average number of common shares outstanding for the period. Diluted net income per share reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock or resulted in the issuance of common stock that then shared in the income of the Company. The computation of weighted-average common shares outstanding, assuming dilution, excluded options to purchase 184,342 and 2,500 shares of our common stock for the three and six months ended December 31, 2019 and 2018, respectively, as the effect of including them would be anti-dilutive. As unearned ESOP shares are released or committed-to-be-released the shares become outstanding for earnings-per-share computations. |
Stock Based Compensation
Stock Based Compensation | 6 Months Ended |
Dec. 31, 2019 | |
Share-based Payment Arrangement [Abstract] | |
Stock Based Compensation | Note 4. Stock Based Compensation The Company follows ASC 718 in establishing standards for the accounting for transactions in which an entity exchanges its equity instruments for goods or services, as well as transactions in which an entity incurs liabilities in exchange for goods or services that are based on the fair value of the entity’s equity instruments or that may be settled by the issuance of those equity instruments. ASC 718 requires that the cost resulting from all share-based payment transactions be recognized in the financial statements based on the fair value of the share-based payment. ASC 718 establishes fair value as the measurement objective in accounting for share-based payment transactions with employees, except for equity instruments held by employee share ownership plans. Total stock-based compensation expense recognized in the statements of comprehensive income for the three-month periods ended December 31, 2019 and 2018 was $45,271 and $40,504, respectively, before income taxes. The related total deferred tax benefits were $2,483 and $2,246 for the same periods. Total stock-based compensation expense recognized in the statements of comprehensive income for the six-month periods ended December 31, 2019 and 2018, was $92,447 and $77,876, respectively, before income taxes. The related total deferred tax benefits were $5,061 and $4,280 for the same periods. As of December 31, 2019, there was $244,525 of unrecognized compensation cost related to stock option awards that is expected to be recognized as expense over the next 2 years. The total deferred tax benefit related to these awards is expected to be $14,059. The Company has one employee stock option plan under which options or stock awards may be granted, the 2017 Stock Option and Restricted Stock Plan (the "2017 Plan"). The Board of Directors may grant options to acquire shares of common stock to employees and non-employee directors of the Company at the fair market value of the common stock on the date of grant. The maximum aggregate number of shares of Common Stock subject to options or awards to non-employee directors is 133,000 and the maximum aggregate number of shares of Common Stock subject to options or awards granted to non-employee directors during any single fiscal year is the lesser of 13,300 and 33 1/3% of the total number of shares subject to options or awards granted in such fiscal year. The maximum number of shares subject to options or awards granted to any individual employee may not exceed 15,000 in a fiscal year. Generally, options granted have a two-year vesting period based on two years of continuous service and have a ten-year contractual life. Option grants provide for accelerated vesting if there is a change in control. Shares issued upon the exercise of options are from those held in Treasury. Options covering 400,000 shares are authorized for issuance under the 2017 Plan, of which 164,329 have been granted as of December 31, 2019. While no further grants of options may be made under the Company’s 2007 Stock Option and Restricted Stock Plan, as of December 31, 2019, 146,550 options were outstanding under such plan of which all are vested and exercisable. ASC 718 requires the use of a valuation model to calculate the fair value of stock-based