Document and Entity Information
Document and Entity Information - USD ($) | 12 Months Ended | ||
Dec. 31, 2019 | Mar. 20, 2020 | Jun. 28, 2019 | |
Document and Entity Information | |||
Document Type | 10-K | ||
Amendment Flag | false | ||
Document Period End Date | Dec. 31, 2019 | ||
Document Fiscal Year Focus | 2019 | ||
Document Fiscal Period Focus | FY | ||
Entity Registrant Name | P&F INDUSTRIES INC | ||
Entity Central Index Key | 0000075340 | ||
Current Fiscal Year End Date | --12-31 | ||
Entity Well-known Seasoned Issuer | No | ||
Entity Voluntary Filers | No | ||
Entity Current Reporting Status | Yes | ||
Entity Filer Category | Non-accelerated Filer | ||
Entity Public Float | $ 14,055,051 | ||
Trading Symbol | PFIN | ||
Entity Common Stock, Shares Outstanding | 3,144,810 | ||
Entity Shell Company | false | ||
Entity Emerging Growth Company | false | ||
Entity Small Business | true | ||
Entity Interactive Data Current | Yes |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) | Dec. 31, 2019 | Dec. 31, 2018 |
CURRENT ASSETS | ||
Cash | $ 380,000 | $ 999,000 |
Accounts receivable - net | 9,313,000 | 9,574,000 |
Inventories | 22,882,000 | 20,496,000 |
Prepaid expenses and other current assets | 1,497,000 | 1,137,000 |
TOTAL CURRENT ASSETS | 34,072,000 | 32,206,000 |
PROPERTY AND EQUIPMENT | ||
Land | 507,000 | 1,281,000 |
Buildings and improvements | 3,303,000 | 6,262,000 |
Machinery and equipment | 25,059,000 | 22,612,000 |
Property, Plant and Equipment, Gross | 28,869,000 | 30,155,000 |
Less accumulated depreciation and amortization | 18,760,000 | 20,380,000 |
NET PROPERTY AND EQUIPMENT | 10,109,000 | 9,775,000 |
GOODWILL | 4,726,000 | 4,436,000 |
OTHER INTANGIBLE ASSETS - net | 8,259,000 | 7,800,000 |
DEFERRED INCOME TAXES - net | 216,000 | 628,000 |
RIGHT-OF-USE ASSETS - OPERATING LEASES | 3,859,000 | 0 |
OTHER ASSETS - net | 502,000 | 741,000 |
TOTAL ASSETS | 61,743,000 | 55,586,000 |
CURRENT LIABILITIES | ||
Short-term borrowings | 5,648,000 | 2,096,000 |
Accounts payable | 1,843,000 | 2,755,000 |
Accrued compensation and benefits | 2,019,000 | 2,336,000 |
Accrued other liabilities | 1,568,000 | 1,243,000 |
Current maturities of long-term debt | 0 | 453,000 |
Current leased liabilities - operating leases | 879,000 | 0 |
Contingent consideration payable | 0 | 1,000,000 |
TOTAL CURRENT LIABILITIES | 11,957,000 | 9,883,000 |
Non-current leased liabilities - operating leases | 3,070,000 | 0 |
Other liabilities | 210,000 | 168,000 |
TOTAL LIABILITIES | 15,237,000 | 10,051,000 |
COMMITMENTS AND CONTINGENCIES | ||
SHAREHOLDERS' EQUITY | ||
Preferred stock - $ 10 par; authorized - 2,000,000 shares; no shares issued | 0 | 0 |
Additional paid-in capital | 14,056,000 | 13,904,000 |
Retained earnings | 38,867,000 | 34,588,000 |
Treasury stock, at cost - 1,273,000 shares at December 31, 2019 and 816,000 shares at December 31, 2018 | (10,213,000) | (6,695,000) |
Accumulated other comprehensive loss | (620,000) | (672,000) |
TOTAL SHAREHOLDERS' EQUITY | 46,506,000 | 45,535,000 |
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY | 61,743,000 | 55,586,000 |
Common Class A [Member] | ||
SHAREHOLDERS' EQUITY | ||
Common stock | 4,416,000 | 4,410,000 |
TOTAL SHAREHOLDERS' EQUITY | 4,416,000 | 4,410,000 |
Common Class B [Member] | ||
SHAREHOLDERS' EQUITY | ||
Common stock | $ 0 | $ 0 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares | Dec. 31, 2019 | Dec. 31, 2018 |
Preferred stock, par value (in dollars per share) | $ 10 | $ 10 |
Preferred stock, shares authorized | 2,000,000 | 2,000,000 |
Preferred stock, shares issued | 0 | 0 |
Treasury stock, shares | 1,273,000 | 816,000 |
Common Class A [Member] | ||
Common stock, par value (in dollars per share) | $ 1 | $ 1 |
Common stock, shares authorized | 7,000,000 | 7,000,000 |
Common stock, shares issued | 4,416,000 | 4,410,000 |
Common Class B [Member] | ||
Common stock, par value (in dollars per share) | $ 1 | $ 1 |
Common stock, shares authorized | 2,000,000 | 2,000,000 |
Common stock, shares issued | 0 | 0 |
CONSOLIDATED STATEMENTS OF INCO
CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME - USD ($) | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME | ||
Net revenue | $ 58,674,000 | $ 64,995,000 |
Cost of sales | 37,716,000 | 41,808,000 |
Gross profit | 20,958,000 | 23,187,000 |
Selling, general and administrative expenses | 21,869,000 | 21,705,000 |
Operating (loss) income | (911,000) | 1,482,000 |
Other expense - net | 0 | (150,000) |
Gain on sale of building | 7,817,000 | 0 |
Interest expense - net | (198,000) | (223,000) |
Income before income taxes | 6,708,000 | 1,109,000 |
Income tax expense - net | (1,797,000) | (253,000) |
Net income | $ 4,911,000 | $ 856,000 |
Basic earnings per share | $ 1.53 | $ 0.24 |
Diluted earnings per share | $ 1.51 | $ 0.23 |
Weighted average common shares outstanding: | ||
Basic | 3,207,000 | 3,628,000 |
Diluted | 3,262,000 | 3,728,000 |
Net income | $ 4,911,000 | $ 856,000 |
Other comprehensive income (loss) - foreign currency translation adjustment | 52,000 | (142,000) |
Total comprehensive income | $ 4,963,000 | $ 714,000 |
CONSOLIDATED STATEMENTS OF SHAR
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY - USD ($) | Common Class A [Member] | Additional paid-in capital [Member] | Retained earnings [Member] | Treasury stock [Member] | Accumulated other comprehensive loss [Member] | Total |
Balance at Dec. 31, 2017 | $ 4,203,000 | $ 13,064,000 | $ 34,455,000 | $ (5,179,000) | $ (530,000) | $ 46,013,000 |
Balance (in shares) at Dec. 31, 2017 | 4,203,000 | (631,000) | ||||
Net income | $ 0 | 0 | 856,000 | $ 0 | 0 | 856,000 |
Exercise of stock options | $ 200,000 | 606,000 | 0 | 0 | 0 | 806,000 |
Exercise of stock options (in shares) | 200,000 | |||||
Restricted common stock compensation | $ 7,000 | 38,000 | 0 | 0 | 0 | 45,000 |
Restricted common stock compensation (in shares) | 7,000 | |||||
Stock-based compensation | $ 0 | 196,000 | 0 | 0 | 0 | 196,000 |
Purchase of Class A common stock | $ 0 | 0 | 0 | $ (1,516,000) | 0 | (1,516,000) |
Purchase of Class A common stock (in shares) | 0 | (185,000) | ||||
Dividends | $ 0 | 0 | (723,000) | $ 0 | 0 | (723,000) |
Foreign currency translation adjustment | 0 | 0 | 0 | 0 | (142,000) | (142,000) |
Balance at Dec. 31, 2018 | $ 4,410,000 | 13,904,000 | 34,588,000 | $ (6,695,000) | (672,000) | 45,535,000 |
Balance (in shares) at Dec. 31, 2018 | 4,410,000 | (816,000) | ||||
Net income | $ 0 | 0 | 4,911,000 | $ 0 | 0 | 4,911,000 |
Restricted common stock compensation | $ 6,000 | 46,000 | 0 | 0 | 0 | 52,000 |
Restricted common stock compensation (in shares) | 6,000 | |||||
Stock-based compensation | $ 0 | 106,000 | 0 | 0 | 0 | 106,000 |
Purchase of Class A common stock | $ 0 | 0 | 0 | $ (3,518,000) | 0 | (3,518,000) |
Purchase of Class A common stock (in shares) | 0 | (457,000) | ||||
Dividends | $ 0 | 0 | (632,000) | $ 0 | 0 | (632,000) |
Foreign currency translation adjustment | 0 | 0 | 0 | 0 | 52,000 | 52,000 |
Balance at Dec. 31, 2019 | $ 4,416,000 | $ 14,056,000 | $ 38,867,000 | $ (10,213,000) | $ (620,000) | $ 46,506,000 |
Balance (in shares) at Dec. 31, 2019 | 4,416,000 | (1,273,000) |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Cash Flows from Operating Activities | ||
Net income | $ 4,911,000 | $ 856,000 |
Non-cash charges: | ||
Depreciation and amortization | 1,566,000 | 1,383,000 |
Amortization of other intangible assets | 703,000 | 702,000 |
Amortization of operating leased assets | 582,000 | 0 |
Amortization of debt issue costs | 23,000 | 95,000 |
Amortization of consideration payable to customer | 270,000 | 122,000 |
(Recovery) provision for doubtful accounts | (38,000) | 121,000 |
Stock-based compensation | 106,000 | 196,000 |
Restricted stock-based compensation | 52,000 | 45,000 |
Gain on sale of fixed assets | (7,817,000) | (1,000) |
Deferred income taxes | 409,000 | 253,000 |
Impairment of assets | 194,000 | 0 |
Fair value increase in contingent consideration | 0 | 150,000 |
Changes in operating assets and liabilities: | ||
Accounts receivable | 529,000 | 482,000 |
Inventories | (1,714,000) | (901,000) |
Prepaid expenses and other current assets | (339,000) | 83,000 |
Other assets | (1,000) | (988,000) |
Accounts payable | (1,025,000) | 317,000 |
Accrued compensation and benefits | (318,000) | 395,000 |
Accrued other liabilities | 255,000 | (324,000) |
Operating lease liabilities | (597,000) | 0 |
Other liabilities | (265,000) | (20,000) |
Total adjustments | (7,425,000) | 2,110,000 |
Net cash (used in) provided by operating activities | (2,514,000) | 2,966,000 |
Cash Flows from Investing Activities: | ||
Capital expenditures | (1,524,000) | (1,878,000) |
Proceeds from sale real property and other assets | 8,766,000 | 26,000 |
Purchase of net assets of gear businesses | (3,518,000) | 0 |
Net cash provided by (used in) investing activities | 3,724,000 | (1,852,000) |
Cash Flows from Financing Activities: | ||
Dividend payments | (632,000) | (723,000) |
Proceeds from exercise of stock options | 0 | 806,000 |
Purchase of Class A common stock | (3,518,000) | (1,516,000) |
Net proceeds from short-term borrowings | 3,552,000 | 168,000 |
Payment of contingent consideration | (692,000) | 0 |
Repayments of notes payable | (453,000) | (47,000) |
Payments of debt issue costs | (72,000) | (3,000) |
Net cash used in financing activities | (1,815,000) | (1,315,000) |
Effect of exchange rate changes on cash | (14,000) | (41,000) |
Net decrease in cash | (619,000) | (242,000) |
Cash at beginning of year | 999,000 | 1,241,000 |
Cash at end of year | 380,000 | 999,000 |
Supplemental disclosures of cash flow information: | ||
Interest | 171,000 | 130,000 |
Income taxes | 1,809,000 | 86,000 |
Amounts included in the measurement of operating lease liabilities | 30,000 | 0 |
Noncash information: | ||
Contingent consideration on acquisition of gear businesses | 64,000 | 0 |
Capital expenditures financed | 0 | 400,000 |
Right of Use ("ROU") assets recognized for new operating lease liabilities | 4,032,000 | 0 |
Operating lease liability related to ROU assets recognized upon adoption of ASC 842 | $ 418,000 | $ 0 |
SUMMARY OF ACCOUNTING POLICIES
SUMMARY OF ACCOUNTING POLICIES | 12 Months Ended |
Dec. 31, 2019 | |
SUMMARY OF ACCOUNTING POLICIES | |
SUMMARY OF ACCOUNTING POLICIES | NOTE 1—SUMMARY OF ACCOUNTING POLICIES Principles of Consolidation The Consolidated Financial Statements contained herein include the accounts of P&F Industries, Inc. and subsidiaries (“P&F” or the “Company”). All significant intercompany balances and transactions have been eliminated. The Company P&F is a Delaware corporation incorporated on April 19, 1963. The Company conducts its business through a wholly-owned subsidiary, Continental Tool Group, Inc. (“Continental”), which in turn operates through its wholly-owned subsidiaries, Florida Pneumatic Manufacturing Corporation (“Florida Pneumatic”) and Hy-Tech Machine, Inc. (“Hy-Tech”). Exhaust Technologies Inc. (“ETI”), Universal Air Tool Company Limited (“UAT”) and Jiffy Air Tool, Inc. (“Jiffy”), are all wholly-owned subsidiaries of Florida Pneumatic. The business of Air Tool Service Company (“ATSCO”) operates through a wholly-owned subsidiary of Hy-Tech. Effective October 25, 2019, the Company through a wholly owned subsidiary of Hy-Tech, acquired substantially all the operating assets comprising the businesses of Blaz-Man Gear, Inc. and Gear Products & Manufacturing, Inc., each an Illinois-based corporation that manufactures and distributes custom gears. See Note 2 – Acquisition, for further discussion Florida Pneumatic imports and sells pneumatic hand tools, most of which are of its own design, primarily to the retail, industrial, automotive and aerospace markets. Its products include sanders, grinders, drills, saws and impact wrenches. These tools are similar in appearance and function to electric hand tools, but are powered by compressed air, rather than by electricity or battery. Air tools, as they are more commonly referred to, generally offer better performance and weigh less than their electrical counterparts. Florida Pneumatic imports and/or manufactures approximately 75 types of pneumatic hand tools, most of which are sold at prices ranging from $50 to $1,000, under the names “Florida Pneumatic,” “Universal Tool”, “Jiffy Air Tool”, AIRCAT, NITROCAT, as well as under the trade names or trademarks of several private label customers. These products are sold to retailers, distributors, manufacturers and private label customers through in-house sales personnel and manufacturers’ representatives. The AIRCAT and NITROCAT brands of pneumatic tools are sold primarily to the automotive service and repair market (“automotive market”). Users of Florida Pneumatics’ hand tools include industrial maintenance and production staffs, do-it-yourself mechanics, professional automobile mechanics and auto body personnel. Jiffy manufactures and distributes pneumatic tools and components primarily to aerospace manufacturers. Hy-Tech designs, manufactures and distributes industrial tools, systems, gearing, accessories and a wide variety of replacement parts under various brands including ATP, Numatx, Thaxton and Quality Gear. Hy-Tech produces and sells heavy-duty pneumatic impact tools, grinders, air motors, hydro-pneumatic riveters, hydrostatic test plugs, impact sockets and custom gears, with prices ranging from $300 to $42,000. Hy-Tech’s ”Engineered Solutions” products are sold direct to Original Equipment Manufacturers (“OEM’s”), and industrial branded products are sold through a broad network of specialized industrial distributors serving power generation, petrochemical, aerospace, construction, railroad, mining, ship building and fabricated metals. Hy-Tech works directly with their industrial customers, designing and manufacturing products from finished components to complete turnkey systems to be sold under their own brand names. Nearly all of Hy-Tech brands are manufactured in the United States of America. Hy-Tech does distribute ATP branded impact sockets, striking wrenches