Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Jul. 31, 2019 | Sep. 05, 2019 | |
Document and Entity Information [Abstract] | ||
Document Type | 10-Q | |
Amendment Flag | false | |
Document Period End Date | Jul. 31, 2019 | |
Document Fiscal Year Focus | 2019 | |
Document Fiscal Period Focus | Q3 | |
Entity Registrant Name | R F INDUSTRIES LTD | |
Entity Central Index Key | 0000740664 | |
Current Fiscal Year End Date | --10-31 | |
Entity Filer Category | Non-accelerated Filer | |
Trading Symbol | RFIL | |
Entity Common Stock, Shares Outstanding | 9,392,351 | |
Entity Emerging Growth Company | false | |
Entity Small Business | true | |
Entity Shell Company | false | |
Entity Current Reporting Status | Yes |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Jul. 31, 2019 | Oct. 31, 2018 |
CURRENT ASSETS | ||
Cash and cash equivalents | $ 13,312 | $ 16,334 |
Trade accounts receivable, net of allowance for doubtful accounts of $32 and $88, respectively | 9,926 | 4,255 |
Inventories | 8,086 | 7,113 |
Other current assets | 757 | 828 |
TOTAL CURRENT ASSETS | 32,081 | 28,530 |
Property and equipment: | ||
Equipment and tooling | 3,503 | 3,210 |
Furniture and office equipment | 988 | 822 |
Property, Plant and Equipment, Gross | 4,491 | 4,032 |
Less accumulated depreciation | 3,685 | 3,473 |
Total property and equipment | 806 | 559 |
Goodwill | 1,340 | 1,340 |
Amortizable intangible assets, net | 1,161 | 1,367 |
Non-amortizable intangible assets | 657 | 657 |
Other assets | 68 | 49 |
TOTAL ASSETS | 36,113 | 32,502 |
CURRENT LIABILITIES | ||
Accounts payable | 2,430 | 1,342 |
Accrued expenses | 2,956 | 3,377 |
TOTAL CURRENT LIABILITIES | 5,386 | 4,719 |
Other long-term liabilities | 91 | 0 |
TOTAL LIABILITIES | 5,477 | 4,719 |
COMMITMENTS AND CONTINGENCIES | ||
STOCKHOLDERS' EQUITY | ||
Common stock - authorized 20,000,000 shares of $0.01 par value; 9,390,351 and 9,291,201 shares issued and outstanding at July 31, 2019 and October 31, 2018, respectively | 94 | 93 |
Additional paid-in capital | 21,647 | 20,974 |
Retained earnings | 8,895 | 6,716 |
TOTAL STOCKHOLDERS' EQUITY | 30,636 | 27,783 |
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | $ 36,113 | $ 32,502 |
CONDENSED CONSOLIDATED BALANC_2
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands | Jul. 31, 2019 | Oct. 31, 2018 |
CONDENSED CONSOLIDATED BALANCE SHEETS | ||
Trade accounts receivable, allowance for doubtful accounts | $ 32 | $ 88 |
Common stock, authorized | 20,000,000 | 20,000,000 |
Common stock, par value | $ 0.01 | $ 0.01 |
Common stock, shares issued | 9,390,351 | 9,291,201 |
Common stock, shares outstanding | 9,390,351 | 9,291,201 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Jul. 31, 2019 | Jul. 31, 2018 | Jul. 31, 2019 | Jul. 31, 2018 | |
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS | ||||
Net sales | $ 15,511 | $ 11,820 | $ 39,784 | $ 40,302 |
Cost of sales | 11,245 | 7,785 | 28,279 | 26,155 |
Gross profit | 4,266 | 4,035 | 11,505 | 14,147 |
Operating expenses: | ||||
Engineering | 381 | 269 | 1,033 | 1,221 |
Selling and general | 2,609 | 1,751 | 7,048 | 6,593 |
Total operating expenses | 2,990 | 2,020 | 8,081 | 7,814 |
Operating income | 1,276 | 2,015 | 3,424 | 6,333 |
Other income | 39 | 13 | 75 | 19 |
Income from continuing operations before provision for income taxes | 1,315 | 2,028 | 3,499 | 6,352 |
Provision for income taxes | 277 | 386 | 760 | 1,241 |
Income from continuing operations | 1,038 | 1,642 | 2,739 | 5,111 |
Income from discontinued operations, net of tax | 89 | 0 | 278 | |
Consolidated net income | $ 1,038 | $ 1,731 | $ 2,739 | $ 5,389 |
Earnings per share | ||||
Continuing operations | $ 0.11 | $ 0.18 | $ 0.29 | $ 0.57 |
Discontinued operations | 0.01 | 0 | 0.03 | |
Net income per share | 0.11 | 0.19 | 0.29 | 0.60 |
Earnings per share | ||||
Continuing operations | 0.11 | 0.17 | 0.28 | 0.54 |
Discontinued operations | 0.01 | 0 | 0.03 | |
Net income per share | $ 0.11 | $ 0.18 | $ 0.28 | $ 0.57 |
Weighted average shares outstanding | ||||
Basic | 9,363,528 | 9,202,095 | 9,343,067 | 9,045,340 |
Diluted | 9,872,899 | 9,729,608 | 9,849,889 | 9,442,612 |
CONDENSED CONSOLIDATED STATEM_2
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY - USD ($) | Common Stock | Additional Paid-in Capital | Retained Earnings | Total |
Balance at Oct. 31, 2017 | $ 89,000 | $ 19,654,000 | $ 1,600,000 | $ 21,343,000 |
Balance (in shares) at Oct. 31, 2017 | 8,872,246 | |||
Exercise of stock options | $ 4,000 | 1,014,000 | 0 | 1,018,000 |
Exercise of stock options (in shares) | 396,087 | |||
Stock-based compensation expense | $ 0 | 189,000 | 0 | 189,000 |
Dividends | 0 | 0 | (544,000) | (544,000) |
Consolidated net income | 0 | 0 | 5,389,000 | 5,389,000 |
Balance at Jul. 31, 2018 | $ 93,000 | 20,857,000 | 6,445,000 | 27,395,000 |
Balance (in shares) at Jul. 31, 2018 | 9,268,333 | |||
Balance at Apr. 30, 2018 | $ 92,000 | 20,196,000 | 4,899,000 | 25,187,000 |
Balance (in shares) at Apr. 30, 2018 | 9,144,873 | |||
Exercise of stock options | $ 1,000 | 604,000 | 0 | 605,000 |
Exercise of stock options (in shares) | 123,460 | |||
Stock-based compensation expense | $ 0 | 57,000 | 0 | 57,000 |
Dividends | 0 | 0 | (185,000) | (185,000) |
Consolidated net income | 0 | 0 | 1,731,000 | 1,731,000 |
Balance at Jul. 31, 2018 | $ 93,000 | 20,857,000 | 6,445,000 | 27,395,000 |
Balance (in shares) at Jul. 31, 2018 | 9,268,333 | |||
Balance at Oct. 31, 2018 | $ 93,000 | 20,974,000 | 6,716,000 | 27,783,000 |
Balance (in shares) at Oct. 31, 2018 | 9,291,201 | |||
Exercise of stock options | $ 1,000 | 413,000 | 0 | 414,000 |
Exercise of stock options (in shares) | 99,150 | |||
Stock-based compensation expense | $ 0 | 260,000 | 0 | 260,000 |
Dividends | 0 | 0 | (560,000) | (560,000) |
Consolidated net income | 0 | 0 | 2,739,000 | 2,739,000 |
Balance at Jul. 31, 2019 | $ 94,000 | 21,647,000 | 8,895,000 | 30,636,000 |
Balance (in shares) at Jul. 31, 2019 | 9,390,351 | |||
Balance at Apr. 30, 2019 | $ 94,000 | 21,522,000 | 8,044,000 | 29,660,000 |
Balance (in shares) at Apr. 30, 2019 | 9,360,351 | |||
Exercise of stock options | $ 0 | 57,000 | 0 | 57,000 |
Exercise of stock options (in shares) | 30,000 | |||
Stock-based compensation expense | $ 0 | 68,000 | 0 | 68,000 |
Dividends | 0 | 0 | (187,000) | (187,000) |
Consolidated net income | 0 | 0 | 1,038,000 | 1,038,000 |
Balance at Jul. 31, 2019 | $ 94,000 | $ 21,647,000 | $ 8,895,000 | $ 30,636,000 |
Balance (in shares) at Jul. 31, 2019 | 9,390,351 |
CONDENSED CONSOLIDATED STATEM_3
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 9 Months Ended | |
Jul. 31, 2019 | Jul. 31, 2018 | |
OPERATING ACTIVITIES: | ||
Consolidated net income | $ 2,739 | $ 5,389 |
Income from discontinued operations | 0 | 278 |
Income from continuing operations | 2,739 | 5,111 |
Adjustments to reconcile consolidated net income to net cash provided by (used in) operating activities: | ||
Bad debt expense | 2 | 20 |
Depreciation and amortization | 418 | 383 |
Loss on disposal of fixed assets | 0 | (1) |
Stock-based compensation expense | 260 | 189 |
Deferred income taxes | 0 | 67 |
Changes in operating assets and liabilities: | ||
Trade accounts receivable | (4,358) | (2,183) |
Inventories | (498) | (799) |
Other current assets | 146 | (302) |
Other long-term assets | 0 | 21 |
Accounts payable | 129 | 400 |
Accrued expenses | (908) | 1,385 |
Income tax receivable | 0 | (103) |
Other long-term liabilities | 80 | 0 |
Net cash provided by (used in) operating activities from continuing operations | (1,990) | 4,188 |
Net cash provided by operating activities from discontinued operations | 0 | 1,003 |
INVESTING ACTIVITIES: | ||
Proceeds from landlord for tenant improvements | 0 | 34 |
Proceeds from sale of inventory | 0 | 1 |
Capital expenditures | (429) | (146) |
Purchase of C Enterprises, net of cash acquired ($143) | (457) | 0 |
Net cash used in investing activities from continuing operations | (886) | (111) |
Net cash used in investing activities from discontinued operations | 0 | (2) |
FINANCING ACTIVITIES: | ||
Proceeds from exercise of stock options | 414 | 1,018 |
Dividends paid | (560) | (544) |
Net cash provided by (used in) financing activities | (146) | 474 |
Net increase (decrease) in cash and cash equivalents | (3,022) | 5,552 |
Cash and cash equivalents of continuing operations, beginning of period | 16,334 | 6,039 |
Cash and cash equivalents, end of period | 13,312 | 11,591 |
Less: cash and cash equivalents of discontinued operations | 0 | 1,082 |
Cash and cash equivalents of continuing operations, end of period | 13,312 | 10,509 |
Supplemental cash flow information - income taxes paid | 613 | 1,503 |
Supplemental schedule of noncash investing and financing activities: | ||
Sale of fully depreciated property and equipment | $ 0 | $ 12 |
CONDENSED CONSOLIDATED STATEM_4