awards. The Company has elected to use the Black-Scholes option valuation model, which incorporates various assumptions including those for dividend yield, volatility, expected life and interest rates. The table below outlines the weighted average assumptions that the Company used to calculate the fair value of each option award for the six months ended December 31, 2019 and 2018. December 31, 2019 December 31, 2018 Dividend yield 4.88% 3.68% Company’s expected volatility 27.81% 27.63% Risk-free interest rate 1.67% 2.70% Expected term 5.3 yrs 5.2 yrs Weighted average fair value per share of options granted during the period $ 3.03 $ 5.14 The Company declares regular dividends quarterly and declared and paid a regular cash dividends of $0.50 per share for the six months ended December 31, 2019. The Company declared regular cash dividends of $0.50 per share and a special cash dividend of $1.00 per share for the six months ended December 31, 2018. Expected stock price volatility is based on the historical volatility of the Company’s stock. The risk-free interest rate is based on the implied yield available on U.S. Treasury issues with an equivalent term approximating the expected life of the options. The expected option term (in years) represents the estimated period of time until exercise and is based on actual historical experience. The following table summarizes stock option activity during the six months ended December 31, 2019: Employee Stock Options Plan Weighted Number of Weighted Average Shares Average Remaining Aggregate Subject Exercise Contractual Intrinsic To Options Price Term Value Balance at July 1, 2019 259,164 $ 25.16 6.37 Granted 54,025 $ 20.50 9.94 Exercised (2,000 ) $ 25.14 — Forfeited or expired (15,602 ) $ 25.59 — Outstanding at December 31, 2019 295,587 $ 24.28 6.56 $ 93,028 Vested or expected to vest at December 31, 2019 278,798 $ 24.32 6.38 $ 83,334 Exercisable at December 31, 2019 189,770 $ 24.56 4.95 $ 33,600 The aggregate intrinsic value in the table above represents the total pretax intrinsic value (the difference between the closing sale price of the Company’s common stock as reported on the NYSE American on December 31, 2019 and the exercise price, multiplied by the number of in-the-money options) that would have been received by the option holders if all option holders had exercised their options on December 31, 2019. This amount changes based on the fair market value of the Company’s common stock. The total intrinsic values of the options exercised during the six months ended December 31, 2019 and 2018 were $263 and $64,420, respectively. The following table summarizes changes in non-vested stock options during the six months ended December 31, 2019: Weighted Average of Shares Grant Date Subject to Fair Value Non-vested at July 1, 2019 104,214 $ 4.077 Granted 54,025 $ 3.030 Vested (43,220 ) $ 2.790 Forfeited or expired (9,202 ) $ 4.194 Non-vested at December 31, 2019 105,817 $ 4.058 |
Commitments and Contingencies
Commitments and Contingencies | 6 Months Ended |
Dec. 31, 2019 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Note 5. Commitments and Contingencies The Company from time to time, enters into standby letters of credit agreements with financial institutions primarily relating to the guarantee of future performance on certain contracts. Contingent liabilities on outstanding standby letters of credit agreements aggregated to zero at December 31, 2019 and June 30, 2019. The Company, as a U.S. Government contractor, is subject to audits, reviews, and investigations by the U.S. Government related to its negotiation and performance of government contracts and its accounting for such contracts. Failure to comply with applicable U.S. Government standards by a contractor may result in suspension from eligibility for award of any new government contract and a guilty plea or conviction may result in debarment from eligibility for awards. The government may, in certain cases, also terminate existing contracts, recover damages, and impose other sanctions and penalties. As a result of contract audits the Company will