and accessories imported from Italy and Asia. The sales of Hy-Tech products through various channel and direct customers are managed by both direct sales personnel and a network of specialized manufacturer representatives. Further, its products are sold as standard off-the-shelf and also produced to be sold for customer specific specifications . Basis of Financial Statement Presentation The Company prepares its Consolidated Financial Statements in accordance with accounting principles generally accepted in the United States (“US GAAP”). Revenue Recognition The Company records revenue based on a five-step model in accordance with Accounting Standards Codification ("ASC") 606, Revenue from Contracts with Customers ("ASC 606"), which it adopted effective January 1, 2018. The Company sells its goods on terms which transfer title and risk of loss at a specified location, which may be our warehouse, destination designated by our customer, port of loading or port of discharge, depending on the final destination of the goods. Other than standard product warranty provisions, our sales arrangements provide for no other post-shipment obligations. The Company offers rebates and other sales incentives, promotional allowances or discounts for certain customers that are typically related to customer purchase volume, all of which are classified as a reduction of revenue and recorded at the time of sale, using the most likely amount approach. The Company periodically evaluates whether an allowance for sales returns is necessary. Historically, we have experienced minimal sales returns. If the Company believes there are material potential sales returns, it would provide the necessary provision against sales. The Company’s performance obligations underlying its core revenue sources remain substantially unchanged. Its revenue is generated through the sale of finished products and is generally recognized at the point in time when merchandise is transferred to the customer with a fixed payment due generally within 30 to 90 days, and in an amount that considers the impacts of estimated allowances. Further, the Company has made a policy election to account for shipping and handling activities that occur after the customer has obtained control of the products as fulfillment costs rather than as an additional promised service. This election is consistent with the Company’s prior policy, and therefore the adoption of ASC 606 relating to shipping and handling activities did not have any impact on its financial results. There are no remaining performance obligations as of December 31, 2019. The Company analyzes its revenue as follows: Revenue generated at Florida Pneumatic. Year Ended December 31, 2019 2018 Increase (decrease) Percent of Percent of Revenue revenue Revenue revenue $ % Automotive $ 14,800,000 34.1 $ 14,430,000 28.5 % $ 370,000 2.6 % Retail customers 12,467,000 28.8 18,234,000 35.9 (5,767,000) (31.6) Aerospace 10,513,000 24.2 12,244,000 24.1 (1,731,000) (14.1) Industrial 4,969,000 11.5 5,151,000 10.2 (182,000) (3.5) Other 608,000 1.4 661,000 1.3 (53,000) (8.0) Total $ 43,357,000 100.0 % $ 50,720,000 100.0 % $ (7,363,000) (14.5) % Revenue generated at Hy-Tech. Year Ended December 31, 2019 2018 Increase (decrease) Percent of Percent of Revenue revenue Revenue revenue $ % OEM $ 7,321,000 47.8 % $ 5,447,000 38.2 % $ 1,874,000 34.4 % ATP 6,290,000 41.1 7,253,000 50.8 (963,000) (13.3) Other 1,706,000 11.1 1,575,000 11.0 131,000 8.3 Total $ 15,317,000 100.0 % $ 14,275,000 100.0 % $ 1,042,000 7.3 % Shipping and Handling Costs Expenses for shipping and handling costs are included in selling, general and administrative expenses, and totaled approximately $1,883,000 and $2,370,000, respectively, for the years ended December 31, 2019 and 2018. Cash and Cash Equivalents Cash and cash equivalents consist of cash held in bank demand deposits. The Company considers all highly liquid debt instruments with original maturities of three months or less to be cash equivalents. There were no cash equivalents at December 31, 2019 and 2018. Financial Instruments The carrying amounts reported in the consolidated balance sheets for cash, accounts receivable, accounts payable and short-term debt approximate fair value as of December 31, 2019 and 2018 because of the relatively short-term maturity of these financial instruments. The carrying amounts reported for long-term debt approximate fair value as of December 31, 2019 and 2018 because, in general, the interest rates underlying the instruments fluctuate with market rates. Accounts Receivable and Allowance for Doubtful Accounts Accounts receivable are customer obligations due under normal trade terms. The Company sells its products to retailers, distributors and original equipment manufacturers involved in a variety of industries. The Company performs continuing credit evaluations of its customers’ financial condition, and although the Company generally does not require collateral, letters of credit may be required from customers in certain circumstances. Management reviews accounts receivable to determine if any receivables will potentially be uncollectible. Factors considered in the determination include, among other factors, number of days an invoice is past due, customer historical trends, available credit ratings information, other financial data and the overall economic environment. Collection agencies may also be utilized if management so determines. The Company records an allowance for doubtful accounts based on specifically identified amounts that are believed to be uncollectible. The Company also records as an additional allowance a certain percentage of aged accounts receivable, based on historical experience and the Company’s assessment of the general financial conditions affecting its customer base. If actual collection experience changes, revisions to the allowance may be required. The Company has a limited number of customers with individually large amounts due at any given balance sheet date. Any unanticipated change in the creditworthiness of any of these customers could have a material effect on the Company’s results of operations in the period in which such changes or events occur. After all reasonable attempts to collect an account receivable have failed, the amount of the receivable is written off against the allowance. Based on the information available, the Company believes that its allowance for doubtful accounts as of December 31, 2019 is adequate. However, actual write-offs might exceed the recorded allowance. Concentrations of Credit Risk The Company places the majority of its cash with its primary bank, Capital One Bank, National Association (“Capital One”), which is insured by the Federal Deposit Insurance Corporation (“FDIC”). Significant concentrations of credit risk may arise from the Company’s cash maintained at Capital One, as from time to time cash balances may exceed the FDIC limits. Financial instruments that potentially subject the Company to concentration of credit risk consist principally of accounts receivable. The Company had one customer that accounted for 27.2% and 32.6% of its consolidated accounts receivable at December 31, 2019 and December 31, 2018, respectively. Further, this customer accounted for 20.7% and 26.5% of the Company’s consolidated revenue in 2019 and 2018, respectively. There was no other customer that accounted for more than 10% of our consolidated revenue in 2019 or 2018. Inventories Inventories are valued at the lower of cost or net realizable value. Cost is determined by the first-in, first-out method. The inventory balance, which includes raw materials, labor, and manufacturing overhead costs, is recorded net of an allowance for obsolete or unmarketable inventory. Such allowance is based upon both historical experience and management’s understanding of market conditions and forecasts of future product demand. If the actual amount of obsolete or unmarketable inventory significantly exceeds the estimated allowance, the Company’s cost of sales, gross profit and net earnings would be significantly affected. Property and Equipment and Depreciation and Amortization Property and equipment are stated at cost less accumulated depreciation and amortization. Generally, the Company capitalizes items in excess of $1,000. Minor replacements and maintenance and repair items are charged to expense as incurred. Upon disposal or retirement of assets, the cost and related accumulated depreciation are removed from the Company’s consolidated balance sheets. Depreciation of buildings and machinery and equipment is computed by using the straight-line method over the estimated useful lives of the assets. Buildings are depreciated over periods ranging from 27.5 to 31 years, and machinery and equipment is depreciated over periods ranging from 3 to 10 years. Leasehold improvements are amortized over the life of the lease or the useful life of the related asset, whichever is shorter. Long-Lived Assets In accordance with authoritative guidance pertaining to the accounting for the impairment or disposal of long-lived assets, property and equipment and purchased intangibles subject to amortization, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. The Company’s assessment of recoverability of property and equipment is performed on an entity level. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of such asset to its estimated undiscounted future cash flows expected to be generated by the asset. If the carrying amount of such asset exceeds its estimated undiscounted future cash flows, an impairment charge is recognized by the amount by which the carrying amount of the asset exceeds the fair value of the asset. Acquisitions The Company accounts for acquired businesses using the purchase method of accounting, which requires that the assets acquired, liabilities assumed, and contingent consideration, if any, are recorded as of the date of the acquisition at their respective fair values. It further requires that acquisition-related costs be recognized separately from the acquisition and expensed as incurred and that restructuring costs be expensed in periods subsequent to the acquisition date. Generally, the Company engages third party valuation appraisal firms to assist it in determining the fair values and useful lives of the assets acquired and liabilities assumed. The Company records a preliminary purchase price allocation for its acquisitions and finalizes purchase price allocations as additional information relative to the fair values of the assets acquired become known. Goodwill, Intangible and Long-Lived Assets Goodwill is carried at cost less any impairment charges. Goodwill and intangible assets with indefinite lives are not amortized but are subject to an annual test for impairment at the entity unit level (operating segment or one level below an operating segment) and between annual tests in certain circumstances. In accordance with authoritative guidance issued by the Financial Accounting Standards Board, (“FASB”), the Company tests goodwill for impairment on an annual basis. This test occurs in the fourth quarter or more frequently if the Company believes indicators of impairment exist. An entity has the option to first assess qualitative factors to determine whether the existence of events or circumstances leads to a determination that it is more likely than not (that is, a likelihood of more than 50)% that the fair value of a reporting unit is less than its carrying amount. If the carrying amount of the reporting unit is less than its fair value, no impairment exists, and no further action is required. If the carrying amount of a reporting unit exceeds its fair value, the entity will record an impairment charge based on the excess of a reporting unit’s carrying amount over its fair value. Intangible assets other than goodwill and intangible assets with indefinite lives, are carried at cost less accumulated amortization. Intangible assets are generally amortized on a straight-line basis over their respective useful lives, generally 3 to 20 years. Long-lived assets and certain identifiable intangible assets to be held and used are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of such assets may not be recoverable. Determination of recoverability is based on an estimate of undiscounted future cash flows resulting from the use of the asset and its eventual disposition. Measurement of any impairment loss for long-lived assets and certain identifiable intangible assets that management expects to hold, and use is based on the amount by which the carrying value exceeds the fair value of the asset. Warranty Liability The Company offers certain warranties against product defects for periods ranging from one to three years. Certain products carry limited lifetime warranties. The Company’s typical warranties require it to repair or replace the defective products during the warranty period at no cost to the customer. At the time the product revenue is recognized, the Company records a liability for estimated costs. The costs are estimated based on revenue and historical experience. The Company periodically assesses the adequacy of its warranty liability and adjusts the amounts as necessary. While the Company believes that its estimated liability for product warranties is adequate and that the judgment applied is appropriate, the estimated liability for the product warranties could differ materially in the future. Income Taxes The Company accounts for income taxes using the asset and liability approach. This approach requires the recognition of current tax assets or liabilities for the amounts refundable or payable on tax returns for the current year, as well as the recognition of deferred tax assets or liabilities for the expected future tax consequences of temporary differences that can arise between (a) the amount of taxable income and pretax financial income for a year, such as from net operating loss carryforwards and other tax credits, and (b) the tax bases of assets or liabilities and their reported amounts in the consolidated financial statements. Deferred tax assets and liabilities are measured using enacted tax rates. The impact on deferred tax assets and liabilities of changes in tax rates and laws, if any, is reflected in the Consolidated Financial Statements in the period enacted. Further, the Company evaluates the likelihood of realizing benefit from our deferred tax assets by estimating future sources of taxable income and the impact of tax planning strategies. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion, or all, of the deferred tax assets will not be realized. The Company files a consolidated Federal tax return. P&F and certain of its subsidiaries file combined tax returns in New York, California, Illinois and Texas. All subsidiaries, other than UAT, file other state and local tax returns on a stand-alone basis. UAT files an income tax return to the taxing authorities in the United Kingdom. Tax benefits are recognized for an uncertain tax position when, in the Company’s judgment, it is more likely than not that the position will be sustained upon examination by a taxing authority. For a tax position that meets the more likely-than-not recognition threshold, the tax benefit is measured as the largest amount that is judged to have a greater than 50% likelihood of being realized upon ultimate settlement with a taxing authority. The liability associated with unrecognized tax benefits is adjusted periodically due to changing circumstances and when new information becomes available. Such adjustments are recognized entirely in the period in which they are identified. The effective tax rate includes the net impact of changes in the liability for unrecognized tax benefits and subsequent adjustments as considered appropriate by the Company. Interest and penalties recognized on the liability for unrecognized tax benefits are recorded as income tax expense. The authoritative guidance for income taxes requires a reduction of the carrying amounts of deferred tax assets by recording a valuation allowance if, based on the available evidence, it is more likely than not (defined as a likelihood of more than 50)% such assets will not be realized. The valuation of deferred tax assets requires judgment in assessing the likely future tax consequences of events that have been recognized in the Company’s financial statements or tax returns and future profitability. The Company’s accounting for deferred tax consequences represents its best estimate of those future events. Changes in the Company’s estimates, due to unanticipated events or otherwise, could have a material effect on its financial condition and results of operations. The Company continually evaluates its deferred tax assets to determine if a valuation allowance is required. On December 22, 2017, the Tax Cuts and Jobs Act (the “Act”) was enacted. Among other things this Act reduced the U.S. federal corporate income tax rate from 35 % to 21%, required companies to pay a one-time transition tax on earnings of certain foreign subsidiaries that were previously deferred, created new provisions related to foreign sourced earnings, eliminated the domestic manufacturing deduction and moves to a hybrid territorial system. In accordance with the Securities and Exchange Commission’s Staff Accounting Bulletin 118 ("SAB 118"), income tax effects of the Act were refined upon obtaining, preparing, and analyzing additional information during the measurement period. At December 31, 2018, the Company had completed its accounting for the tax effects of the Act. In January 2018, the FASB released guidance on the accounting for tax on the global intangible low-taxed income (“GILTI”) provisions of the Act. The GILTI provisions impose a tax on foreign income in excess of a deemed return on tangible assets of foreign corporations. The guidance allows companies to make an accounting policy election to either (i) account for GILTI as a component of tax expense in the period in which they are subject to the rules (the period cost method), or (ii) account for GILTI in the Company’s measurement of deferred taxes (the deferred method). After completing the analysis of the GILTI provisions, the Company elected to account for GILTI using the period cost method. Sale of real property Effective June 18, 2019 (the “Jupiter Closing Date”), Florida Pneumatic completed the sale of real property located in Jupiter, Florida in which it conducts its principal operations (the “Jupiter Facility”). The Jupiter Facility was purchased by an unrelated third party for purchase price of $9.2 million. After broker fees and other expenses relating to the sale, the Company received approximately $8.7 million. Selling price $ 9,200,000 Selling expenses 451,000 Net proceeds 8,749,000 Land 774,000 Building and improvements 2,956,000 Accumulated depreciation (2,798,000) Net book value 932,000 Gain on sale of the Jupiter Facility $ 7,817,000 Effective as of the Jupiter Closing Date, Florida Pneumatic, entered into a lease with respect to an approximately 42,000 square foot portion of the Jupiter Facility. The lease is for a term of five years, with either party able to terminate after four years. The initial monthly base rent under the lease is $32,345 with annual escalations of 3%. Florida Pneumatic will also be responsible for certain other payments of “additional rent” as set forth in the lease, including certain taxes, assessments and operating expenses. The Company considered the guidance in the current accounting literature relating to the recognition of the gain and determined that the full amount of $7,817,000 should be recognized as of the date of the transaction. Lease Accounting On January 1, 2019, the Company adopted Accounting Standards Codification (“ASC”) ASC 842 “ Leases ” using the initial date of adoption method, whereby the adoption does not impact any periods prior to 2019. ASC Topic 842 retains a distinction between finance leases and operating leases. The classification criteria for distinguishing between finance leases and operating leases are substantially similar to the classification criteria for distinguishing between capital leases and operating leases in the previous leases’ guidance. The Company recorded an operating Right of Use (“ROU”) asset of $394,000, and an operating lease liability of $418,000 as of January 1, 2019. The difference between the initial operating ROU asset and operating lease liability of $24,000 is accrued rent previously recorded under ASC 840. The Company elected to adopt the package of practical expedients and, accordingly, did not reassess any previously expired or existing arrangements and related classifications under ASC 840. If the rate implicit in the lease is not readily determinable, the Company uses its incremental borrowing rate as the discount rate. The Company uses its best judgement when determining the incremental borrowing rate, which is the rate of interest that the Company would have to pay to borrow on a collateralized basis over a similar term to the lease payments in a similar currency. The Company’s operating leases include vehicles, office space and the use of real property. The Company has not identified any material finance leases as of December 31, 2019. For the year ended December 31, 2019, the Company had $582,000 in Operating lease expense. See Note 2 for information related to a new 5 year lease. The following is a maturity analysis of the annual undiscounted cash flows reconciled to the carrying value of the operating lease liabilities as of December 31, 2019: As of December 31, 2019 2020 $ 900,000 2021 828,000 2022 739,000 2023 637,000 2024 369,000 Thereafter 1,042,000 Total operating lease payments 4,515,000 Less imputed interest (566,000) Total operating lease liabilities $ 3,949,000 Weighted-average remaining lease term 6.7 years Weighted-average discount rate 4.4 % Use of Estimates The preparation of financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, possible disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. On an on-going basis P&F evaluates its estimates, including those related to collectability of accounts receivable, valuation of inventories, recoverability of goodwill and intangible assets, consideration payable to customer and income taxes. The Company bases its estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not apparent from other sources. Actual results may differ from those estimates under different assumptions or conditions. Advertising The Company expenses its costs of advertising in the period in which they are incurred. Advertising costs for the years ended December 31, 2019 and 2018 were $1,690,000 and $1,375,000, respectively. Earnings Per Common Share Basic earnings per common share exclude any dilution. It is based upon the weighted average number of shares of Common Stock outstanding during the year. Diluted earnings per common share reflect the effect of shares of Common Stock issuable upon the exercise of stock options, unless the effect on earnings is anti-dilutive. Diluted earnings per common share is computed using the treasury stock method. Under this method, the aggregate number of shares of Common Stock outstanding reflects the assumed use of proceeds from the hypothetical exercise of any outstanding options to purchase shares of the Company’s Class A Common Stock. The average market value for the period is used as the assumed purchase price. The following table sets forth the computation of basic and diluted earnings per common share: Years Ended December 31, 2019 2018 Numerator for basic and diluted earnings per common share: Net income $ 4,911,000 $ 856,000 Denominator: Denominator for basic income per share—weighted average common shares outstanding 3,207,000 3,628,000 Denominator for diluted income per share—adjusted weighted average common shares and assumed conversions 3,262,000 3,728,000 The average anti-dilutive options outstanding for the year ended December 31, 2019 and 2018 were 55,000 and 12,000, respectively. December 31, 2019 and 2018 Share-Based Compensation In accordance with US GAAP, the Company measures and recognizes compensation expense for all share-based payment awards based on estimated fair values. Share-based compensation expense is included in selling, general and administrative expense on the accompanying consolidated statements of income and comprehensive income. With respect to stock options, US GAAP requires companies to estimate the fair value of share-based payment awards on the date of grant using an option-pricing model. The value of the portion of the award that is ultimately expected to vest is recognized as expense over the requisite service periods in the Company’s consolidated statements of income and comprehensive income. The Company records compensation expense ratably over the vesting periods. The Company estimates forfeitures at the time of grant and revises this estimate, if necessary, in subsequent periods if actual forfeitures differ from those estimates. The Company uses the Black-Scholes option-pricing model as its method of valuation for share-based awards granted. As such, the Company’s determination of fair value of share-based payment awards is affected by the Company’s stock price as well as assumptions regarding a number of complex and subjective variables. These variables include but are not limited to the Company’s expected stock price volatility over the term of the awards, relevant interest rates, and the expected term of the awards. With respect to any issuance of its Common Stock, the Company determines fair value per share as the closing price of its Common Stock on the date of the grant of said shares. Foreign Currency Translation The assets and liabilities of international operations are translated at the exchange rates in effect at the balance sheet date. Revenue and expense accounts are translated at the monthly average exchange rates. Adjustments arising from the translation of the foreign currency financial statements of the Company’s international operations are reported as a component of "Accumulated other comprehensive loss" in the Company’s consolidated balance sheets. For foreign currency remeasurement from each local currency into the appropriate functional currency, monetary assets and liabilities are remeasured to functional currencies using current exchange rates in effect at the balance sheet date. Gains or losses from these remeasurements were not significant and have been included in the Company’s consolidated statements of income and comprehensive income. Non-monetary assets and liabilities are recorded at historical exchange rates, and the related remeasurement gains or losses are reported as a component of "Accumulated other comprehensive loss" in the Company’s consolidated balance sheets. Going concern assessment In accordance with current accounting literature, the Company assesses going concern uncertainty in its financial statements to determine if it will have sufficient cash on hand and working capital, including available borrowings on loans, to operate for a period of at least one year from the date the financial statements are issued or available to be issued, which is referred to as the “look-forward period”, as defined in the current accounting guidance. As part of this assessment, based on conditions that are known and reasonably knowable to the Company, it will consider various scenarios, forecasts, projections, estimates and will make certain key assumptions, including the timing and nature of projected cash expenditures or programs, and its ability to delay or curtail expenditures or programs, if necessary, among other factors. Based on this assessment, as necessary or applicable, the Company will make certain assumptions around implementing curtailments or delays in the nature and timing of programs and expenditures to the extent the Company deems probable those implementations can be achieved and it will have the proper authority to execute them within the look-forward period. Our assessment determined the Company is a going concern. New Accounting Pronouncements Re |