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Parenthetical) $ in Thousands | 9 Months Ended |
Jul. 31, 2019USD ($) | |
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS | |
Cash Acquired from Acquisition | $ 143 |
Unaudited interim condensed con
Unaudited interim condensed consolidated financial statements | 9 Months Ended |
Jul. 31, 2019 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Unaudited interim condensed consolidated financial statements | Note 1 - Unaudited interim condensed consolidated financial statements The accompanying unaudited condensed consolidated financial statements of RF Industries, Ltd. and its divisions and three wholly-owned subsidiaries (collectively, hereinafter the “Company”) have been prepared in conformity with accounting principles generally accepted in the United States of America for interim financial information and with the instructions to Form 10‑Q. Accordingly, they do not include all of the information and footnotes required by accounting principles generally accepted in the United States of America for complete financial statements. In the opinion of management, all adjustments, which are normal and recurring, have been included in order to make the information not misleading. Information included in the consolidated balance sheet as of October 31, 2018 has been derived from, and certain terms used herein are defined in, the audited consolidated financial statements of the Company as of October 31, 2018 included in the Company’s Annual Report on Form 10‑K (“Form 10‑K”) for the year ended October 31, 2018 that was previously filed with the Securities and Exchange Commission (“SEC”). Operating results for the nine months ended July 31, 2019 are not necessarily indicative of the results that may be expected for the year ending October 31, 2019. The unaudited condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and footnotes thereto included in the Company’s Annual Report on Form 10‑K for the year ended October 31, 2018. Principles of consolidation The accompanying unaudited condensed consolidated financial statements for the periods ended on or before January 31, 2019 include the accounts of RF Industries, Ltd. and its two wholly-owned subsidiaries, Cables Unlimited, Inc. (“Cables Unlimited”) and Rel-Tech Electronics, Inc. (“Rel-Tech”). The unaudited condensed consolidated financial statements for the three and nine months ended July 31, 2019 include the accounts of RF Industries, Ltd., Cables Unlimited, Rel-Tech, and C Enterprises, Inc. (“C Enterprises”), a wholly-owned subsidiary that RF Industries, Ltd. formed for the sole purpose of acquiring the business and assets of C Enterprises, L.P. The acquisition of the business and assets of C Enterprises, L.P. was completed on March 15, 2019. For all periods on or before January 31, 2019, references herein to the “Company” shall refer to RF Industries, Ltd., Cables Unlimited, and Rel-Tech, and for all periods after January 31, 2019, references to the “Company” shall refer to RF Industries, Ltd., Cables Unlimited, Rel-Tech, and C Enterprises, collectively. All intercompany balances and transactions have been eliminated in consolidation. Reclassifications Certain amounts in the prior period condensed consolidated financial statements and notes have been reclassified to conform to the current period presentation of continuing operations and discontinued operations (see Note 3). These reclassifications had no effect on reported consolidated net income. Fair value measurements The Company measures at fair value certain financial assets and liabilities. Fair value is defined as the price that would be received to sell an asset or transfer a liability in an orderly transaction between market participants at the measurement date. U. S. GAAP specifies a hierarchy of valuation techniques based on whether the inputs to those valuation techniques are observable or unobservable. Observable inputs reflect market data obtained from independent sources, while unobservable inputs reflect the Company's market assumptions. These two types of inputs have created the following fair-value hierarchy: Level 1 - Quoted prices for identical instruments in active markets; Level 2 - Quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active, and model-derived valuations in which all significant inputs and significant value drivers are observable in active markets; and Level 3 - Valuations derived from valuation techniques in which one or more significant inputs or significant value drivers are unobservable. As of July 31, 2019 and October 31, 2018, the carrying amounts reflected in the accompanying condensed consolidated balance sheets for cash and cash equivalents, accounts receivable, accounts payable, and accrued liabilities approximated their carrying value due to their short-term nature. Revenue recognition On November 1, 2018, the Company adopted Accounting Standards Update (“ASU”) No. 2014‑09, Revenue from Contracts with Customers (Topic 606) (“ASC 606”) applying the modified retrospective method. The core principle of ASC 606 is that revenue should be recorded in an amount that reflects the consideration to which we expect to be entitled in exchange for goods or services promised to customers. Under ASC 606, the Company follows a five-step model to: (1) identify the contract with our customer; (2) identify our performance obligations in our contract; (3) determine the transaction price for our contract; (4) allocate the transaction price to our performance obligations; and (5) recognize revenue when (or as) each performance obligation is satisfied. In accordance with this accounting principle, the Company recognizes revenue using the output method at a point in time when finished goods have been transferred to the customer and there are no other obligations to customers after the title of the goods have transferred. Title of goods are transferred based on shipping terms for each customer – for shipments with terms of FOB Shipping Point, title is transferred upon shipment; for shipments with terms of FOB Destination, title is transferred upon delivery. Recent accounting standards Recently issued accounting pronouncements not yet adopted: In February 2016, the Financial Accounting Standards Board (“FASB”) issued ASU No. 2016‑02, Leases. This ASU requires lessees to recognize most leases on their balance sheets related to the rights and obligations created by those leases. The ASU also requires additional qualitative and quantitative disclosures related to the nature, timing and uncertainty of cash flows arising from leases. The guidance is effective for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years. Early adoption is permitted. The Company is currently evaluating the impact the adoption of this new standard will have on its Consolidated Financial Statements. In January 2017, the FASB issued ASU No. 2017‑04, Intangibles-Goodwill and Other, which simplifies the accounting for goodwill impairments by eliminating step 2 from the goodwill impairment test. Instead, if “the carrying amount of a reporting unit exceeds its fair value, an impairment loss shall be recognized in an amount equal to that excess, limited to the total amount of goodwill allocated to that reporting unit.” The guidance is effective for fiscal years beginning after December 15, 2019. Early adoption is permitted. The Company is currently evaluating the impact the adoption of this new standard will have on its Consolidated Financial Statements. Recently issued accounting pronouncements adopted: In May 2014, the FASB issued ASC 606. This guidance superseded Topic 605, Revenue Recognition, in addition to other industry-specific guidance. The new standard requires a company to recognize revenue in a manner that depicts the transfer of promised goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods and services. In August 2015, the FASB issued ASU 2015‑14, Revenue from Contracts with Customers: Deferral of the Effective Date, as a revision to ASU 2014‑09, which revised the effective date to fiscal years, and interim periods within those years, beginning after December 15, 2017. Early adoption is permitted but not prior to periods beginning after December 15, 2016 (i.e., the original adoption date per ASU 2014‑09). In March 2016, the FASB issued ASU 2016‑08, Revenue from Contracts with Customers: Principal versus Agent Considerations, which clarifies certain aspects of the principal-versus-agent guidance, including how an entity should identify the unit of accounting for the principal versus agent evaluation and how it should apply the control principle to certain types of arrangements, such as service transactions. The amendments also reframe the indicators to focus on evidence that an entity is acting as a principal rather than as an agent. In April 2016, the FASB issued ASU 2016‑10, Revenue from Contracts with Customers: Identifying Performance Obligations and Licensing, which clarifies how an entity should evaluate the nature of its promise in granting a license of intellectual property, which will determine whether it recognizes revenue over time or at a point in time. The amendments also clarify when a promised good or service is separately identifiable (i.e., distinct within the context of the contract) and allow entities to disregard items that are immaterial in the context of a contract. On November 1, 2018, the Company adopted ASC 606 applying the modified retrospective method. The Company has performed a review of ASC 606 as compared to its previous accounting policies for our product revenue and did not identify any material impact to revenue recognized. Therefore, there was no adjustment to retained earnings for a cumulative effect. The necessary changes to business processes and controls to effectively review and account for any new contracts under this standard have been implemented. |