determine a range of possible outcomes and in accordance with ASC 450 “Contingencies” the Company will accrue amounts within a range that appears to be its best estimate of a possible outcome. Adjustments are made to accruals, if any, periodically based on current information. We are party to various litigation matters and claims arising from time to time in the ordinary course of business. While the results of such matters cannot be predicted with certainty, we believe that the final outcome of such matters will not have a material adverse effect on our business, financial condition, results of operations or cash flows. |
Revenue
Revenue | 6 Months Ended |
Dec. 31, 2019 | |
Revenue from Contract with Customer [Abstract] | |
Revenue | Note 6. Revenue Effective July 1, 2018, we adopted Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 606 “Revenue from Contracts with Customers”, which requires entities to assess the products or services promised in contracts with customers at contract inception to determine the appropriate unit at which to record revenues. Revenue is recognized when control of the promised products or services is transferred to customers at an amount that reflects the consideration to which the entity expects to be entitled to in exchange for those products or services. We adopted ASC 606 using the modified retrospective method, which means, using the allowed practical expedient, we applied the new standard to open contracts at June 30, 2018. We reviewed remaining obligations as of the effective date and determined no adjustment was required to the opening balance of retained earnings. Under the modified retrospective method, prior period revenue is not restated for comparative periods. As a result of the adoption, we reclassified customer advance payments from inventory to contract liabilities. Contract liabilities were $1,803,340 and $6,054 as of December 31, 2019 and June 30, 2019, respectively. The increase in contract liabilities is primarily due to cash collected from progress payments related to specific contracts. The Company used the practical expedient to expense incremental costs incurred to obtain a contract when the contract term is less than one year. Significant judgment is required in determining the satisfaction of performance obligations. Revenues from our performance obligations are satisfied over time using the output method which considers the appraisal of results achieved and milestones reached or units delivered based on contractual shipment terms, typically shipping point. Revenue is recognized when the customer takes control of the product or services. The output method best depicts the transfer of control to the customer as the output method represents work completed. Control is typically transferred to the customer at shipping point as the company has a present right to payment, the customer has legal title to the asset, the customer has the significant risks and rewards of ownership of the asset, and in most instances the customer has accepted the asset. Total revenue recognized for the three and six months ended December 31, 2019 based on units delivered totaled $5,702,565 and $10,820,879, respectively, compared to $6,020,415 and $12,873,185 for the same periods in fiscal year 2019. Total revenue recognized for the three and six months ended December 31, 2019 based on milestones achieved totaled $1,584,109 and $2,389,614, respectively, compared to $1,282,694 and $2,767,323 for the same periods in fiscal year 2019. The Company offers a standard one-year product warranty. Product warranties offered by the company are classified as assurance-type warranties, which means, the warranty only guarantees that the good or service functions as promised. Based on this, the provided warranty is not considered to be a distinct performance obligation. The impact of variable consideration has been considered but none identified which would be required to be allocated to the transaction price as of December 31, 2019. Our payment terms are generally 30-60 days. The Company’s backlog at December 31, 2019 totaling $58.4 million is expected to be recognized in the following fiscal years: 40% in 2020; 34% in 2021; 19% in 2022, and 7% thereafter. |