ACQUISITION
ACQUISITION | 12 Months Ended |
Dec. 31, 2019 | |
ACQUISITION | |
ACQUISITION | NOTE 2 —ACQUISITION Effective October 25, 2019 (the “Gears Closing Date”), the Company, through a wholly owned subsidiary of Hy-Tech, acquired substantially all the assets comprising the businesses of Blaz-Man Gear, Inc. and Gear Products & Manufacturing, Inc., (the “Gears Acquisition”), each an Illinois-based corporation that manufactures and distributes custom gears. The Company believes that the acquisition of these two businesses will provide added expertise and market exposure into the customized/specialty gears market. The purchase price consisted of an aggregate of approximately $3.5 million in cash, which was funded by Revolver borrowings and the assumption of certain payables and contractual obligations. In addition, the sellers may be entitled to additional contingent consideration based upon sale of certain categories of acquired inventory during the two-year period following the Gears Closing Date. In connection with the Gears Acquisition, the Company entered into Consent, Joinder and Amendment No. 8 (“Amendment No. 8”) to Second Amended and Restated Loan and Security Agreement (the “Credit Agreement”), with Capital One, National Association. Amendment No. 8, among other things, provided consent to the Gears Acquisition. Amendment No. 8 also modified the Credit Agreement to suspend the requirement pertaining to compliance with the covenant relating to a Fixed Charge Coverage Ratio, unless a Default or Event of Default occurs, or availability is less than 17.5% of the aggregate amount of the Revolver Commitments, as each such term is defined, at any time. Further, it granted permission to the Company to continue its issuance of dividends and allow the Company to repurchase shares of its own Common Stock, provided that no Default or Event of Default has occurred, subject to Revolver availability limitations, among other things. Additionally, on the Gears Closing Date, the Company entered into a new five-year lease with the ultimate intention of combining all gear manufacturing operations into one location. The new leased premises, located in Punxsutawney, PA is approximately 42,000 square feet, with annual lease payments of $165,800.The Company has two three-year options to renew the lease. As the result of the Company’s decision to vacate leased space in Punxsutawney, which housed Hy-Tech’s gear operations prior to the Gears Acquisition, it wrote off the fair value of the vacated old lease by a reduction in the Right of Use Assets and leasehold improvements on the Balance Sheet of approximately $99,000 and included a like amount in Selling, general and administrative expenses on its Consolidated Statement of Income and Comprehensive Income. The Company will continue to make monthly lease payments toward the old vacated lease through February 2021 unless the Company and the landlord agree to other terms. Additionally, the Sellers of the Gear Businesses may be entitled to additional consideration (“contingent consideration”), should the Company sell within a two-year period from the date of acquisition, certain portions of acquired inventories, which had no fair value at the time of the acquisition. Accordingly, the Company, determined that, based upon historical sales history provided or otherwise, the most likely scenario could result in a payment of contingent consideration of approximately $64,000. Total Cash paid at closing $ 3,518,000 Fair value of contingent consideration 64,000 Total estimated purchase price $ 3,582,000 The following table presents purchase price allocation: Accounts receivable $ 218,000 Inventories 630,000 Machinery, equipment and vehicle 1,437,000 Identifiable intangible assets: Customer relationships 995,000 Trademarks and trade names 54,000 Non-compete agreements 95,000 Liabilities assumed (131,000) Goodwill 284,000 Total estimated purchase price $ 3,582,000 The excess of the total purchase price over the fair value of the net assets acquired, including the value of the identifiable intangible assets, has been allocated to goodwill. Goodwill will be amortized over 15 years for tax purposes, but not deductible for financial reporting purposes. The intangible assets subject to amortization will be amortized over 15 years for tax purposes. For financial reporting purposes their respective useful lives have been determined as follows: Customer relationships years Non-Compete agreements years Trademarks and trade names indefinite The following unaudited pro-forma combined financial information gives effect to the Acquisitions as if the transactions were consummated January 1, 2018. This unaudited pro-forma financial information is presented for information purposes only and is not intended to present actual results that would have been attained had the Acquisition been completed as of January 1, 2018 (the beginning of the earliest period presented)or to project potential operating results as of any future date or for any future periods. For the Year Ended For the Year Ended December 31, 2019 December 31, 2018 Revenue $ 61,087,000 $ 68,523,000 Net income $ 5,356,000 $ 1,028,000 Earnings per share – basic $ 1.67 $ 0.28 Earnings per share – diluted $ 1.64 $ 0.28 |
FAIR VALUE MEASUREMENTS
FAIR VALUE MEASUREMENTS | 12 Months Ended |
Dec. 31, 2019 | |
FAIR VALUE MEASUREMENTS | |
FAIR VALUE MEASUREMENTS | NOTE 3—FAIR VALUE MEASUREMENTS Accounting guidance defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Under this guidance, the Company is required to classify certain assets and liabilities based on the following hierarchy: Level 1: Quoted prices for identical assets or liabilities in active markets that can be assessed at the measurement date. Level 2: Inputs other than quoted prices included in Level 1, such as quoted prices for similar assets and liabilities in active markets; quoted prices for identical or similar assets and liabilities in markets that are not active; or other inputs that are observable or can be corroborated by observable market data. Level 3: Inputs reflect management’s best estimate of what market participants would use in pricing the asset or liability at the measurement date. The inputs are unobservable in the market and significant to the instrument’s valuation. The guidance requires the use of observable market data if such data is available without undue cost and effort. As of December 31, 2019, and 2018, the carrying amounts reflected in the accompanying consolidated balance sheets for current assets and current liabilities approximated fair value due to the short-term nature of these accounts. Assets and liabilities measured at fair value on a non-recurring basis include goodwill and intangible assets. Such assets are reviewed quarterly for impairment indicators. If a triggering event has occurred, the assets are re-measured when the estimated fair value of the corresponding asset group is less than the carrying value. The fair value measurements, in such instances, are based on significant unobservable inputs (Level 3). |
ACCOUNTS RECEIVABLE AND ALLOWAN
ACCOUNTS RECEIVABLE AND ALLOWANCE FOR DOUBTFUL ACCOUNTS | 12 Months Ended |
Dec. 31, 2019 | |
ACCOUNTS RECEIVABLE AND ALLOWANCE FOR DOUBTFUL ACCOUNTS | |
ACCOUNTS RECEIVABLE AND ALLOWANCE FOR DOUBTFUL ACCOUNTS | NOTE 4—ACCOUNTS RECEIVABLE AND ALLOWANCE FOR DOUBTFUL ACCOUNTS Accounts receivable - net consists of: December 31, December 31, 2019 2018 Accounts receivable $ 9,547,000 $ 9,847,000 Allowance for doubtful accounts, sales discounts and chargebacks (234,000) (273,000) $ 9,313,000 $ 9,574,000 |
INVENTORIES
INVENTORIES | 12 Months Ended |
Dec. 31, 2019 | |
INVENTORIES | |
INVENTORIES | NOTE 5—INVENTORIES Inventories consist of: December 31, December 31, 2019 2018 Raw materials $ 2,178,000 $ 1,963,000 Work in process 2,302,000 1,924,000 Finished goods 18,402,000 16,609,000 $ 22,882,000 $ 20,496,000 |
GOODWILL AND OTHER INTANGIBLE A
GOODWILL AND OTHER INTANGIBLE ASSETS | 12 Months Ended |
Dec. 31, 2019 | |
GOODWILL AND OTHER INTANGIBLE ASSETS | |
GOODWILL AND OTHER INTANGIBLE ASSETS | NOTE 6—GOODWILL AND OTHER INTANGIBLE ASSETS Goodwill and other intangible assets with indefinite lives are tested annually or whenever events or circumstances indicate the carrying value of these assets may not be recoverable. In accordance with authoritative guidance issued by the FASB, the Company performed an annual impairment test of goodwill and indefinite-lived intangible assets during the fourth quarter based on conditions as of November 30, 2019. For both 2019 and 2018, with respect to Florida Pneumatic and Hy-Tech, the Company determined their fair value using the income approach methodology of valuation, which considers the expected present value of future cash flows. As an integral part of the valuation process the Company utilizes its latest cash flows forecasts for the next four fiscal years, and then applies projected minimal growth for all remaining years, based upon available statistical data and management’s estimates. The result of the Company’s impairment test for Florida Pneumatic and Hy-Tech determined that its fair value exceeded the carrying value and, as such, no impairment to Goodwill and other intangible assets was recorded in 2019. Changes in the carrying amount of goodwill are as follows: Balance, January 1, 2019 $ 4,436,000 Currency translation adjustment 6,000 Acquisition of Hy-Tech Illinois 284,000 Balance, December 31, 2019 $ 4,726,000 Other intangible assets were as follows: December 31, 2019 December 31, 2018 Accumulated Net book Accumulated Net book Cost amortization value Cost amortization value Other intangible assets: Customer relationships (1) $ 7,825,000 $ 2,724,000 $ 5,101,000 $ 6,821,000 $ 2,135,000 $ 4,686,000 Trademarks and trade names (1) 2,375,000 — 2,375,000 2,308,000 — 2,308,000 Trademarks and trade names 200,000 45,000 155,000 200,000 32,000 168,000 Engineering drawings 330,000 225,000 105,000 330,000 202,000 128,000 Non-compete agreements (1) 331,000 235,000 96,000 233,000 223,000 10,000 Patents 1,405,000 978,000 427,000 1,405,000 905,000 500,000 Totals $ 12,466,000 $ 4,207,000 $ 8,259,000 $ 11,297,000 $ 3,497,000 $ 7,800,000 (1) A portion of these intangibles are maintained in a foreign currency and are therefore subject to foreign exchange rate fluctuations. Changes in the carrying amount of other intangibles are as follows: Accumulated Cost amortization Net book value Balance, January 1, 2019 $ 11,297,000 $ 3,497,000 $ 7,800,000 Amortization — 703,000 (703,000) Acquisition of Hy-Tech Illinois 1,144,000 — 1,144,000 Currency translation adjustment 25,000 7,000 18,000 Balance, December 31, 2019 $ 12,466,000 $ 4,207,000 $ 8,259,000 The weighted average amortization period for intangible assets was as follows: December 31, 2019 December 31, 2018 Customer relationships 8.7 9.3 Trademarks and trade names 11.5 12.5 Engineering drawings 7.1 7.7 Non-compete agreements 3.7 2.3 Patents 7.1 7.9 Amortization expense of intangible assets subject to amortization was as follows: Year ended December 31, 2019 2018 $ 703,000 $ 702,000 Amortization expense for each of the next five years and thereafter is estimated to be as follows: 2020 $ 767,000 2021 759,000 2022 758,000 2023 754,000 2024 706,000 Thereafter 2,140,000 $ 5,884,000 |
DEBT
DEBT | 12 Months Ended |
Dec. 31, 2019 | |
DEBT | |
DEBT | NOTE 7—DEBT In October 2010, the Company entered into a Loan and Security Agreement (“Credit Agreement”) with an affiliate of Capital One, National Association (“Capital One” or the “Bank”). The Credit Agreement, as amended and restated in April 2017 and further amended from time-to-time, among other things, provides the ability to borrow funds under a $16,000,000 revolver line (“Revolver”), subject to certain borrowing base criteria. Additionally, there is a $2,000,000 line for capital expenditures (“Capex Loan”), with $1,600,000 available for future borrowings. Revolver and Capex Loan borrowings are secured by the Company’s accounts receivable, inventory, equipment, and real property, among other things. P&F and certain of its subsidiaries are borrowers under the Credit Agreement, and their obligations are cross guaranteed by certain other subsidiaries. The Credit Agreement was amended effective February 8, 2019, which among other things set the expiration date to February 8, 2024. Additionally, see Note 2 to the Company’s Consolidated Financial Statements for further discussion relating to Amendment No. 8. At the Company's option, Revolver borrowings bear interest at either LIBOR ("London interbank Offered Rate") or the Base Rate, as the term is defined in the Credit Agreement, plus an Applicable Margin, as defined in the Credit Agreement. The Company is subject to limitations on the number of LIBOR borrowings. The Company provides Capital One with monthly borrowing base certificates, and in certain circumstances, it is required to deliver monthly financial statements and certificates of compliance with various financial covenants. Should an event of default occur the interest rate would increase by 2% per annum during the period of default, in addition to other remedies provided to Capital One. The Company believes that should a need arise whereby the current credit facility is insufficient it can borrow additional amounts against its real property or other assets. At December 31, 2019, its short-term or Revolver borrowing was $5,648,000 compared to $2,096,000 at December 31, 2018. Applicable Margin Rates, at December 31, 2019 and 2018 for LIBOR and Base Rates were 1.50% and 0.50%, respectively. Additionally, at December 31, 2019 and 2018, there was approximately $9,200,000 and $12,024,000, respectively, available to the Company under its Revolver arrangement. The average balance of short-term borrowings during the years ended December 31, 2019 and 2018, were $4,253,000 and $3,113,000, respectively. There was a $100,000 Term Loan that was secured by mortgages on the real property, accounts receivable, inventory and equipment. At December 31,2018 borrowing of this Term Loan was at LIBOR. The Applicable Margin for LIBOR at December 31,2018 was 1.5%. In June 2019, the Company repaid the principal amount of $100,000. In April 2018, the Company borrowed $400,000 against the Capex line. This borrowing was to be repaid in equal principle installments of approximately $6,700, payable monthly, with the balance due at its Maturity Date as defined in the Credit Agreement. At December 31, 2018, the balance due on the Capex loan was $353,000 and was included in Current Liabilities on the Company’s 2018 Consolidated Financial Statement. In June 2019, the Company paid the bank the balance of this Capex loan. |