Business Acquisition
Business Acquisition | 9 Months Ended |
Jul. 31, 2019 | |
Business Acquisition | |
Business Acquisition | Note 2 - Business Acquisition On March 15, 2019, through C Enterprises, Inc., its newly formed subsidiary, the Company purchased the business and assets of C Enterprises L.P., a California based designer and manufacturer of quality connectivity solutions to telecommunications and data communications distributors. In consideration for the C Enterprises business and assets, the Company paid $600,000 in cash and assumed certain liabilities. The acquisition was determined not to be material and was accounted for in accordance with the acquisition method of accounting, and the acquired assets and assumed liabilities were recorded by the Company at their estimated fair values in accordance with ASC 805, Business Combinations. There were no intangible assets identified as part of the acquisition. The results of C Enterprises, Inc.’s operations subsequent to March 15, 2019 have been included in the results of the Custom Cabling Manufacturing and Assembly segment (“Custom Cabling segment”) as well as in the Company’s consolidated statements of operations. Costs related to the acquisition of C Enterprises were approximately $100,000 and have been expensed as incurred and categorized in selling and general expenses. For the three and nine months ended July 31, 2019, C Enterprises, Inc. contributed $2.9 million and $4.5 million of revenue, respectively. |
Discontinued operations
Discontinued operations | 9 Months Ended |
Jul. 31, 2019 | |
Discontinued Operations and Disposal Groups [Abstract] | |
Discontinued operations | Note 3 - Discontinued operations On October 31, 2018, the Company sold all of the assets and liabilities of its subsidiary, Comnet Telecom Supply, Inc. (“Comnet”), to RAP Acquisition Inc., a New Jersey corporation. Comnet was a New Jersey-based manufacturer and supplier of telecommunications and data products, including fiber optic cables, cabling technologies, custom patch cord assemblies, data center consoles, and other data center equipment. This division was one of the three subsidiaries in the Company’s Custom Cabling Manufacturing Assembly segment. For the three months ended July 31, 2018, the Company recognized pretax income of $127,000 from the discontinued operations of Comnet, and income tax expense of $38,000. The major line items constituting the income from discontinued operations of Comnet for the three months ended July 31, 2018 are as follows (in thousands): Three Months Ended July 31, 2018 Major line items constituting pretax income from discontinued operations: Net sales $ 2,030 Cost of sales (1,509) Gross profit 521 Selling, general and administrative expenses (394) Pretax income from discontinued operations 127 Provision for income taxes 38 Income from discontinued operations $ 89 For the nine months ended July 31, 2018, the Company recognized pretax income of $380,000 from the discontinued operations of Comnet, and income tax expense of $102,000. The major line items constituting the income from discontinued operations of Comnet for the nine months ended July 31, 2018 are as follows (in thousands): Nine Months Ended July 31, 2018 Major line items constituting pretax income from discontinued operations: Net sales $ 6,270 Cost of sales (4,703) Gross profit 1,567 Selling, general and administrative expenses (1,187) Pretax income from discontinued operations 380 Provision for income taxes 102 Income from discontinued operations $ 278 |
Inventories and major vendors
Inventories and major vendors | 9 Months Ended |
Jul. 31, 2019 | |
Inventory Disclosure [Abstract] | |
Inventories and major vendors | Note 4 - Inventories and major vendors Inventories, consisting of materials, labor and manufacturing overhead, are stated at the lower of cost or net realizable value. Cost has been determined using the weighted average cost method. Inventories consist of the following (in thousands): July 31, 2019 October 31, 2018 Raw materials and supplies $ 3,538 $ 2,711 Work in process 743 603 Finished goods 3,805 3,799 Totals $ 8,086 $ 7,113 Two vendors accounted for 23% and 14% of inventory purchases for the three months ended July 31, 2019. For the nine months ended July 31, 2019, the same two vendors accounted for 17% and 14% of inventory purchases, respectively. For the three months ended July 31, 2018, one vendor accounted for 50% of inventory purchases. This same vendor accounted for 47% of inventory purchases for the nine months ended July 31, 2018. The Company has arrangements with these vendors to purchase products based on purchase orders periodically issued by the Company. |
Other current assets
Other current assets | 9 Months Ended |
Jul. 31, 2019 | |
Other current assets [Abstract] | |
Other current assets | Note 5 - Other current assets Other current assets consist of the following (in thousands): July 31, 2019 October 31, 2018 Prepaid taxes $ 186 $ 335 Prepaid expense 472 228 Notes receivable, current portion — 20 Other 99 245 Totals $ 757 $ 828 |
Accrued expenses
Accrued expenses | 9 Months Ended |
Jul. 31, 2019 | |
Payables and Accruals [Abstract] | |
Accrued expenses and other long-term liabilities | Note 6 - Accrued expenses Accrued expenses consist of the following (in thousands): July 31, 2019 October 31, 2018 Wages payable $ 1,514 $ 1,705 Accrued receipts 943 1,271 Other current liabilities 499 401 Totals $ 2,956 $ 3,377 Accrued receipts represent purchased inventory for which invoices have not been received. |
Earnings per share
Earnings per share | 9 Months Ended |
Jul. 31, 2019 | |
Earnings Per Share [Abstract] | |
Earnings per share | Note 7 - Earnings per share Basic earnings per share is computed by dividing consolidated net income by the weighted average number of common shares outstanding during the period. Diluted earnings per share is computed by dividing consolidated net income by the weighted average number of common shares outstanding increased by the effects of assuming that other potentially dilutive securities (such as stock options) outstanding during the period had been exercised and the treasury stock method had been applied. Potentially issuable securities totaling 124,097 and 0 shares for the three months ended July 31, 2019 and 2018, respectively, and 124,097 and 245,328 shares for the nine months ended July 31, 2019 and 2018, respectively, were excluded from the calculation of diluted per share amounts because of their anti-dilutive effect. The following table summarizes the computation of basic and diluted weighted average shares outstanding: Three Months Ended July 31, Nine Months Ended July 31, 2019 2018 2019 2018 Weighted average shares outstanding for basic earnings per share 9,363,528 9,202,095 9,343,067 9,045,340 Add effects of potentially dilutive securities-assumed exercise of stock options 509,371 527,513 506,822 397,272 Weighted average shares outstanding for diluted earnings per share 9,872,899 9,729,608 9,849,889 9,442,612 |
Stock-based compensation and eq
Stock-based compensation and equity transactions | 9 Months Ended |
Jul. 31, 2019 | |
Stock-based compensation and equity transactions | |