Recently Issued Accounting Stan
Recently Issued Accounting Standards | 6 Months Ended |
Dec. 31, 2019 | |
Recently Issued Accounting Standards [Abstract] | |
Recently Issued Accounting Standards | Note 7. Recently Issued Accounting Standards Recent Accounting Pronouncements Adopted In February 2018, the FASB issued ASU No. 2018-02, “Income Statement—Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income”. Under current accounting guidance, the income tax effects for changes in income tax rates and certain other transactions are recognized in income from continuing operations resulting in income tax effects recognized in Accumulated Other Comprehensive Income that do not reflect the current tax rate of the entity (“stranded tax effects”). The new guidance allows the Company the option to reclassify these stranded tax effects to retained earnings that relate to the change in the federal tax rate resulting from the passage of the Tax Cuts and Jobs Act (the “Tax Act”). This update is effective for fiscal years beginning after December 15, 2018, including interim periods therein, and early adoption is permitted. The adoption did not have a material effect on the Company’s financial statements. Recent Accounting Pronouncements Not Yet Adopted In December 2019, the FASB issued guidance (ASU 2019-12) intended to simplify the accounting for income taxes. The amendments in this guidance are effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2020 (the Company’s fiscal 2021), with early adoption permitted. The Company is currently evaluating the potential impact of this guidance on the Company’s disclosures. In August 2018, the FASB issued ASU No. 2018-13, “Fair Value Measurement (Topic 820): Disclosure Framework – Changes to the Disclosure Requirements for Fair Value Measurement.” This ASU is part of the FASB’s larger disclosure framework project intended to improve the effectiveness of financial statement footnote disclosure. ASU 2018-13 modifies required fair value disclosures related primarily to level 3 investments. This ASU is effective for annual periods beginning after December 15, 2019 and interim periods within those annual periods. The adoption of ASU 2018-13 is not expected to have a material effect on the Company’s financial position, results of operations, and cash flows. |
Employee Stock Ownership Plan
Employee Stock Ownership Plan | 6 Months Ended |
Dec. 31, 2019 | |
Employee Stock Ownership Plan [Abstract] | |
Employee Stock Ownership Plan | Note 8. Employee Stock Ownership Plan The Company sponsors a leveraged employee stock ownership plan (the "ESOP") that covers all nonunion employees who work 1,000 or more hours per year and are employed on June 30. The Company makes annual contributions to the ESOP equal to the ESOP's debt service less dividends on unallocated shares received by the ESOP. All dividends on unallocated shares received by the ESOP are used to pay debt service. Dividends on allocated ESOP shares are recorded as a reduction of retained earnings. As the debt is repaid, shares are released and allocated to active employees, based on the proportion of debt service paid in the year. The Company accounts for its ESOP in accordance with FASB ASC 718-40. Accordingly, the shares purchased by the ESOP are reported as Unearned ESOP shares in the balance sheets and the statements of changes in stockholders’ equity. As shares are released or committed-to-be-released, the Company reports compensation expense equal to the current average market price of the shares, and the shares become outstanding for earnings-per-share (EPS) computations. ESOP compensation expense was $77,987 and $102,448 for the three-month periods ended December 31, 2019 and 2018, respectively. ESOP compensation expense was $165,820 and $203,809 for the six-month periods ended December 31, 2019 and 2018, respectively. The ESOP shares as of December 31, 2019 and 2018 were as follows: December 31, 2019 December 31, 2018 Allocated