STOCK OPTIONS - STOCK COMPENSAT
STOCK OPTIONS - STOCK COMPENSATION | 12 Months Ended |
Dec. 31, 2019 | |
STOCK OPTIONS - STOCK COMPENSATION | |
STOCK OPTIONS - STOCK COMPENSATION | NOTE 8—STOCK OPTIONS – STOCK COMPENSATION The Company’s stockholders approved the P&F Industries, Inc. 2012 Stock Incentive Plan (the “2012 Plan”). The 2012 Plan authorizes the issuance to employees, consultants and non-employee directors of nonqualified stock options, stock appreciation rights, restricted stock, performance shares, performance units, and other stock-based awards. In addition, employees are eligible to be granted incentive stock options under the 2012 Plan. The 2012 Plan is currently administered by the compensation committee of the Company’s Board of Directors (the “Committee”). The aggregate number of shares of the Company’s Class A Common Stock (“Common Stock”) that may be issued under the 2012 Plan may not exceed 325,000 shares; provided, however, that any shares of Common Stock that are subject to a stock option, stock appreciation right or other stock-based award that is based on the appreciation in value of a share of Common Stock in excess of an amount equal to at least the fair market value of the Common Stock on the date such other stock-based award is granted (each an “Appreciation Award”) will be counted against this limit as one share for every share granted. Any shares of restricted stock or shares of Common Stock that are subject to any other award other than Appreciation Award will be counted against this limit as 1.5 shares for every share granted. The maximum number of shares of Common Stock with respect to which any award of stock options, stock appreciation rights or other Appreciation Award that may be granted under the 2012 Plan during any fiscal year to any eligible employee or consultant will be 100,000 shares per type of award. The maximum number of shares of Common Stock subject to any award of performance shares for any performance period, other stock-based awards that are not Appreciation Awards, or shares of restricted stock for which the grant of such award or the lapse of the relevant restriction period is subject to the attainment of specified performance goals that may be granted under the 2012 Plan during any fiscal year to any eligible employee or consultant will be 65,000 shares per type of award. The maximum number of shares of Common Stock for all such types of awards to any eligible employee or consultant will be 165,000 shares during any fiscal year. There are no annual limits on the number of shares of Common Stock with respect to an award of restricted stock that is not subject to the attainment of specified performance goals to eligible employees or consultants. The maximum value at grant of performance units which may be granted under the 2012 Plan during any fiscal year will be $1,000,000. The maximum number of shares of Common Stock subject to any award which may be granted under the 2012 Plan during any fiscal year of the Company to any non-employee director will be 35,000 shares. With respect to stock options, the Committee determines the number of shares of Common Stock subject to each option, the term of each option, which may not exceed 10 years (or five years in the case of an incentive stock option granted to a 10% stockholder), the exercise price, the vesting schedule (if any), and the other material terms of each option. No stock option may have an exercise price less than the fair market value of the Common Stock at the time of grant (or, in the case of an incentive stock option granted to a 10% stockholder, 110% of fair market value). With respect to all other permissible grants under the 2012 Plan, the Committee will determine their terms and conditions, subject to the terms and conditions of the 2012 Plan. The 2012 Plan, which terminates in May 2022, is the successor to the Company’s 2002 Stock Incentive Plan (“Previous Plan”) – see below. Stock option awards made under the Previous Plan will continue in effect and remain governed by the provisions of that plan. The Company’s Previous Plan authorized the issuance to employees and directors of options to purchase a maximum of 1,100,000 shares of Common Stock. These options had to be issued within 10 years of the effective date of the Previous Plan and are exercisable for a 10-year period from the date of grant, at prices not less than 100% of the closing market value of the Common Stock on the date the option is granted. In the event options granted contained a vesting schedule over a period of years, the Company recognized compensation cost for these awards ratably over the service period. On February 28, 2019, the Committee authorized the issuance of options to purchase 8,000 shares of the Company’s Common Stock . This grant was issued to non-executive employees. All options within this grant have an exercise price of $8.55. The options granted vest as to one third on each of the anniversary dates in 2020, 2021 and 2022. All the options granted have a 10-year life. The volatility is determined using historical volatilities based on historical stock prices. The Company estimated the fair value of its Common Stock options using the following assumptions: For the years ended December 31, 2019 Risk-free interest rate 2.73 % Expected term 10 years Volatility 62.08 % Dividend yield 2.34 % Fair value of options granted $ 4.60 The Company did not issue any options to purchase shares of its Common Stock during 2018. The following table contains information on the status of the Company’s stock options: Weighted Number Average Aggregate of Exercise Price Intrinsic Shares per share Value Outstanding, January 1, 2018 418,233 $ 5.17 Granted — — Exercised (200,158) 4.02 Forfeited — — Expired — — Outstanding, December 31, 2018 218,075 6.22 Granted 8,000 8.55 Exercised — — Forfeited — — Expired — — Outstanding, December 31, 2019 226,075 $ 6.30 $ 219,983 Vested, December 31, 2019 188,409 $ 6.08 $ 219,983 The following is a summary of changes in non-vested shares, all of which are expected to vest: December 31, 2019 2018 Weighted Weighted Average Average Option Grant-Date Option Grant-Date Shares Fair Value Shares Fair Value Non-vested shares, beginning of year 59,333 $ 4.41 89,000 $ 4.41 Granted 8,000 4.60 — — Vested (29,667) 4.41 (29,667) 4.41 Forfeited — — — — Non-vested shares, end of year 37,666 $ 4.45 59,333 $ 4.41 Stock-based compensation expense recognized for the years ended December 31, 2019 and 2018 was approximately $106,000 and $196,000, respectively. The Company recognizes stock-based compensation cost over the requisite service period. However, the exercisability of the respective non-vested options, which are at predetermined dates, does not necessarily correspond to the periods in which straight-line amortization of compensation expenses is recorded. As of December 31, 2019, the Company had approximately $55,000 of total unrecognized compensation costs related to non-vested awards granted under its stock based plans, which it expects to recognize over a weighted average period of 0.8 years. The following table summarizes information about stock options outstanding and exercisable at December 31, 2019: Options Outstanding Options Exercisable Weighted Average Weighted Weighted Average Remaining Average Remaining Weighted Number Contractual Exercise Number Contractual Average outstanding Life (Years) Price exercisable Life (Years) Exercise Price 1.0 $ 2.92 17,244 1.0 $ 2.92 1.4 $ 4.37 18,812 1.4 $ 4.37 2.4 $ 4.29 2,090 2.4 $ 4.29 2.5 $ 4.74 41,809 2.5 $ 4.74 3.3 $ 7.86 49,120 3.3 $ 7.86 7.7 $ 7.09 59,334 7.7 $ 7.09 9.2 $ 8.55 — — — 4.7 $ 6.30 188,409 4.1 $ 6.08 Other Information At December 31, 2019 and 2018, there were 62,062 and 79,437 shares available for issuance under the 2012 Plan. At December 31, 2019, there were 191,575 options outstanding issued under the 2012 Plan and 34,500 options outstanding issued under the Previous Plan. Restricted Stock The Company, in May 2019, granted 1,250 restricted shares of its Common Stock to each non-employee member of its Board of Directors, totaling 6,250 restricted shares. The Company determined that the fair value of these shares was $8.31 per share, which was the closing price of the Company’s Common Stock on the date of the grant. These shares cannot be traded earlier than the first anniversary of the grant date. The Company will ratably amortize the total non-cash compensation expense of approximately $52,000, which is included in its selling, general and administrative expenses through May 2020. The Company, in May 2018, granted 1,250 restricted shares of its Common Stock to each non-employee member of its Board of Directors, totaling 6,250 restricted shares. The Company determined that the fair value of these shares was $8.43 per share, which was the closing price of the Company’s Common Stock on the date of the grant. These shares could not be traded earlier than the first anniversary of the grant date. The Company ratably amortized the total non-cash compensation expense of approximately $53,000, which is included in its selling, general and administrative expenses through May 2019. Treasury Stock On September 12, 2018, subsequent to the expiration of a previous repurchase program adopted in 2017 (the “2017 Repurchase Program”), the Company’s Board of Directors authorized the Company to repurchase up to 100,000 additional shares of its Common Stock (the “2018 Repurchase Program”) from time to time over the next 12 months through a 10b5‑1 trading plan, and potentially through open market purchases, privately-negotiated transactions, or otherwise in compliance with Rule 10b‑18 under the Securities Exchange Act of 1934. On September 14, 2018, the Company announced that, pursuant to the 2018 Repurchase Program, it had adopted a written trading plan in accordance with the guidelines specified under Rule 10b5‑1 under the Securities Exchange Act of 1934. Repurchases made under the plan, that commenced on September 17, 2018, are subject to the SEC’s regulations, as well as certain price, market, volume, and timing constraints specified in the plan. Since the inception of the 2018 Repurchase Program through December 31, 2018, the Company repurchased 33,398 shares of its Common Stock at an aggregate cost of approximately $272,000. The Company repurchased 66,602 shares of its Common Stock at an aggregate cost of approximately $547,000 during 2019 to complete the 2018 Repurchase Program. In June 2018 and November 2018, the Company purchased 18,140 shares and 85,791 shares of its Common Stock in two separate privately negotiated transactions. These transactions were outside of the 2018 Repurchase Program and the 2017 Repurchase Program, pursuant to additional authorization of the Company’s Board of Directors at a total cost of $150,000 and $698,000, respectively. The June 2018 purchase price per share was equal to 5% below the average of the closing price of its Common Stock for the three days prior to the transaction, with the November 2018 purchase price based on the average closing price over the three days prior to the date of transaction. On February 14, 2019, the Company entered into an agreement to repurchase 389,909 shares of its Common Stock from certain funds and accounts advised or sub-advised by Fidelity Management & Research Company or one of its affiliates in a privately negotiated transaction at approximately $7.62 per share for a total purchase price of $2,971,00,the agreed upon the purchase price per share of $7.62,was computed as the value equal to 97% of the volume weighted average price of the company’s common stock for the 20 trading days ended on February 7,2019.On February 15, 2019, the Company completed this transaction. On February 14, 2019, the Company entered into Amendment No. 6 to the Second Amended and Restated Loan and Security Agreement with Capital One, which permitted the Company to complete the above transaction. |
DIVIDENDS
DIVIDENDS | 12 Months Ended |
Dec. 31, 2019 | |
DIVIDENDS | |
DIVIDENDS | NOTE 9—DIVIDENDS In 2016, our Board of Directors approved the initiation of a dividend policy under which the Company intends to declare quarterly cash dividends to its stockholders in the amount of $0.05 per quarter. In the months of February, May, August and November of 2019 and 2018, our Board of Directors approved the payment of dividends of $0.05 per common share to the shareholders of record. Accordingly, the Company paid a $0.05 per share dividend to the shareholders of record in each of the aforementioned months. The aggregate of such dividend payments was approximately $632,000 and $723,000 for the years ended December 31, 2019 and 2018, respectively. Our Board of Directors expects to maintain this dividend policy; however, the future declaration of dividends under this policy is dependent upon several factors, which include such things as our overall financial condition, results of operations, capital requirements and other factors our board may deem relevant. |
INCOME TAXES
INCOME TAXES | 12 Months Ended |
Dec. 31, 2019 | |
INCOME TAXES | |