Stock-based compensation and equity transactions | Note 8 - Stock-based compensation and equity transactions On December 13, 2017, the Company granted 80,000 incentive stock options to an employee. These options vested 8,000 shares on the date of grant, and the balance vests as to 8,000 shares per year thereafter on each of the next nine anniversaries of December 13, 2017, and expire ten years from the date of grant. On December 3, 2018, the Company granted each of two employees 25,000 incentive stock options. These options vested 5,000 each on the date of grant, and the balance vests as to 5,000 shares each per year thereafter on each of the next four anniversaries of December 3, 2018, and expire ten years from the date of grant. On December 3, 2018, the Company also granted one employee 10,000 incentive stock options. These options vested 2,000 shares on the date of grant, and the balance vests as to 2,000 shares per year thereafter on each of the next four anniversaries of December 3, 2018, and expire ten years from the date of grant. On March 8, 2019, the Company granted one employee 25,000 incentive stock options. These options vested 5,000 on the date of grant, and the balance vests as to 5,000 shares per year thereafter on each of the next four anniversaries of March 8, 2019, and expire ten years from the date of grant. No other incentive stock options were granted to Company employees during the three and nine months ended July 31, 2019 and 2018. The weighted average fair value of employee and non-employee directors’ stock options granted by the Company during the nine months ended July 31, 2019 and 2018 was estimated to be $8.16 and $2.44, respectively, per share, using the Black-Scholes option pricing model with the following assumptions: Nine Months Ended July 31, 2019 2018 Risk-free interest rate 2.86 % 1.87 % Dividend yield 0.98 % 3.28 % Expected life of the option 5.90 years 4.54 years Volatility factor 55.42 % 46.83 % Expected volatilities are based on historical volatility of the Company’s stock price and other factors. The Company used the historical method to calculate the expected life of the 2019 and 2018 option grants. The expected life represents the period of time that options granted are expected to be outstanding. The risk-free rate is based on the U.S. Treasury rate with a maturity date corresponding to the options’ expected life. The dividend yield is based upon the historical dividend yield. Company stock option plans Descriptions of the Company’s stock option plans are included in Note 9 of the Company’s Annual Report on Form 10‑K for the year ended October 31, 2018. A summary of the status of the options granted under the Company’s stock option plans as of July 31, 2019 and the changes in options outstanding during the nine months then ended is presented in the table that follows: Weighted Average Shares Exercise Price Outstanding at November 1, 2018 942,366 $ 3.09 Options granted 124,097 $ 8.16 Options exercised (99,150) $ 4.17 Options canceled or expired (5,250) $ 6.82 Options outstanding at July 31, 2019 962,063 $ 3.61 Options exercisable at July 31, 2019 671,897 $ 3.27 Options vested and expected to vest at July 31, 2019 961,004 $ 3.61 Weighted average remaining contractual life of options outstanding as of July 31, 2019: 4.13 years Weighted average remaining contractual life of options exercisable as of July 31, 2019: 2.73 years Weighted average remaining contractual life of options vested and expected to vest as of July 31, 2019: 4.11 years Aggregate intrinsic value of options outstanding at July 31, 2019: $3,721,000 Aggregate intrinsic value of options exercisable at July 31, 2019: $2,792,000 Aggregate intrinsic value of options vested and expected to vest at July 31, 2019: $3,706,000 As of July 31, 2019, $492,000 of expense with respect to nonvested share-based arrangements has yet to be recognized but is expected to be recognized over a weighted average period of 5.35 years. Non-employee directors receive a compensation package of $50,000 annually, which is paid one-half in cash and one-half through the grant of non-qualified stock options to purchase shares of the Company’s common stock. During the quarter ended January 31, 2019, the Company granted each of its five non-employee directors 7,203 non-qualified stock options. The options have an exercise price of $8.07 per share. The number of stock options granted to each director was determined by dividing $25,000 by the fair value of a stock option grant using the Black-Scholes model ($3.471 per share). These options vest ratably over fiscal year 2019 and expire five years from the date of grant. Effective November 1, 2018, in addition to the compensation received for serving on the Board of Directors, the Chairman of each committee of the Board will receive $15,000 per year in cash for services rendered as Chairman. On June 7, 2019, a new director joined the Board. The Company granted the new director 3,082 non-qualified stock options with an exercise price of $7.50 per share. The number of stock options granted to this director was determined by dividing $10,000 of compensation (prorated for the period as an active director) by the fair value of a stock option grant using the Black-Scholes model ($3.245 per share). These options vest ratably over fiscal year 2019 and expire five years from the date of grant. No other non-qualified stock options were granted during the three and nine months ended July 31, 2019. Stock option expense During the nine months ended July 31, 2019 and 2018, stock-based compensation expense totaled $260,000 and $189,000, respectively, and was classified in selling and general expenses. During the three months ended July 31, 2019 and 2018, stock-based compensation expense totaled $68,000 and $57,000, respectively, and was classified in selling and general expenses. |
Concentrations of credit risk
Concentrations of credit risk | 9 Months Ended |
Jul. 31, 2019 | |
Concentrations of credit risk | |
Concentrations of credit risk | Note 9 - Concentrations of credit risk Financial instruments that potentially subject the Company to concentrations of credit risk consist primarily of cash and cash equivalents and accounts receivable. The Company maintains its cash and cash equivalents with high-credit quality financial institutions. At July 31, 2019, the Company had cash and cash equivalent balances in excess of federally insured limits in the amount of approximately $11.8 million. Two customers, a distributor (“Distributor A”) and an equipment manufacturer, accounted for approximately 23% and 19%, respectively, of the Company’s net sales for the nine-month period ended July 31, 2019. The equipment manufacturer’s accounts receivable balance accounted for 47% of the total net accounts receivable balance at July 31, 2019, while a different distributor (“Distributor B”) had an accounts receivable balance that accounted for 11% of the total net accounts receivable balance at July 31, 2019. For the three-month period ended July 31, 2019, Distributor B and the equipment manufacturer accounted for approximately 11% and 35%, respectively, of the Company’s net sales. For the nine-month period ended July 31, 2018, one customer who is a distributor, accounted for approximately 65% of the Company’s net sales. This same customer accounted for approximately 59% of the Company’s net sales for the three-month period ended July 31, 2018. At July 31, 2018, this customer’s accounts receivable balance accounted for approximately 61% of the total net accounts receivable balance. Although these customers have been on-going major customers of the Company, the written agreements with these customers do not have any minimum purchase obligations and they could stop buying the Company’s products at any time and for any reason. A reduction, delay or cancellation of orders from these customers or the loss of these customers could significantly reduce the Company’s future revenues and profits. |
Segment information
Segment information | 9 Months Ended |
Jul. 31, 2019 | |
Segment Reporting [Abstract] | |
Segment information | Note 10 - Segment information The Company aggregates operating divisions into operating segments that have similar economic characteristics primarily in the following areas: (1) the nature of the product and services; (2) the nature of the production process; (3) the type or class of customer for their products and services; (4) the methods used to distribute their products or services; (5) if applicable, the nature of the regulatory environment. Based upon this evaluation, as of July 31, 2019, the Company had two segments – RF Connector and Cable Assembly (“RF Connector segment”) and Custom Cabling Manufacturing and Assembly (“Custom Cabling segment”). As of July 31, 2019, the RF Connector segment consisted of one division and the Custom Cabling segment was composed of three divisions. The four divisions that met the quantitative thresholds for segment reporting are the RF Connector and Cable Assembly division (“RF Connector division”), Cables Unlimited, Rel-Tech, and C Enterprises. While each segment had similar products and services, with one major exception, there was little overlapping of these services to their customer base. In addition, sales of product and services for the RF Connector segment were primarily through the distribution channel while the Custom Cabling segment sales were through a combination of distribution and direct to the end