shares 452,763 441,753 Committed-to-be-released shares 7,083 7,500 Unreleased shares 7,083 21,666 Total shares held by the ESOP 466,929 470,919 Fair value of unreleased shares $ 152,993 $ 539,917 The Company may at times be required to repurchase shares at the ESOP participants’ request at the fair market value. During the three and six months ended December 31, 2019 the Company repurchased 1,847 and 2,180 shares previously held by the ESOP for $39,658 and $47,949, respectively. During the three and six months ended December 31, 2018 the Company did not repurchase any shares held by the ESOP. The ESOP allows for eligible participants to take whole share distributions from the Plan on specific dates in accordance with the provision of the Plan. Share distributions from the ESOP during the six months ended December 31, 2019 and 2018 totaled 2,180 and 17,279, respectively. |
Investment Securities (Tables)
Investment Securities (Tables) | 6 Months Ended |
Dec. 31, 2019 | |
Investments, Debt and Equity Securities [Abstract] | |
Schedule of Available-for-Sale Securities | The cost, gross unrealized gains, gross unrealized losses and fair value of available-for-sale securities by major security type at December 31, 2019 and June 30, 2019 are as follows: Gross Gross Amortized Unrealized Unrealized Fair Cost Gains Losses Value December 31, 2019 Certificates of deposit $ 5,034,847 $ $ $ 5,034,847 Municipal bonds 631,860 1,449 (305 ) 633,004 Total investment securities $ 5,666,707 $ 1,449 $ (305 ) $ 5,667,851 June 30, 2019 Certificates of deposit $ 5,046,627 $ — $ — $ 5,046,627 Municipal bonds 636,269 1,576 (232 ) 637,613 Total investment securities $ 5,682,896 $ 1,576 $ (232 ) $ 5,684,240 |
Schedule of Contractual Maturities | As of December 31, 2019 and June 30, 2019, the remaining contractual maturities of available-for-sale securities were as follows: Years to Maturity Less than One to One Year Five Years Total December 31, 2019 Available-for-sale $ 5,512,298 $ 155,553 $ 5,667,851 June 30, 2019 Available-for-sale $ 5,549,460 $ 134,780 $ 5,684,240 |
Stock Based Compensation (Table
Stock Based Compensation (Tables) | 6 Months Ended |
Dec. 31, 2019 | |
Share-based Payment Arrangement [Abstract] | |
Schedule of Fair Value Assumptions | The table below outlines the weighted average assumptions that the Company used to calculate the fair value of each option award for the six months ended December 31, 2019 and 2018. December 31, 2019 December 31, 2018 Dividend yield 4.88% 3.68% Company’s expected volatility 27.81% 27.63% Risk-free interest rate 1.67% 2.70% Expected term 5.3 yrs 5.2 yrs Weighted average fair value per share of options granted during the period $ 3.03 $ 5.14 |
Schedule of Stock Option Activity | The following table summarizes stock option activity during the six months ended December 31, 2019: Employee Stock Options Plan Weighted Number of Weighted Average Shares Average Remaining Aggregate Subject Exercise Contractual Intrinsic To Options Price Term Value Balance at July 1, 2019 259,164 $ 25.16 6.37 Granted 54,025 $ 20.50 9.94 Exercised (2,000 ) $ 25.14 — Forfeited or expired (15,602 ) $ 25.59 — Outstanding at December 31, 2019 295,587 $ 24.28 6.56 $ 93,028 Vested or expected to vest at December 31, 2019 278,798 $ 24.32 6.38 $ 83,334 Exercisable at December 31, 2019 189,770 $ 24.56 4.95 $ 33,600 |
Schedule of Changes in Non-Vested Stock Options | The following table summarizes changes in non-vested stock options during the six months ended December 31, 2019: Weighted Average of Shares Grant Date Subject to Fair Value Non-vested at July 1, 2019 104,214 $ 4.077 Granted 54,025 $ 3.030 Vested (43,220 ) $ 2.790 Forfeited or expired (9,202 ) $ 4.194 Non-vested at December 31, 2019 105,817 $ 4.058 |
Employee Stock Ownership Plan (
Employee Stock Ownership Plan (Tables) | 6 Months Ended |
Dec. 31, 2019 | |
Employee Stock Ownership Plan [Abstract] | |
Schedule of ESOP shares | The ESOP shares as of December 31, 2019 and 2018 were as follows: December 31, 2019 December 31, 2018 Allocated shares 452,763 441,753 Committed-to-be-released shares 7,083 7,500 Unreleased shares 7,083 21,666 Total shares held by the ESOP 466,929 470,919 Fair value of unreleased shares $ 152,993 $ 539,917 |