INCOME TAXES | NOTE 10—INCOME TAXES Income tax expense (benefit) in the consolidated statements of income and comprehensive income consists of: Years Ended December 31, 2019 2018 Current: Federal $ 1,078,000 $ (39,000) State and local 312,000 24,000 Foreign 3,000 19,000 Total current 1,393,000 4,000 Deferred: Federal 513,000 268,000 State and local (105,000) (15,000) Foreign (4,000) (4,000) Total deferred 404,000 249,000 Totals $ 1,797,000 $ 253,000 At December 31, 2019, the Company had state net operating loss carryforwards of approximately $4,112,000, which expire through 2039. On December 22, 2017, the Tax Cuts and Jobs Act of 2017 (the “Act”) was signed into law making significant changes to the Internal Revenue Code. Changes included, but are not limited to, a corporate tax rate decrease from 35% to 21%, effective for tax years beginning after December 31, 2017, the transition of U.S international taxation from a worldwide tax system to a territorial system, and a one-time transition tax on the mandatory deemed repatriation of cumulative foreign earnings as of December 31, 2017. The Staff of the Securities and Exchange Commission issued Staff Accounting Bulletin No. 118 (“SAB 118”) to address the application of US GAAP in situations when a registrant does not have the necessary information available, prepared or analyzed (including computations) in reasonable detail to complete the accounting for certain income tax effects of the Act. During 2018, the Company finalized its computation of the impact of the Act which resulted in a 3.4 % reduction in its effective tax rate. In January 2018, the FASB released guidance on the accounting for tax on the global intangible low-taxed income (“GILTI”) provisions of the Act. The GILTI provisions impose a tax on foreign income in excess of a deemed return on tangible assets of foreign corporations. The guidance allows companies to make an accounting policy election to either (i) account for GILTI as a component of tax expense in the period in which they are subject to the rules (the period cost method), or (ii) account for GILTI in the Company’s measurement of deferred taxes (the deferred method). After completing the analysis of the GILTI provisions, the Company elected to account for GILTI using the period cost method. Deferred tax assets (liabilities) consist of: December 31, 2019 2018 Deferred tax assets: Bad debt reserves $ 17,000 $ 17,000 Inventory reserves 653,000 615,000 Warranty and other reserves 77,000 78,000 Stock-based compensation 212,000 184,000 Goodwill 866,000 940,000 Acquisition costs 223,000 170,000 Net operating losses - federal — 340,000 Net operating losses - state 77,000 91,000 Other 20,000 18,000 2,145,000 2,453,000 Deferred tax (liabilities): Prepaid expenses (79,000) (373,000) Depreciation (1,154,000) (732,000) Intangibles (696,000) (720,000) Net deferred tax assets $ 216,000 $ 628,000 The components of income before income taxes consisted of the following: Years ended December 31, 2019 2018 United States operations $ 6,715,000 $ 1,004,000 International operations (7,000) 105,000 Income before tax $ 6,708,000 $ 1,109,000 A reconciliation of the Federal statutory rate to the total effective tax rate applicable to income is as follows: Years ended December 31, 2019 2018 Federal income tax computed at statutory rates 21.0 % 21.0 % (Decrease) increase in taxes resulting from: State and local taxes, net of Federal tax benefit 2.4 0.6 Permanent differences - net 3.1 5.2 Foreign rate differential — (0.7) Tax Cuts and Jobs Act of 2017 — (3.4) Other 0.3 0.1 Income tax expense 26.8 % 22.8 % The Company files a consolidated Federal tax return. The Company and certain of its subsidiaries file tax returns in various U.S. state jurisdictions. Its foreign subsidiary, UAT, files in the United Kingdom. With few exceptions, the years that remain subject to examination are the years ended December 31, 2016 through December 31, 2019. Interest and penalties, if any, related to income tax liabilities are included in income tax expense. As of December 31, 2019, the Company does not have a liability for uncertain tax positions. |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 12 Months Ended |
Dec. 31, 2019 | |
COMMITMENTS AND CONTINGENCIES. | |
COMMITMENTS AND CONTINGENCIES | NOTE 11—COMMITMENTS AND CONTINGENCIES (a) The Company maintains a contributory defined contribution plan that covers all eligible employees. All contributions to this plan are discretionary. Amounts recognized as expense for contributions to this plan were $438,000 and $380,000 for the years ended December 31, 2019 and 2018, respectively. (b) At December 31, 2019 and 2018, the Company had open purchase order commitments totaling approximately $4,871,000 and $6,700,000, respectively. (c) From time to time, the Company may be a defendant or co-defendant in actions brought about in the ordinary course of conducting our business. |
SUBSEQUENT EVENT
SUBSEQUENT EVENT | 12 Months Ended |
Dec. 31, 2019 | |
SUBSEQUENT EVENT | |
SUBSEQUENT EVENT | NOTE 12—SUBSEQUENT EVENT On March 11, 2020 the World Health Organization declared the novel strain of coronavirus (COVID-19) a global pandemic and recommended containment and mitigation measures worldwide. As a result, the Company expects operations at all of its locations to be affected in some capacity, as the COVID-19 virus continues to proliferate and the federal, state and local governments under which we operate continue to adopt new rules. The Company has put in place enhanced procedures at all locations, such as restricting international and domestic travel, adopting a variety of steps designed to ensure social distancing in our facilities, including working remotely where available and modifying our shifts, and increasing our cleaning and sanitizing procedures in our facilities. in an effort to protect its employees while still striving to meet its customers’ needs. The Company cannot reasonably estimate the length or severity of this pandemic, or the extent to which the disruption may materially impact its consolidated financial position, results of operations, and cash flows in fiscal 2020. |
SUMMARY OF ACCOUNTING POLICIES
SUMMARY OF ACCOUNTING POLICIES (Policies) | 12 Months Ended |
Dec. 31, 2019 | |
SUMMARY OF ACCOUNTING POLICIES | |
Principles of Consolidation | Principles of Consolidation The Consolidated Financial Statements contained herein include the accounts of P&F Industries, Inc. and subsidiaries (“P&F” or the “Company”). All significant intercompany balances and transactions have been eliminated. |
The Company | The Company P&F is a Delaware corporation incorporated on April 19, 1963. The Company conducts its business through a wholly-owned subsidiary, Continental Tool Group, Inc. (“Continental”), which in turn operates through its wholly-owned subsidiaries, Florida Pneumatic Manufacturing Corporation (“Florida Pneumatic”) and Hy-Tech Machine, Inc. (“Hy-Tech”). Exhaust Technologies Inc. (“ETI”), Universal Air Tool Company Limited (“UAT”) and Jiffy Air Tool, Inc. (“Jiffy”), are all wholly-owned subsidiaries of Florida Pneumatic. The business of Air Tool Service Company (“ATSCO”) operates through a wholly-owned subsidiary of Hy-Tech. Effective October 25, 2019, the Company through a wholly owned subsidiary of Hy-Tech, acquired substantially all the operating assets comprising the businesses of Blaz-Man Gear, Inc. and Gear Products & Manufacturing, Inc., each an Illinois-based corporation that manufactures and distributes custom gears. See Note 2 – Acquisition, for further discussion Florida Pneumatic imports and sells pneumatic hand tools, most of which are of its own design, primarily to the retail, industrial, automotive and aerospace markets. Its products include sanders, grinders, drills, saws and impact wrenches. These tools are similar in appearance and function to electric hand tools, but are powered by compressed air, rather than by electricity or battery. Air tools, as they are more commonly referred to, generally offer better performance and weigh less than their electrical counterparts. Florida Pneumatic imports and/or manufactures approximately 75 types of pneumatic hand tools, most of which are sold at prices ranging from $50 to $1,000, under the names “Florida Pneumatic,” “Universal Tool”, “Jiffy Air Tool”, AIRCAT, NITROCAT, as well as under the trade names or trademarks of several private label customers. These products are sold to retailers, distributors, manufacturers and private label customers through in-house sales personnel and manufacturers’ representatives. The AIRCAT and NITROCAT brands of pneumatic tools are sold primarily to the automotive service and repair market (“automotive market”). Users of Florida Pneumatics’ hand tools include industrial maintenance and production staffs, do-it-yourself mechanics, professional automobile mechanics and auto body personnel. Jiffy manufactures and distributes pneumatic tools and components primarily to aerospace manufacturers. Hy-Tech designs, manufactures and distributes industrial tools, systems, gearing, accessories and a wide variety of replacement parts under various brands including ATP, Numatx, Thaxton and Quality Gear. Hy-Tech produces and sells heavy-duty pneumatic impact tools, grinders, air motors, hydro-pneumatic riveters, hydrostatic test plugs, impact sockets and custom gears, with prices ranging from $300 to $42,000. Hy-Tech’s ”Engineered Solutions” products are sold direct to Original Equipment Manufacturers (“OEM’s”), and industrial branded products are sold through a broad network of specialized industrial distributors serving power generation, petrochemical, aerospace, construction, railroad, mining, ship building and fabricated metals. Hy-Tech works directly with their industrial customers, designing and manufacturing products from finished components to complete turnkey systems to be sold under their own brand names. Nearly all of Hy-Tech brands are manufactured in the United States of America. Hy-Tech does distribute ATP branded impact sockets, striking wrenches and accessories imported from Italy and Asia. The sales of Hy-Tech products through various channel and direct customers are managed by both direct sales personnel and a network of specialized manufacturer representatives. Further, its products are sold as standard off-the-shelf and also produced to be sold for customer specific specifications . |
Basis of Financial Statement Presentation | Basis of Financial Statement Presentation The Company prepares its Consolidated Financial Statements in accordance with accounting principles generally accepted in the United States (“US GAAP”). |
Revenue recognition | Revenue Recognition The Company records revenue based on a five-step model in accordance with Accounting Standards Codification ("ASC") 606, Revenue from Contracts with Customers ("ASC 606"), which it adopted effective January 1, 2018. The Company sells its goods on terms which transfer title and risk of loss at a specified location, which may be our warehouse, destination designated by our customer, port of loading or port of discharge, depending on the final destination of the goods. Other than standard product warranty provisions, our sales arrangements provide for no other post-shipment obligations. The Company offers rebates and other sales incentives, promotional allowances or discounts for certain customers that are typically related to customer purchase volume, all of which are classified as a reduction of revenue and recorded at the time of sale, using the most likely amount approach. The Company periodically evaluates whether an allowance for sales returns is necessary. Historically, we have experienced minimal sales returns. If the Company believes there are material potential sales returns, it would provide the necessary provision against sales. The Company’s performance obligations underlying its core revenue sources remain substantially unchanged. Its revenue is generated through the sale of finished products and is generally recognized at the point in time when merchandise is transferred to the customer with a fixed payment due generally within 30 to 90 days, and in an amount that considers the impacts of estimated allowances. Further, the Company has made a policy election to account for shipping and handling activities that occur after the customer has obtained control of the products as fulfillment costs rather than as an additional promised service. This election is consistent with the Company’s prior policy, and therefore the adoption of ASC 606 relating to shipping and handling activities did not have any impact on its financial results. There are no remaining performance obligations as of December 31, 2019. The Company analyzes its revenue as follows: Revenue generated at Florida Pneumatic. Year Ended December 31, 2019 2018 Increase (decrease) Percent of Percent of Revenue revenue Revenue revenue $ % Automotive $ 14,800,000 34.1 $ 14,430,000 28.5 % $ 370,000 2.6 % Retail customers 12,467,000 28.8 18,234,000 35.9 (5,767,000) (31.6) Aerospace 10,513,000 24.2 12,244,000 24.1 (1,731,000) (14.1) Industrial 4,969,000 11.5 5,151,000 10.2 (182,000) (3.5) Other 608,000 1.4 661,000 1.3 (53,000) (8.0) Total $ 43,357,000 100.0 % $ 50,720,000 100.0 % $ (7,363,000) (14.5) % Revenue generated at Hy-Tech. Year Ended December 31, 2019 2018 Increase (decrease) Percent of Percent of Revenue revenue Revenue revenue $ % OEM $ 7,321,000 47.8 % $ 5,447,000 38.2 % $ 1,874,000 34.4 % ATP 6,290,000 41.1 7,253,000 50.8 (963,000) (13.3) Other 1,706,000 11.1 1,575,000 11.0 131,000 8.3 Total $ 15,317,000 100.0 % $ 14,275,000 100.0 % $ 1,042,000 7.3 % |
Shipping and Handling Costs | Shipping and Handling Costs Expenses for shipping and handling costs are included in selling, general and administrative expenses, and totaled approximately $1,883,000 and $2,370,000, respectively, for the years ended December 31, 2019 and 2018. |
Cash and Cash Equivalents | Cash and Cash Equivalents Cash and cash equivalents consist of cash held in bank demand deposits. The Company considers all highly liquid debt instruments with original maturities of three months or less to be cash equivalents. There were no cash equivalents at December 31, 2019 and 2018. |