customer. Management identifies the Company’s segments based on strategic business units that are, in turn, based along market lines. These strategic business units offer products and services to different markets in accordance with their customer base and product usage. For segment reporting purposes, the RF Connector division constitutes the RF Connector segment, and the Cables Unlimited, Rel-Tech, and C Enterprises divisions constitute the Custom Cabling segment. As reviewed by the Company’s chief operating decision maker, the Company evaluates the performance of each segment based on income or loss before income taxes. The Company charges depreciation and amortization directly to each division within the segment. Accounts receivable, inventory, property and equipment, goodwill and intangible assets are the only assets identified by segment. Except as discussed above, the accounting policies for segment reporting are the same for the Company as a whole. Substantially all of the Company’s operations are conducted in the United States; however, the Company derives a portion of its revenue from export sales. The Company attributes sales to geographic areas based on the location of the customers. The following table presents the sales of the Company by geographic area for the three and nine months ended July 31, 2019 and 2018 (in thousands): Three Months Ended July 31, Nine Months Ended July 31, 2019 2018 2019 2018 United States $ 15,154 $ 11,652 $ 39,075 $ 39,790 Foreign Countries: Canada 156 142 433 421 Mexico 109 — 109 39 All Other 92 26 167 52 357 168 709 512 Totals $ 15,511 $ 11,820 $ 39,784 $ 40,302 Net sales, income from continuing operations before provision for income taxes and other related segment information for the three months ended July 31, 2019 and 2018 are as follows (in thousands): RF Connector Custom Cabling and Manufacturing and 2019 Cable Assembly Assembly Corporate Total Net sales $ 3,462 $ 12,049 $ — $ 15,511 Income from continuing operations before provision for income taxes 151 1,125 39 1,315 Depreciation and amortization 40 100 — 140 Total assets 6,969 15,007 14,137 36,113 2018 Net sales $ 3,139 $ 8,681 $ — $ 11,820 Income from continuing operations before provision for income taxes 219 1,796 13 2,028 Depreciation and amortization 42 87 — 129 Total assets 6,336 9,006 17,571 32,913 Net sales, income (loss) from continuing operations before provision for income taxes and other related segment information for the nine months ended July 31, 2019 and 2018 are as follows (in thousands): RF Connector Custom Cabling and Manufacturing and 2019 Cable Assembly Assembly Corporate Total Net sales $ 10,061 $ 29,723 $ — $ 39,784 Income from continuing operations before provision for income taxes 697 2,727 75 3,499 Depreciation and amortization 130 288 — 418 Total assets 6,969 15,007 14,137 36,113 2018 Net sales $ 8,503 $ 31,799 $ — $ 40,302 Income (loss) from continuing operations before provision for income taxes (420) 6,753 19 6,352 Depreciation and amortization 129 254 — 383 Total assets 6,336 9,006 17,571 32,913 |
Income taxes
Income taxes | 9 Months Ended |
Jul. 31, 2019 | |
Income Tax Disclosure [Abstract] | |
Income taxes | Note 11 - Income taxes On December 22, 2017, the U.S. President signed the Tax Cuts and Jobs Act (the “Tax Act”). The Tax Act, among other things, lowered the U.S. corporate income tax rate from 35% to 21% effective January 1, 2018. In December 2017, the SEC staff issued Staff Accounting Bulletin No. 118, Income Tax Accounting Implications of the Tax Cuts and Jobs Act (SAB 118), which allowed us to record provisional amounts during a measurement period not to extend beyond one year of the enactment date. As a result, we previously recorded a provisional estimate of the effect of the Tax Act in our financial statements. In the first quarter of 2019, we completed our analysis to determine the effect of the Tax Act and recorded no additional adjustments as of December 22, 2018. The Company uses an estimated annual effective tax rate, which is based on expected annual income, statutory tax rates and tax planning opportunities available in the various jurisdictions in which the Company operates, to determine its quarterly provision (benefit) for income taxes. Certain significant or unusual items are separately recognized in the quarter in which they occur and can be a source of variability in the effective tax rates from quarter to quarter. The provision for income taxes was 22% and 19% of income before income taxes for the three months ended July 31, 2019 (the “fiscal 2019 quarter”) and 2018 (the “fiscal 2018 quarter”), respectively, and 22% and 20% of income before income taxes for the nine months ended July 31, 2019 and 2018. The increase in the effective tax rate from period to period was primarily driven by the elimination of the benefit from the domestic production activities deduction and the one-time benefit recorded in the prior year related to the reduction in the Company’s deferred tax liability due to the change in the federal tax rate, both as a result of the Tax Act. The Company recorded income from discontinued operations, net of tax, as disclosed in Note 3. The Company had $90,000 and $58,000 of unrecognized tax benefits, inclusive of interest and penalties, as of July 31, 2019 and October 31, 2018, respectively. The unrecognized tax benefits, if recognized, would result in a net tax benefit of $21,000 as of July 31, 2019. |
Intangible assets
Intangible assets | 9 Months Ended |
Jul. 31, 2019 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Intangible assets | Note 12 - Intangible assets Intangible assets consist of the following (in thousands): July 31, 2019 October 31, 2018 Amortizable intangible assets: Customer relationships (estimated lives 7 - 15 years) $ 2,879 $ 2,879 Accumulated amortization (1,818) (1,619) 1,061 1,260 Patents (estimated life 14 years) 142 142 Accumulated amortization (42) (35) 100 107 Totals $ 1,161 $ 1,367 Non-amortizable intangible assets: Trademarks $ 657 $ 657 Amortization expense for the nine months ended July 31, 2019 and the year ended October 31, 2018 was $206,000 and $275,000, respectively. As of July 31, 2019, the weighted-average amortization period for the amortizable intangible assets is 10.98 years. |
Commitments
Commitments | 9 Months Ended |
Jul. 31, 2019 | |
Commitments | |
Commitments | Note 13 - Commitments The Company currently leases its corporate headquarters and RF connector and cable assembly manufacturing facilities in San Diego, California. On June 5, 2017, the Company entered into a fifth amendment to its lease for its facility in San Diego, California. As a result, the Company now leases a total of approximately 21,908 square feet of office, warehouse and manufacturing space at its San Diego location. The term of the lease expires on July 31, 2022, and the rental payments under the lease currently are $26,176 per month. The San Diego lease also requires the payment of the Company’s pro rata share of real estate taxes and insurance, maintenance and other operating expenses related to the facilities. (i) On June 9, 2017, the Cables Unlimited division entered into an amendment to its lease with K&K Unlimited, as landlord, under which Cables Unlimited leases its 12,000 square foot manufacturing facility in Yaphank, New York, to extend the term of the lease to June 30, 2018. Cables Unlimited’s monthly rent expense under the amended lease remained at $13,000 per month, plus payments of all utilities, janitorial expenses, routine maintenance costs and costs of insurance for Cables Unlimited’s business operations and equipment. On June 6, 2018, Cables Unlimited extended its lease with K&K Unlimited for an additional three years to June 30, 2021, under the same terms and conditions. The landlord is a company controlled by Darren Clark, the former owner and current President of Cables Unlimited. (ii) On July 25, 2017, the Rel-Tech Electronic division entered into a lease for approximately 13,750 square feet located in Milford, Connecticut. Rel-Tech’s net monthly rent expense under the lease is $8,707 per month for these facilities. That lease expired in August 2019. On September 1, 2019, Rel-Tech extended its lease term for an additional two years to August 31, 2021, with escalating rent payments over the two years. Beginning September 1, 2019, the net monthly rent payments are $8,969 per month. All other terms and conditions remain the same. (iii) On November 1, 2018, the Cables Unlimited division entered into a lease agreement with 100 Bellport Avenue, LLC, as landlord, for approximately 7,500 square feet located in Yaphank, New York, with a monthly rent expense of $5,625. On February 1, 2019, Cables Unlimited entered into an amendment to this lease to expand the leased space by an additional 5,000 square feet and increase the monthly rent expense by $3,750, resulting in a total rent expense of $9,375 per month. The lease expires on October 31, 2019. (iv) The newly acquired C Enterprises division leases approximately 24,014 square feet of office, warehouse, and manufacturing space located in Vista, California. The term of the lease expires on June 30, 2023, and the rental payments under the lease currently are $18,491 per month, plus payments of real estate taxes, management fee, property insurance and other operating expenses related to the facilities. As of July 31, 2019, the aggregate monthly rental for all of the Company’s facilities is approximately $76,000 per month, plus utilities, maintenance and insurance. |