Investment Securities (Schedule
Investment Securities (Schedule of Available-for-Sale Securities) (Details) - USD ($) | Dec. 31, 2019 | Jun. 30, 2019 |
Debt Securities, Available-for-sale [Line Items] | ||
Amortized Cost | $ 5,666,707 | $ 5,682,896 |
Gross Unrealized Gains | 1,449 | 1,576 |
Gross Unrealized Losses | (305) | (232) |
Fair Value | 5,667,851 | 5,684,240 |
Certificates of Deposit [Member] | ||
Debt Securities, Available-for-sale [Line Items] | ||
Amortized Cost | 5,034,847 | 5,046,627 |
Fair Value | 5,034,847 | 5,046,627 |
Municipal Bonds [Member] | ||
Debt Securities, Available-for-sale [Line Items] | ||
Amortized Cost | 631,860 | 636,269 |
Gross Unrealized Gains | 1,449 | 1,576 |
Gross Unrealized Losses | (305) | (232) |
Fair Value | $ 633,004 | $ 637,613 |
Investment Securities (Schedu_2
Investment Securities (Schedule of Contractual Maturities) (Details) - USD ($) | Dec. 31, 2019 | Jun. 30, 2019 |
Contractual maturities of available-for-sale securities | ||
Less than One Year | $ 5,512,298 | $ 5,549,460 |
One to Five Years | 155,553 | 134,780 |
Fair Value | $ 5,667,851 | $ 5,684,240 |
Net Income per Share (Details)
Net Income per Share (Details) - shares | 3 Months Ended | 6 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2019 | Dec. 31, 2018 | |
Net Income per Share [Abstract] | ||||
Anti-dilutive securities | 184,342 | 2,500 | 184,342 | 2,500 |
Stock Based Compensation (Narra
Stock Based Compensation (Narrative) (Details) - USD ($) | 3 Months Ended | 6 Months Ended | |||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2019 | Dec. 31, 2018 | Jun. 30, 2019 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Stock based compensation expense | $ 45,271 | $ 40,504 | $ 92,447 | $ 77,876 | |
Deferred tax benefit related to stock based compensation | 2,483 | $ 2,246 | 5,061 | $ 4,280 | |
Unrecognized compensation costs | 244,525 | $ 244,525 | |||
Period in which compensation cost will be recognized | 2 years | ||||
Deferred tax benefit related to unrecognized compensation costs | $ 14,059 | $ 14,059 | |||
Granted | 54,025 | ||||
Outstanding | 295,587 | 295,587 | 259,164 | ||
Cash divided paid | $ 0.25 | $ 0.25 | $ 0.50 | $ 1.50 | |
Special cash divided paid | $ 1 | ||||
Total intrinsic values of the options exercised | $ 263 | $ 64,420 | |||
2017 Plan [Member] | Non employee directors [Member] | Maximum [Member] | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Authorized shares under plan | 133,000 | 133,000 | |||
Percentage of total number of shares subject to options or awards, single fiscal year | 33.33% | ||||
Number of shares subject to option or award, single fiscal year | 13,300 | 13,300 | |||
2017 Plan [Member] | Individual Employee [Member] | Maximum [Member] | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Number of shares subject to option or award, single fiscal year | 15,000 | 15,000 | |||
Stock Option Plans [Member] | 2017 Plan [Member] | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Vesting period | 2 years | ||||
Expiration period | 10 years | ||||
Authorized shares under plan | 400,000 | 400,000 | |||
Granted | 164,329 | ||||
Stock Option Plans [Member] | 2007 Plan [Member] | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Outstanding | 146,550 | 146,550 |
Stock Based Compensation (Sched
Stock Based Compensation (Schedule of weighted average assumptions for option awards) (Details) - $ / shares | 6 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Weighted Average Assumptions | ||
Dividend yield | 4.88% | 3.68% |
Company's expected volatility | 27.81% | 27.63% |
Risk-free interest rate | 1.67% | 2.70% |
Expected term | 5 years 3 months 19 days | 5 years 2 months 12 days |
Weighted average fair value per share of options granted during the period | $ 3.03 | $ 5.14 |
Stock Based Compensation (Sch_2
Stock Based Compensation (Schedule of Stock Option Activity) (Details) - USD ($) | 6 Months Ended | 12 Months Ended |
Dec. 31, 2019 | Jun. 30, 2019 | |