Financial Instruments | Financial Instruments The carrying amounts reported in the consolidated balance sheets for cash, accounts receivable, accounts payable and short-term debt approximate fair value as of December 31, 2019 and 2018 because of the relatively short-term maturity of these financial instruments. The carrying amounts reported for long-term debt approximate fair value as of December 31, 2019 and 2018 because, in general, the interest rates underlying the instruments fluctuate with market rates. |
Accounts Receivable and Allowance for Doubtful Accounts | Accounts Receivable and Allowance for Doubtful Accounts Accounts receivable are customer obligations due under normal trade terms. The Company sells its products to retailers, distributors and original equipment manufacturers involved in a variety of industries. The Company performs continuing credit evaluations of its customers’ financial condition, and although the Company generally does not require collateral, letters of credit may be required from customers in certain circumstances. Management reviews accounts receivable to determine if any receivables will potentially be uncollectible. Factors considered in the determination include, among other factors, number of days an invoice is past due, customer historical trends, available credit ratings information, other financial data and the overall economic environment. Collection agencies may also be utilized if management so determines. The Company records an allowance for doubtful accounts based on specifically identified amounts that are believed to be uncollectible. The Company also records as an additional allowance a certain percentage of aged accounts receivable, based on historical experience and the Company’s assessment of the general financial conditions affecting its customer base. If actual collection experience changes, revisions to the allowance may be required. The Company has a limited number of customers with individually large amounts due at any given balance sheet date. Any unanticipated change in the creditworthiness of any of these customers could have a material effect on the Company’s results of operations in the period in which such changes or events occur. After all reasonable attempts to collect an account receivable have failed, the amount of the receivable is written off against the allowance. Based on the information available, the Company believes that its allowance for doubtful accounts as of December 31, 2019 is adequate. However, actual write-offs might exceed the recorded allowance. |
Concentrations of Credit Risk | Concentrations of Credit Risk The Company places the majority of its cash with its primary bank, Capital One Bank, National Association (“Capital One”), which is insured by the Federal Deposit Insurance Corporation (“FDIC”). Significant concentrations of credit risk may arise from the Company’s cash maintained at Capital One, as from time to time cash balances may exceed the FDIC limits. Financial instruments that potentially subject the Company to concentration of credit risk consist principally of accounts receivable. The Company had one customer that accounted for 27.2% and 32.6% of its consolidated accounts receivable at December 31, 2019 and December 31, 2018, respectively. Further, this customer accounted for 20.7% and 26.5% of the Company’s consolidated revenue in 2019 and 2018, respectively. There was no other customer that accounted for more than 10% of our consolidated revenue in 2019 or 2018. |
Inventories | Inventories Inventories are valued at the lower of cost or net realizable value. Cost is determined by the first-in, first-out method. The inventory balance, which includes raw materials, labor, and manufacturing overhead costs, is recorded net of an allowance for obsolete or unmarketable inventory. Such allowance is based upon both historical experience and management’s understanding of market conditions and forecasts of future product demand. If the actual amount of obsolete or unmarketable inventory significantly exceeds the estimated allowance, the Company’s cost of sales, gross profit and net earnings would be significantly affected. |
Property and Equipment and Depreciation and Amortization | Property and Equipment and Depreciation and Amortization Property and equipment are stated at cost less accumulated depreciation and amortization. Generally, the Company capitalizes items in excess of $1,000. Minor replacements and maintenance and repair items are charged to expense as incurred. Upon disposal or retirement of assets, the cost and related accumulated depreciation are removed from the Company’s consolidated balance sheets. Depreciation of buildings and machinery and equipment is computed by using the straight-line method over the estimated useful lives of the assets. Buildings are depreciated over periods ranging from 27.5 to 31 years, and machinery and equipment is depreciated over periods ranging from 3 to 10 years. Leasehold improvements are amortized over the life of the lease or the useful life of the related asset, whichever is shorter. |
Long-Lived Assets | Long-Lived Assets In accordance with authoritative guidance pertaining to the accounting for the impairment or disposal of long-lived assets, property and equipment and purchased intangibles subject to amortization, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. The Company’s assessment of recoverability of property and equipment is performed on an entity level. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of such asset to its estimated undiscounted future cash flows expected to be generated by the asset. If the carrying amount of such asset exceeds its estimated undiscounted future cash flows, an impairment charge is recognized by the amount by which the carrying amount of the asset exceeds the fair value of the asset. |
Acquisitions | Acquisitions The Company accounts for acquired businesses using the purchase method of accounting, which requires that the assets acquired, liabilities assumed, and contingent consideration, if any, are recorded as of the date of the acquisition at their respective fair values. It further requires that acquisition-related costs be recognized separately from the acquisition and expensed as incurred and that restructuring costs be expensed in periods subsequent to the acquisition date. Generally, the Company engages third party valuation appraisal firms to assist it in determining the fair values and useful lives of the assets acquired and liabilities assumed. The Company records a preliminary purchase price allocation for its acquisitions and finalizes purchase price allocations as additional information relative to the fair values of the assets acquired become known. |
Goodwill, Intangible and Long-Lived Assets | Goodwill, Intangible and Long-Lived Assets Goodwill is carried at cost less any impairment charges. Goodwill and intangible assets with indefinite lives are not amortized but are subject to an annual test for impairment at the entity unit level (operating segment or one level below an operating segment) and between annual tests in certain circumstances. In accordance with authoritative guidance issued by the Financial Accounting Standards Board, (“FASB”), the Company tests goodwill for impairment on an annual basis. This test occurs in the fourth quarter or more frequently if the Company believes indicators of impairment exist. An entity has the option to first assess qualitative factors to determine whether the existence of events or circumstances leads to a determination that it is more likely than not (that is, a likelihood of more than 50)% that the fair value of a reporting unit is less than its carrying amount. If the carrying amount of the reporting unit is less than its fair value, no impairment exists, and no further action is required. If the carrying amount of a reporting unit exceeds its fair value, the entity will record an impairment charge based on the excess of a reporting unit’s carrying amount over its fair value. Intangible assets other than goodwill and intangible assets with indefinite lives, are carried at cost less accumulated amortization. Intangible assets are generally amortized on a straight-line basis over their respective useful lives, generally 3 to 20 years. Long-lived assets and certain identifiable intangible assets to be held and used are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of such assets may not be recoverable. Determination of recoverability is based on an estimate of undiscounted future cash flows resulting from the use of the asset and its eventual disposition. Measurement of any impairment loss for long-lived assets and certain identifiable intangible assets that management expects to hold, and use is based on the amount by which the carrying value exceeds the fair value of the asset. |
Warranty Liability | Warranty Liability The Company offers certain warranties against product defects for periods ranging from one to three years. Certain products carry limited lifetime warranties. The Company’s typical warranties require it to repair or replace the defective products during the warranty period at no cost to the customer. At the time the product revenue is recognized, the Company records a liability for estimated costs. The costs are estimated based on revenue and historical experience. The Company periodically assesses the adequacy of its warranty liability and adjusts the amounts as necessary. While the Company believes that its estimated liability for product warranties is adequate and that the judgment applied is appropriate, the estimated liability for the product warranties could differ materially in the future. |
Income Taxes | Income Taxes The Company accounts for income taxes using the asset and liability approach. This approach requires the recognition of current tax assets or liabilities for the amounts refundable or payable on tax returns for the current year, as well as the recognition of deferred tax assets or liabilities for the expected future tax consequences of temporary differences that can arise between (a) the amount of taxable income and pretax financial income for a year, such as from net operating loss carryforwards and other tax credits, and (b) the tax bases of assets or liabilities and their reported amounts in the consolidated financial statements. Deferred tax assets and liabilities are measured using enacted tax rates. The impact on deferred tax assets and liabilities of changes in tax rates and laws, if any, is reflected in the Consolidated Financial Statements in the period enacted. Further, the Company evaluates the likelihood of realizing benefit from our deferred tax assets by estimating future sources of taxable income and the impact of tax planning strategies. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion, or all, of the deferred tax assets will not be realized. The Company files a consolidated Federal tax return. P&F and certain of its subsidiaries file combined tax returns in New York, California, Illinois and Texas. All subsidiaries, other than UAT, file other state and local tax returns on a stand-alone basis. UAT files an income tax return to the taxing authorities in the United Kingdom. Tax benefits are recognized for an uncertain tax position when, in the Company’s judgment, it is more likely than not that the position will be sustained upon examination by a taxing authority. For a tax position that meets the more likely-than-not recognition threshold, the tax benefit is measured as the largest amount that is judged to have a greater than 50% likelihood of being realized upon ultimate settlement with a taxing authority. The liability associated with unrecognized tax benefits is adjusted periodically due to changing circumstances and when new information becomes available. Such adjustments are recognized entirely in the period in which they are identified. The effective tax rate includes the net impact of changes in the liability for unrecognized tax benefits and subsequent adjustments as considered appropriate by the Company. Interest and penalties recognized on the liability for unrecognized tax benefits are recorded as income tax expense. The authoritative guidance for income taxes requires a reduction of the carrying amounts of deferred tax assets by recording a valuation allowance if, based on the available evidence, it is more likely than not (defined as a likelihood of more than 50)% such assets will not be realized. The valuation of deferred tax assets requires judgment in assessing the likely future tax consequences of events that have been recognized in the Company’s financial statements or tax returns and future profitability. The Company’s accounting for deferred tax consequences represents its best estimate of those future events. Changes in the Company’s estimates, due to unanticipated events or otherwise, could have a material effect on its financial condition and results of operations. The Company continually evaluates its deferred tax assets to determine if a valuation allowance is required. On December 22, 2017, the Tax Cuts and Jobs Act (the “Act”) was enacted. Among other things this Act reduced the U.S. federal corporate income tax rate from 35 % to 21%, required companies to pay a one-time transition tax on earnings of certain foreign subsidiaries that were previously deferred, created new provisions related to foreign sourced earnings, eliminated the domestic manufacturing deduction and moves to a hybrid territorial system. In accordance with the Securities and Exchange Commission’s Staff Accounting Bulletin 118 ("SAB 118"), income tax effects of the Act were refined upon obtaining, preparing, and analyzing additional information during the measurement period. At December 31, 2018, the Company had completed its accounting for the tax effects of the Act. In January 2018, the FASB released guidance on the accounting for tax on the global intangible low-taxed income (“GILTI”) provisions of the Act. The GILTI provisions impose a tax on foreign income in excess of a deemed return on tangible assets of foreign corporations. The guidance allows companies to make an accounting policy election to either (i) account for GILTI as a component of tax expense in the period in which they are subject to the rules (the period cost method), or (ii) account for GILTI in the Company’s measurement of deferred taxes (the deferred method). After completing the analysis of the GILTI provisions, the Company elected to account for GILTI using the period cost method. |