Cash dividend and declared divi
Cash dividend and declared dividends | 9 Months Ended |
Jul. 31, 2019 | |
Cash dividend and declared dividends | |
Cash dividend and declared dividends | Note 14 - Cash dividend and declared dividends The Company paid dividends of $0.02 per share during the three months ended July 31, 2019 and 2018 for a total of $187,000 and $185,000, respectively. The Company paid dividends of $0.02 per share during the nine months ended July 31, 2019 and 2018 for a total of $560,000 and $544,000, respectively. |
Subsequent events
Subsequent events | 9 Months Ended |
Jul. 31, 2019 | |
Subsequent event | |
Subsequent event | Note 15 - Subsequent event On September 9, 2019, the Board of Directors of the Company declared a quarterly cash dividend of $0.02 per share to be paid on October 15, 2019 to stockholders of record on September 30, 2019. |
Discontinued operations (Tables
Discontinued operations (Tables) | 9 Months Ended |
Jul. 31, 2019 | |
Discontinued Operations and Disposal Groups [Abstract] | |
Summary Constituting the income (loss) of Discontinued Operations | The major line items constituting the income from discontinued operations of Comnet for the three months ended July 31, 2018 are as follows (in thousands): Three Months Ended July 31, 2018 Major line items constituting pretax income from discontinued operations: Net sales $ 2,030 Cost of sales (1,509) Gross profit 521 Selling, general and administrative expenses (394) Pretax income from discontinued operations 127 Provision for income taxes 38 Income from discontinued operations $ 89 The major line items constituting the income from discontinued operations of Comnet for the nine months ended July 31, 2018 are as follows (in thousands): Nine Months Ended July 31, 2018 Major line items constituting pretax income from discontinued operations: Net sales $ 6,270 Cost of sales (4,703) Gross profit 1,567 Selling, general and administrative expenses (1,187) Pretax income from discontinued operations 380 Provision for income taxes 102 Income from discontinued operations $ 278 |
Inventories and major vendors (
Inventories and major vendors (Tables) | 9 Months Ended |
Jul. 31, 2019 | |
Inventory Disclosure [Abstract] | |
Components of Inventories | Inventories consist of the following (in thousands): July 31, 2019 October 31, 2018 Raw materials and supplies $ 3,538 $ 2,711 Work in process 743 603 Finished goods 3,805 3,799 Totals $ 8,086 $ 7,113 |
Other current assets (Tables)
Other current assets (Tables) | 9 Months Ended |
Jul. 31, 2019 | |
Other current assets [Abstract] | |
Schedule of other current assets | Other current assets consist of the following (in thousands): July 31, 2019 October 31, 2018 Prepaid taxes $ 186 $ 335 Prepaid expense 472 228 Notes receivable, current portion — 20 Other 99 245 Totals $ 757 $ 828 |
Accrued expenses (Tables)
Accrued expenses (Tables) | 9 Months Ended |
Jul. 31, 2019 | |
Payables and Accruals [Abstract] | |
Accrued expenses | Accrued expenses consist of the following (in thousands): July 31, 2019 October 31, 2018 Wages payable $ 1,514 $ 1,705 Accrued receipts 943 1,271 Other current liabilities 499 401 Totals $ 2,956 $ 3,377 |
Earnings per share (Tables)
Earnings per share (Tables) | 9 Months Ended |
Jul. 31, 2019 | |
Earnings Per Share [Abstract] | |
Computation of Basic and Diluted Weighted Average Shares Outstanding | The following table summarizes the computation of basic and diluted weighted average shares outstanding: Three Months Ended July 31, Nine Months Ended July 31, 2019 2018 2019 2018 Weighted average shares outstanding for basic earnings per share 9,363,528 9,202,095 9,343,067 9,045,340 Add effects of potentially dilutive securities-assumed exercise of stock options 509,371 527,513 506,822 397,272 Weighted average shares outstanding for diluted earnings per share 9,872,899 9,729,608 9,849,889 9,442,612 |
Stock-based compensation and _2
Stock-based compensation and equity transactions (Tables) | 9 Months Ended |
Jul. 31, 2019 | |
Stock-based compensation and equity transactions | |
Computation of Weighted Average Fair Value of Employee Stock Options using Black-Scholes Option Pricing Model Assumptions | Black-Scholes option pricing model with the following assumptions: Nine Months Ended July 31, 2019 2018 Risk-free interest rate 2.86 % 1.87 % Dividend yield 0.98 % 3.28 % Expected life of the option 5.90 years 4.54 years Volatility factor 55.42 % 46.83 % |
Summary of Status of Options Granted under Stock Option Plans and Changes in Options Outstanding | A summary of the status of the options granted under the Company’s stock option plans as of July 31, 2019 and the changes in options outstanding during the nine months then ended is presented in the table that follows: Weighted Average Shares Exercise Price Outstanding at November 1, 2018 942,366 $ 3.09 Options granted 124,097 $ 8.16 Options exercised (99,150) $ 4.17 Options canceled or expired (5,250) $ 6.82 Options outstanding at July 31, 2019 962,063 $ 3.61 Options exercisable at July 31, 2019 671,897 $ 3.27 Options vested and expected to vest at July 31, 2019 961,004 $ 3.61 |
Segment information (Tables)
Segment information (Tables) | 9 Months Ended |
Jul. 31, 2019 | |
Segment Reporting [Abstract] | |
Sales by Geographic Area | The following table presents the sales of the Company by geographic area for the three and nine months ended July 31, 2019 and 2018 (in thousands): Three Months Ended July 31, Nine Months Ended July 31, 2019 2018 2019 2018 United States $ 15,154 $ 11,652 $ 39,075 $ 39,790 Foreign Countries: Canada 156 142 433 421 Mexico 109 — 109 39 All Other 92 26 167 52 357 168 709 512 Totals $ 15,511 $ 11,820 $ 39,784 $ 40,302 |
Net Sales, Income (Loss) Before Provision for Income Taxes and Other Related Segment Information | Net sales, income from continuing operations before provision for income taxes and other related segment information for the three months ended July 31, 2019 and 2018 are as follows (in thousands): RF Connector Custom Cabling and Manufacturing and 2019 Cable Assembly Assembly Corporate Total Net sales $ 3,462 $ 12,049 $ — $ 15,511 Income from continuing operations before provision for income taxes 151 1,125 39 1,315 Depreciation and amortization 40 100 — 140 Total assets 6,969 15,007 14,137 36,113 2018 Net sales $ 3,139 $ 8,681 $ — $ 11,820 Income from continuing operations before provision for income taxes 219 1,796 13 2,028 Depreciation and amortization 42 87 — 129 Total assets 6,336 9,006 17,571 32,913 Net sales, income (loss) from continuing operations before provision for income taxes and other related segment information for the nine months ended July 31, 2019 and 2018 are as follows (in thousands): RF Connector Custom Cabling and Manufacturing and 2019 Cable Assembly Assembly Corporate Total Net sales $ 10,061 $ 29,723 $ — $ 39,784 Income from continuing operations before provision for income taxes 697 2,727 75 3,499 Depreciation and amortization 130 288 — 418 Total assets 6,969 15,007 14,137 36,113 2018 Net sales $ 8,503 $ 31,799 $ — $ 40,302 Income (loss) from continuing operations before provision for income taxes (420) 6,753 19 6,352 Depreciation and amortization 129 254 — 383 Total assets 6,336 9,006 17,571 32,913 |
Intangible assets (Tables)
Intangible assets (Tables) | 9 Months Ended |
Jul. 31, 2019 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Intangible assets | Intangible assets consist of the following (in thousands): July 31, 2019 October 31, 2018 Amortizable intangible assets: Customer relationships (estimated lives 7 - 15 years) $ 2,879 $ 2,879 Accumulated amortization (1,818) (1,619) 1,061 1,260 Patents (estimated life 14 years) 142 142 Accumulated amortization (42) (35) 100 107 Totals $ 1,161 $ 1,367 Non-amortizable intangible assets: Trademarks $ 657 $ 657 |
Business Acquisition (Details)
Business Acquisition (Details) - USD ($) | Mar. 15, 2019 | Jul. 31, 2019 | Jul. 31, 2018 | Jul. 31, 2019 | Jul. 31, 2018 |
Revenues | $ 15,511,000 | $ 11,820,000 | $ 39,784,000 | $ 40,302,000 | |
C Enterprises Inc [Member] | |||||
Payments to Acquire Businesses, Gross | $ 600,000 | ||||