Number of Shares Subject To Options | ||
Balance at July 1, 2019 | 259,164 | |
Granted | 54,025 | |
Exercised | (2,000) | |
Forfeited or expired | (15,602) | |
Outstanding at December 31, 2019 | 295,587 | 259,164 |
Vested or expected to vest at December 31, 2019 | 278,798 | |
Exercisable at December 31, 2019 | 189,770 | |
Weighted Average Exercise Price | ||
Balance at July 1, 2019 | $ 25.16 | |
Granted | 20.50 | |
Exercised | 25.14 | |
Forfeited or expired | 25.59 | |
Outstanding at December 31, 2019 | 24.28 | $ 25.16 |
Vested or expected to vest at December 31, 2019 | 24.32 | |
Exercisable at December 31, 2019 | $ 24.56 | |
Weighted Average Remaining Contractual Term | ||
Outstanding | 6 years 6 months 21 days | 6 years 4 months 13 days |
Granted | 9 years 11 months 8 days | |
Vested or expected to vest at December 31, 2019 | 6 years 4 months 17 days | |
Exercisable at December 31, 2019 | 4 years 11 months 12 days | |
Aggregate Intrinsic Value | ||
Outstanding at December 31, 2019 | $ 93,028 | |
Vested or expected to vest at December 31, 2019 | 83,334 | |
Exercisable at December 31, 2019 | $ 33,600 |
Stock Based Compensation (Sch_3
Stock Based Compensation (Schedule of Changes in Non-Vested Stock Options) (Details) | 6 Months Ended |
Dec. 31, 2019$ / sharesshares | |
Number of Shares Subject to Option | |
Non-vested at July 1, 2019 | shares | 104,214 |
Granted | shares | 54,025 |
Vested | shares | (43,220) |
Forfeited or expired | shares | (9,202) |
Non-vested at December 31, 2019 | shares | 105,817 |
Weighted Average Grant Date Fair Value (per Option) | |
Non-vested at July 1, 2019 | $ / shares | $ 4.077 |
Granted | $ / shares | 3.030 |
Vested | $ / shares | 2.790 |
Forfeited or expired | $ / shares | 4.194 |
Non-vested at December 31, 2019 | $ / shares | $ 4.058 |
Commitments and Contingencies (
Commitments and Contingencies (Details) - USD ($) | Dec. 31, 2019 | Jun. 30, 2019 |
Standby Letters of Credit [Member] | ||
Contingent liabilities | $ 0 | $ 0 |
Revenue (Details)
Revenue (Details) - USD ($) | 3 Months Ended | 6 Months Ended | |||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2019 | Dec. 31, 2018 | Jun. 30, 2019 | |
Item Effected [Line Items] | |||||
Revenue | $ 7,286,674 | $ 7,303,109 | $ 13,210,493 | $ 15,640,508 | |
ASC 606 [Member] | |||||
Item Effected [Line Items] | |||||
Contract liabilities | 1,803,340 | 1,803,340 | $ 6,054 | ||
ASC 606 [Member] | Backlog [Member] | |||||
Item Effected [Line Items] | |||||
Intangible assets | 58,400,000 | $ 58,400,000 | |||
Percentage of estimated shipments | 40% in 2020; 34% in 2021; 19% in 2022, and 7% thereafter. | ||||
ASC 606 [Member] | Units Delivered [Member] | |||||
Item Effected [Line Items] | |||||
Revenue | 5,702,565 | 6,020,415 | $ 10,820,879 | 12,873,185 | |
ASC 606 [Member] | Milestones Achieved [Member] | |||||
Item Effected [Line Items] | |||||
Revenue | $ 1,584,109 | $ 1,282,694 | $ 2,389,614 | $ 2,767,323 |
Employee Stock Ownership Plan_2
Employee Stock Ownership Plan (Narrative) (Details) | 3 Months Ended | 6 Months Ended | ||
Dec. 31, 2019USD ($)shares | Dec. 31, 2018USD ($) | Dec. 31, 2019USD ($)hshares | Dec. 31, 2018USD ($)shares | |
Employee Stock Ownership Plan (ESOP) Disclosures [Line Items] | ||||
ESOP compensation expense | $ 77,987 | $ 102,448 | $ 165,820 | $ 203,809 |
Value of shares repurchased | $ 39,658 | $ 47,949 | ||
Employee Stock Ownership Plan [Member] | ||||
Employee Stock Ownership Plan (ESOP) Disclosures [Line Items] | ||||
Number of hours worked per year to quality for the plan | h | 1,000 | |||
Shares distributed | shares | 2,180 | 17,279 | ||
Shares repurchased | shares | 1,847 | 2,180 | ||
Value of shares repurchased | $ 39,658 | $ 47,949 |
Employee Stock Ownership Plan_3
Employee Stock Ownership Plan (Schedule of ESOP shares) (Details) - USD ($) | Dec. 31, 2019 | Dec. 31, 2018 |
Employee Stock Ownership Plan [Abstract] | ||
Allocated shares | 452,763 | 441,753 |
Committed-to-be-released shares | 7,083 | 7,500 |
Unreleased shares | 7,083 | 21,666 |
Total shares held by the ESOP | 466,929 | 470,919 |
Fair value of unreleased shares | $ 152,993 | $ 539,917 |