Revenues | $ 2,900,000 | $ 4,500,000 | |||
Selling And General Expenses [Member] | C Enterprises Inc [Member] | |||||
Business Combination, Acquisition Related Costs | $ 100,000 |
Continuing operations and repor
Continuing operations and reported as discontinued operations (Details) - Comnet Telecom Division [Member] - USD ($) | 3 Months Ended | 9 Months Ended |
Jul. 31, 2018 | Jul. 31, 2018 | |
Major line items constituting pretax income from discontinued operations: | ||
Net sales | $ 2,030,000 | $ 6,270,000 |
Cost of sales | (1,509,000) | (4,703,000) |
Gross profit | 521,000 | 1,567,000 |
Selling, general and administrative expenses | (394,000) | (1,187,000) |
Pretax income from discontinued operations | 127,000 | 380,000 |
Provision for income taxes | 38,000 | 102,000 |
Income from discontinued operations | $ 89,000 | $ 278,000 |
Discontinued operations - Addit
Discontinued operations - Additional Information (Detail) - Comnet Telecom Division [Member] - USD ($) | 3 Months Ended | 9 Months Ended |
Jul. 31, 2018 | Jul. 31, 2018 | |
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||
Discontinued Operation, Tax Effect of Discontinued Operation | $ 38,000 | $ 102,000 |
Discontinued Operation, Income (Loss) from Discontinued Operation, before Income Tax | $ 127,000 | $ 380,000 |
Inventories and major vendors -
Inventories and major vendors - Components of Inventories (Detail) - USD ($) $ in Thousands | Jul. 31, 2019 | Oct. 31, 2018 |
Inventory Disclosure [Abstract] | ||
Raw materials and supplies | $ 3,538 | $ 2,711 |
Work in process | 743 | 603 |
Finished goods | 3,805 | 3,799 |
Totals | $ 8,086 | $ 7,113 |
Inventories and major vendors_2
Inventories and major vendors - Additional Information (Detail) | 3 Months Ended | 9 Months Ended | ||
Jul. 31, 2019 | Jul. 31, 2018 | Jul. 31, 2019 | Jul. 31, 2018 | |
Vendor One | ||||
Inventory [Line Items] | ||||
Concentration Risk, Percentage | 23.00% | 50.00% | 17.00% | 47.00% |
Vendor Two | ||||
Inventory [Line Items] | ||||
Concentration Risk, Percentage | 14.00% | 14.00% |
Other current assets (Detail)
Other current assets (Detail) - USD ($) $ in Thousands | Jul. 31, 2019 | Oct. 31, 2018 |
Other current assets [Abstract] | ||
Prepaid taxes | $ 186 | $ 335 |
Prepaid expense | 472 | 228 |
Notes receivable, current portion | 0 | 20 |
Other | 99 | 245 |
Totals | $ 757 | $ 828 |
Accrued expenses (Detail)
Accrued expenses (Detail) - USD ($) $ in Thousands | Jul. 31, 2019 | Oct. 31, 2018 |
Payables and Accruals [Abstract] | ||
Wages payable | $ 1,514 | $ 1,705 |
Accrued receipts | 943 | 1,271 |
Other current liabilities | 499 | 401 |
Totals | $ 2,956 | $ 3,377 |
Earnings per share - Computatio
Earnings per share - Computation of Basic and Diluted Weighted Average Shares Outstanding (Detail) - shares | 3 Months Ended | 9 Months Ended | ||
Jul. 31, 2019 | Jul. 31, 2018 | Jul. 31, 2019 | Jul. 31, 2018 | |
Earnings Per Share [Abstract] | ||||
Weighted average shares outstanding for basic earnings per share | 9,363,528 | 9,202,095 | 9,343,067 | 9,045,340 |
Add effects of potentially dilutive securities-assumed exercise of stock options | 509,371 | 527,513 | 506,822 | 397,272 |
Weighted average shares outstanding for diluted earnings per share | 9,872,899 | 9,729,608 | 9,849,889 | 9,442,612 |
Earnings per share - Additional
Earnings per share - Additional Information (Detail) - shares | 3 Months Ended | 9 Months Ended | ||
Jul. 31, 2019 | Jul. 31, 2018 | Jul. 31, 2019 | Jul. 31, 2018 | |
Earnings Per Share [Abstract] | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount | 124,097 | 0 | 124,097 | 245,328 |
Stock-based compensation and _3
Stock-based compensation and equity transactions - Summary of fair value of employee and non-employee directors' stock options (Detail) | 9 Months Ended | |
Jul. 31, 2019 | Jul. 31, 2018 | |
Stock-based compensation and equity transactions | ||
Risk-free interest rate | 2.86% | 1.87% |
Dividend yield | 0.98% | 3.28% |
Expected life of the option | 5 years 10 months 24 days | 4 years 6 months 15 days |
Volatility factor | 55.42% | 46.83% |
Stock-based compensation and _4
Stock-based compensation and equity transactions - Summary of status of options granted under stock option plans and changes in options outstanding (Detail) - Stock Option - $ / shares | 9 Months Ended |
Jul. 31, 2019 | |
Shares | |
Outstanding at November 1, 2018 | 942,366 |
Options granted | 124,097 |
Options exercised | (99,150) |
Options canceled or expired | (5,250) |
Options outstanding at July 31, 2019 | 962,063 |
Options exercisable at July 31, 2019 | 671,897 |
Options vested and expected to vest at July 31, 2019 | 961,004 |
Weighted Average Exercise Price | |
Outstanding at November 1, 2018 | $ 3.09 |
Options granted | 8.16 |
Options exercised | 4.17 |
Options canceled or expired | 6.82 |
Options outstanding at July 31, 2019 | 3.61 |
Options exercisable at July 31, 2019 | 3.27 |
Options vested and expected to vest at July 31, 2019 | $ 3.61 |
Stock-based compensation and _5
Stock-based compensation and equity transactions - Additional Information (Detail) - USD ($) | Jun. 07, 2019 | Mar. 08, 2019 | Dec. 03, 2018 | Dec. 13, 2017 | Jul. 31, 2019 | Jan. 31, 2019 | Jul. 31, 2018 | Jul. 31, 2019 | Jul. 31, 2018 | Nov. 01, 2018 |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||||
Weighted average remaining life of options outstanding | 4 years 1 month 17 days | |||||||||
Weighted average remaining contractual life of options exercisable | 2 years 8 months 23 days | |||||||||
Weighted average life of options vested and expected to vest | 4 years 1 month 10 days | |||||||||
Aggregate intrinsic value of options outstanding | $ 3,721,000 | $ 3,721,000 | ||||||||
Aggregate intrinsic value of options exercisable | 2,792,000 | 2,792,000 | ||||||||
Aggregate intrinsic value of options vested and expected to vest | 3,706,000 | 3,706,000 | ||||||||
Non-vested stock-based arrangements yet to be recognized | 492,000 | $ 492,000 | ||||||||
Stock based arrangements yet to be recognized, weighted average period expected to be recognized | 5 years 4 months 6 days | |||||||||
Non-employee director annual grant | $ 50,000 | $ 50,000 | ||||||||
Stock based compensation expense | $ 260,000 | $ 189,000 | ||||||||
Nonqualified Plan [Member] | ||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||||
Fair value of stock option per share | $ 3.245 | $ 3.471 | ||||||||
Share-based Goods and Nonemployee Services Transaction, Quantity of Securities Issued | 3,082 | 0 | 7,203 | 0 | ||||||
Share Based Goods And Non Employee Services Transaction Value Of Stock Option Issued | $ 10,000 | $ 25,000 | ||||||||
Share-based Compensation Arrangement by Share-based Payment Award, Expiration Period | 5 years | 5 years | ||||||||
Share-based Compensation Arrangements by Share-based Payment Award, Options, Grants in Period, Weighted Average Exercise Price | $ 7.50 | $ 8.07 | ||||||||
Nonqualified Plan [Member] | Board of Directors Chairman [Member] | ||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||||
Amount Payable Annually for Services Rendered | $ 15,000 | |||||||||
Incentive stock options | ||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||||
Share-based compensation arrangement by share-based payment award, options, grants in period, gross | 80,000 | 0 | 0 | 0 | 0 | |||||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Vested, Number of Shares | 8,000 | |||||||||
Sharebased Compensation Arrangement By Sharebased Payment Award Options Vested Period | 10 years | |||||||||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Vested and Expected to Vest, Outstanding, Number | 8,000 | |||||||||
Incentive stock options | One Employee [Member] | ||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||||
Share-based compensation arrangement by share-based payment award, options, grants in period, gross | 25,000 | 10,000 | ||||||||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Vested, Number of Shares | 5,000 | 2,000 | ||||||||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Vested and Expected to Vest, Outstanding, Number | 5,000 | 2,000 | ||||||||
Share-based Compensation Arrangement by Share-based Payment Award, Expiration Period | 10 years | 10 years | ||||||||
Incentive stock options | Two Employees [Member] | ||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||||
Share-based compensation arrangement by share-based payment award, options, grants in period, gross | 25,000 | |||||||||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Vested, Number of Shares | 5,000 | |||||||||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Vested and Expected to Vest, Outstanding, Number | 5,000 | |||||||||
Share-based Compensation Arrangement by Share-based Payment Award, Expiration Period | 10 years | |||||||||
Employee And Non-Employee Directors [Member] | ||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||||
Fair value of stock option per share | $ 8.16 | $ 2.44 | $ 8.16 | $ 2.44 | ||||||
Selling And General Expenses [Member] | ||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||||
Stock based compensation expense | $ 68,000 | $ 57,000 | $ 260,000 | $ 189,000 |
Concentrations of credit risk (
Concentrations of credit risk (Detail) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Jul. 31, 2019 | Jul. 31, 2018 | Jul. 31, 2019 | Jul. 31, 2018 | |
Concentration Risk [Line Items] | ||||
Cash, FDIC insured amount | $ 11.8 | $ 11.8 | ||
Sales Revenue, Goods, Net | Distributor A [Member] | ||||
Concentration Risk [Line Items] | ||||
Concentration risk, percentage | 59.00% | 23.00% | 65.00% | |
Sales Revenue, Goods, Net | Distributor B [Member] | ||||
Concentration Risk [Line Items] | ||||
Concentration risk, percentage | 11.00% | |||
Sales Revenue, Goods, Net | Equipment Manufacturer [Member] | ||||
Concentration Risk [Line Items] | ||||
Concentration risk, percentage | 35.00% | 19.00% | ||
Accounts Receivable | Distributor A [Member] | ||||
Concentration Risk [Line Items] | ||||
Concentration risk, percentage | 61.00% | |||
Accounts Receivable | Distributor B [Member] | ||||
Concentration Risk [Line Items] | ||||
Concentration risk, percentage | 11.00% | |||
Accounts Receivable | Equipment Manufacturer [Member] | ||||
Concentration Risk [Line Items] | ||||
Concentration risk, percentage | 47.00% |
Sales by geographic area (Detai
Sales by geographic area (Detail) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Jul. 31, 2019 | Jul. 31, 2018 | Jul. 31, 2019 | Jul. 31, 2018 | |
Revenue, Major Customer [Line Items] | ||||
Sales revenue | $ 15,511 | $ 11,820 | $ 39,784 | $ 40,302 |
United States | ||||
Revenue, Major Customer [Line Items] | ||||
Sales revenue | 15,154 | 11,652 | 39,075 | 39,790 |
Canada | ||||
Revenue, Major Customer [Line Items] | ||||
Sales revenue | 156 | 142 | 433 | 421 |
Mexico | ||||
Revenue, Major Customer [Line Items] | ||||
Sales revenue | 109 | 0 | 109 | 39 |
All other | ||||
Revenue, Major Customer [Line Items] | ||||
Sales revenue | 92 | 26 | 167 | 52 |
Foreign countries, total | ||||
Revenue, Major Customer [Line Items] | ||||
Sales revenue | $ 357 | $ 168 | $ 709 | $ 512 |
Net sales, income (loss) before
Net sales, income (loss) before provision for income taxes and other related segment information (Detail) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Jul. 31, 2019 | Jul. 31, 2018 | Jul. 31, 2019 | Jul. 31, 2018 | Oct. 31, 2018 | |
Segment Reporting Information [Line Items] | |||||
Net sales | $ 15,511 | $ 11,820 | $ 39,784 | $ 40,302 | |
Income (loss) from continuing operations before provision for income taxes | 1,315 | 2,028 | 3,499 | 6,352 | |
Depreciation and amortization | 140 | 129 | 418 | 383 | |
Total assets | 36,113 | 32,913 | 36,113 | 32,913 | $ 32,502 |
RF Connector and Cable Assembly | |||||
Segment Reporting Information [Line Items] | |||||
Net sales | 3,462 | 3,139 | 10,061 | 8,503 | |
Income (loss) from continuing operations before provision for income taxes | 151 | 219 | 697 | (420) | |
Depreciation and amortization | 40 | 42 | 130 | 129 | |
Total assets | 6,969 | 6,336 | 6,969 | 6,336 | |
Custom Cabling Manufacturing and Assembly | |||||
Segment Reporting Information [Line Items] | |||||
Net sales | 12,049 | 8,681 | 29,723 | 31,799 | |
Income (loss) from continuing operations before provision for income taxes | 1,125 | 1,796 | 2,727 | 6,753 | |
Depreciation and amortization | 100 | 87 | 288 | 254 | |
Total assets | 15,007 | 9,006 | 15,007 | 9,006 | |
Corporate | |||||
Segment Reporting Information [Line Items] | |||||
Net sales | 0 | 0 | 0 | 0 | |
Income (loss) from continuing operations before provision for income taxes | 39 | 13 | 75 | 19 | |
Depreciation and amortization | 0 | 0 | 0 | 0 | |
Total assets | $ 14,137 | $ 17,571 | $ 14,137 | $ 17,571 |
Income taxes - Additional Infor
Income taxes - Additional Information (Detail) - USD ($) | 3 Months Ended | 9 Months Ended | 12 Months Ended | |||
Jul. 31, 2019 | Jul. 31, 2018 | Jul. 31, 2019 | Jul. 31, 2018 | Oct. 31, 2018 | Oct. 31, 2017 | |
Disclosure Income Taxes Additional Information [Abstract] | ||||||
Provision for income tax as percentage of income (loss) before income taxes | 22.00% | 19.00% | 22.00% | 20.00% | ||
Effective Income Tax Rate Reconciliation, at Federal Statutory Income Tax Rate, Percent | 21.00% | 35.00% | ||||
Unrecognized tax benefits, inclusive of interest and penalties | $ 90,000 | $ 90,000 | $ 58,000 | |||
Unrecognized tax benefits | $ 21,000 | $ 21,000 |
Intangible assets (Detail)
Intangible assets (Detail) - USD ($) $ in Thousands | Jul. 31, 2019 | Oct. 31, 2018 |
Intangible Assets [Line Items] | ||
Amortizable intangible assets, net | $ 1,161 | $ 1,367 |
Non-amortizable intangible assets, Trademarks | 657 | 657 |
Customer relationships (estimated lives 7 - 15 years) | ||
Intangible Assets [Line Items] | ||
Amortizable intangible assets, gross | 2,879 | 2,879 |
Amortizable intangible assets, Accumulated amortization | (1,818) | (1,619) |
Amortizable intangible assets, net | 1,061 | 1,260 |
Patents (estimated life 14 years) | ||
Intangible Assets [Line Items] | ||
Amortizable intangible assets, gross | 142 | 142 |
Amortizable intangible assets, Accumulated amortization | (42) | (35) |
Amortizable intangible assets, net | $ 100 | $ 107 |
Intangible assets (Parenthetica
Intangible assets (Parenthetical) (Detail) | 9 Months Ended |
Jul. 31, 2019 | |
Customer relationships (estimated lives 7 - 15 years) | Maximum [Member] | |
Intangible Assets [Line Items] | |
Finite-Lived Intangible Asset, Useful Life | 15 years |
Customer relationships (estimated lives 7 - 15 years) | Minimum [Member] | |
Intangible Assets [Line Items] | |
Finite-Lived Intangible Asset, Useful Life | 7 years |
Patents (estimated life 14 years) | |
Intangible Assets [Line Items] | |
Finite-Lived Intangible Asset, Useful Life | 14 years |
Intangible assets - Additional
Intangible assets - Additional Information (Detail) - USD ($) | 9 Months Ended | 12 Months Ended |
Jul. 31, 2019 | Oct. 31, 2018 | |
Goodwill and Intangible Assets Disclosure [Abstract] | ||
Amortization expense | $ 206,000 | $ 275,000 |
Acquired Finite-lived Intangible Assets, Weighted Average Useful Life | 10 years 11 months 23 days |
Commitments - (Detail)
Commitments - (Detail) | Sep. 01, 2019USD ($) | Jul. 31, 2019USD ($) | Mar. 15, 2019USD ($)ft² | Feb. 01, 2019USD ($)ft² | Feb. 01, 2019ft² | Jun. 06, 2018 | Nov. 02, 2018USD ($)ft² | Jul. 25, 2017USD ($)ft² | Jun. 09, 2017USD ($)ft² | Jun. 05, 2017USD ($)ft² |
Commitments And Contingencies [Line Items] | ||||||||||
Operating Leases, Rent Expense, Minimum Rentals | $ 76,000 | |||||||||
San Diego, California [Member] | ||||||||||
Commitments And Contingencies [Line Items] | ||||||||||
Area of Land | ft² | 21,908 | |||||||||
Operating Leases, Rent Expense | $ 26,176 | |||||||||
Lease Expiration Date | Jul. 31, 2022 | |||||||||
Milford Connecticut [Member] | Commitments [Member] | ||||||||||
Commitments And Contingencies [Line Items] | ||||||||||
Area of Land | ft² | 13,750 | |||||||||
Operating Leases, Rent Expense | $ 8,969 | $ 8,707 | ||||||||
Lease Expiration Date | Aug. 31, 2021 | Aug. 31, 2019 | ||||||||
NEW YORK | Commitments [Member] | K&K Unlimited [Member] | ||||||||||
Commitments And Contingencies [Line Items] | ||||||||||
Area of Land | ft² | 12,000 | |||||||||
Operating Leases, Rent Expense | $ 13,000 | |||||||||
Lease Expiration Date | Jun. 30, 2018 | |||||||||
Additional Lease Expiration Date | Jun. 30, 2021 | |||||||||
NEW YORK | Commitments [Member] | 100 Bellport Avenue, LLC [Member] | ||||||||||
Commitments And Contingencies [Line Items] | ||||||||||
Area of Land | ft² | 7,500 | |||||||||
Operating Leases, Rent Expense | $ 9,375 | $ 5,625 | ||||||||
NEW YORK | Commitments [Member] | Amendment [Member] | ||||||||||
Commitments And Contingencies [Line Items] | ||||||||||
Area of Land | ft² | 5,000 | 5,000 | ||||||||
Operating Leases, Rent Expense | $ 3,750 | |||||||||
Lease Expiration Date | Oct. 31, 2019 | |||||||||
California | Commitments [Member] | ||||||||||
Commitments And Contingencies [Line Items] | ||||||||||
Area of Land | ft² | 24,014 | |||||||||
Operating Leases, Rent Expense | $ 18,491 |
Cash dividend and declared di_2
Cash dividend and declared dividends - (Detail) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Jul. 31, 2019 | Jul. 31, 2018 | Jul. 31, 2019 | Jul. 31, 2018 | |
Cash dividend and declared dividends | ||||
Dividends paid, per share | $ 0.02 | $ 0.02 | $ 0.02 | $ 0.02 |
Dividends paid | $ 187 | $ 185 | $ 560 | $ 544 |
Subsequent events - (Detail)
Subsequent events - (Detail) - Subsequent Event | Sep. 09, 2019$ / shares |
Subsequent Event [Line Items] | |
Dividends Payable, Amount Per Share | $ 0.02 |
Dividends payable, record date | Sep. 30, 2019 |