Sale of real property | Sale of real property Effective June 18, 2019 (the “Jupiter Closing Date”), Florida Pneumatic completed the sale of real property located in Jupiter, Florida in which it conducts its principal operations (the “Jupiter Facility”). The Jupiter Facility was purchased by an unrelated third party for purchase price of $9.2 million. After broker fees and other expenses relating to the sale, the Company received approximately $8.7 million. Selling price $ 9,200,000 Selling expenses 451,000 Net proceeds 8,749,000 Land 774,000 Building and improvements 2,956,000 Accumulated depreciation (2,798,000) Net book value 932,000 Gain on sale of the Jupiter Facility $ 7,817,000 Effective as of the Jupiter Closing Date, Florida Pneumatic, entered into a lease with respect to an approximately 42,000 square foot portion of the Jupiter Facility. The lease is for a term of five years, with either party able to terminate after four years. The initial monthly base rent under the lease is $32,345 with annual escalations of 3%. Florida Pneumatic will also be responsible for certain other payments of “additional rent” as set forth in the lease, including certain taxes, assessments and operating expenses. The Company considered the guidance in the current accounting literature relating to the recognition of the gain and determined that the full amount of $7,817,000 should be recognized as of the date of the transaction. |
Lease Accounting | Lease Accounting On January 1, 2019, the Company adopted Accounting Standards Codification (“ASC”) ASC 842 “ Leases ” using the initial date of adoption method, whereby the adoption does not impact any periods prior to 2019. ASC Topic 842 retains a distinction between finance leases and operating leases. The classification criteria for distinguishing between finance leases and operating leases are substantially similar to the classification criteria for distinguishing between capital leases and operating leases in the previous leases’ guidance. The Company recorded an operating Right of Use (“ROU”) asset of $394,000, and an operating lease liability of $418,000 as of January 1, 2019. The difference between the initial operating ROU asset and operating lease liability of $24,000 is accrued rent previously recorded under ASC 840. The Company elected to adopt the package of practical expedients and, accordingly, did not reassess any previously expired or existing arrangements and related classifications under ASC 840. If the rate implicit in the lease is not readily determinable, the Company uses its incremental borrowing rate as the discount rate. The Company uses its best judgement when determining the incremental borrowing rate, which is the rate of interest that the Company would have to pay to borrow on a collateralized basis over a similar term to the lease payments in a similar currency. The Company’s operating leases include vehicles, office space and the use of real property. The Company has not identified any material finance leases as of December 31, 2019. For the year ended December 31, 2019, the Company had $582,000 in Operating lease expense. See Note 2 for information related to a new 5 year lease. The following is a maturity analysis of the annual undiscounted cash flows reconciled to the carrying value of the operating lease liabilities as of December 31, 2019: As of December 31, 2019 2020 $ 900,000 2021 828,000 2022 739,000 2023 637,000 2024 369,000 Thereafter 1,042,000 Total operating lease payments 4,515,000 Less imputed interest (566,000) Total operating lease liabilities $ 3,949,000 Weighted-average remaining lease term 6.7 years Weighted-average discount rate 4.4 % |
Use of Estimates | Use of Estimates The preparation of financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, possible disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. On an on-going basis P&F evaluates its estimates, including those related to collectability of accounts receivable, valuation of inventories, recoverability of goodwill and intangible assets, consideration payable to customer and income taxes. The Company bases its estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not apparent from other sources. Actual results may differ from those estimates under different assumptions or conditions. |
Advertising | Advertising The Company expenses its costs of advertising in the period in which they are incurred. Advertising costs for the years ended December 31, 2019 and 2018 were $1,690,000 and $1,375,000, respectively. |
Earnings Per Common Share | Earnings Per Common Share Basic earnings per common share exclude any dilution. It is based upon the weighted average number of shares of Common Stock outstanding during the year. Diluted earnings per common share reflect the effect of shares of Common Stock issuable upon the exercise of stock options, unless the effect on earnings is anti-dilutive. Diluted earnings per common share is computed using the treasury stock method. Under this method, the aggregate number of shares of Common Stock outstanding reflects the assumed use of proceeds from the hypothetical exercise of any outstanding options to purchase shares of the Company’s Class A Common Stock. The average market value for the period is used as the assumed purchase price. The following table sets forth the computation of basic and diluted earnings per common share: Years Ended December 31, 2019 2018 Numerator for basic and diluted earnings per common share: Net income $ 4,911,000 $ 856,000 Denominator: Denominator for basic income per share—weighted average common shares outstanding 3,207,000 3,628,000 Denominator for diluted income per share—adjusted weighted average common shares and assumed conversions 3,262,000 3,728,000 The average anti-dilutive options outstanding for the year ended December 31, 2019 and 2018 were 55,000 and 12,000, respectively. December 31, 2019 and 2018 |
Share-Based Compensation | Share-Based Compensation In accordance with US GAAP, the Company measures and recognizes compensation expense for all share-based payment awards based on estimated fair values. Share-based compensation expense is included in selling, general and administrative expense on the accompanying consolidated statements of income and comprehensive income. With respect to stock options, US GAAP requires companies to estimate the fair value of share-based payment awards on the date of grant using an option-pricing model. The value of the portion of the award that is ultimately expected to vest is recognized as expense over the requisite service periods in the Company’s consolidated statements of income and comprehensive income. The Company records compensation expense ratably over the vesting periods. The Company estimates forfeitures at the time of grant and revises this estimate, if necessary, in subsequent periods if actual forfeitures differ from those estimates. The Company uses the Black-Scholes option-pricing model as its method of valuation for share-based awards granted. As such, the Company’s determination of fair value of share-based payment awards is affected by the Company’s stock price as well as assumptions regarding a number of complex and subjective variables. These variables include but are not limited to the Company’s expected stock price volatility over the term of the awards, relevant interest rates, and the expected term of the awards. With respect to any issuance of its Common Stock, the Company determines fair value per share as the closing price of its Common Stock on the date of the grant of said shares. |
Foreign Currency Translation | Foreign Currency Translation The assets and liabilities of international operations are translated at the exchange rates in effect at the balance sheet date. Revenue and expense accounts are translated at the monthly average exchange rates. Adjustments arising from the translation of the foreign currency financial statements of the Company’s international operations are reported as a component of "Accumulated other comprehensive loss" in the Company’s consolidated balance sheets. For foreign currency remeasurement from each local currency into the appropriate functional currency, monetary assets and liabilities are remeasured to functional currencies using current exchange rates in effect at the balance sheet date. Gains or losses from these remeasurements were not significant and have been included in the Company’s consolidated statements of income and comprehensive income. Non-monetary assets and liabilities are recorded at historical exchange rates, and the related remeasurement gains or losses are reported as a component of "Accumulated other comprehensive loss" in the Company’s consolidated balance sheets. |
Going concern assessment | Going concern assessment In accordance with current accounting literature, the Company assesses going concern uncertainty in its financial statements to determine if it will have sufficient cash on hand and working capital, including available borrowings on loans, to operate for a period of at least one year from the date the financial statements are issued or available to be issued, which is referred to as the “look-forward period”, as defined in the current accounting guidance. As part of this assessment, based on conditions that are known and reasonably knowable to the Company, it will consider various scenarios, forecasts, projections, estimates and will make certain key assumptions, including the timing and nature of projected cash expenditures or programs, and its ability to delay or curtail expenditures or programs, if necessary, among other factors. Based on this assessment, as necessary or applicable, the Company will make certain assumptions around implementing curtailments or delays in the nature and timing of programs and expenditures to the extent the Company deems probable those implementations can be achieved and it will have the proper authority to execute them within the look-forward period. Our assessment determined the Company is a going concern. |
New Accounting Pronouncements | New Accounting Pronouncements Recently Adopted In February 2016, the FASB issued ASU 2016-02, Leases . This ASU is a comprehensive new leases standard that amends various aspects of existing guidance for leases and requires additional disclosures about leasing arrangements. It will require companies to recognize lease assets and lease liabilities by lessees for those leases classified as operating leases under previous US GAAP. ASC Topic 842 retains a distinction between finance leases and operating leases. The classification criteria for distinguishing between finance leases and operating leases are substantially similar to the classification criteria for distinguishing between capital leases and operating leases in the previous leases’ guidance. This ASU became effective January 1, 2019. The ASU offers two transition methods: (1) a modified retrospective approach, in which leases shall be measured and recognized at the beginning of the earliest comparative period presented with an adjustment to equity in the financial statements in which the ASU is first applied or (2) a prospective approach, in which a company is allowed to initially apply the new lease standard at the adoption date. The Company elected the prospective approach. The adoption of this standard had a minimal effect on the Company’s Consolidated Statement of Income and Comprehensive Income. However, does require the Company to include on its Consolidate Balance Sheet Right-of-Use assets and related liabilities incurred in connection with certain operating leases, which at December 31, 2019, were $3,859,000 and $3,949,000, respectively. In February 2018, the FASB issued No. ASU 2018-02, Income Statement – Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income (“ASU 2018-02”). Under ASU 2018-02, an entity may elect to reclassify the income tax effects of the Tax Reform Act on items within accumulated other comprehensive income to retained earnings. ASU 2018-02 is effective for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years. Early adoption is permitted in any interim period. The adoption of this standard did not have a material effect on the Company’s Consolidated Financial Statements. Other than the aforementioned, the Company does not believe that any other recently issued, but not yet effective accounting standard, if adopted, will have a material effect on our Consolidated Financial Statements. Not yet Adopted In December 2019, the FASB issued Accounting Standards Update ("ASU") 2019-12, “ Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes. ” The ASU is intended to simplify various aspects related to accounting for income taxes. This guidance is effective for fiscal years beginning after December 15, 2020, and for interim periods within those fiscal years, with early adoption permitted. The Company is currently evaluating the impact this guidance may have on its consolidated financial statements. In March 2020, the FASB issued ASU No. 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting (“ASU 2020-04”), which provides temporary optional guidance to ease the potential burden in accounting for reference rate reform. The new guidance provides optional expedients and exceptions for applying generally accepted accounting principles to transactions affected by reference rate reform if certain criteria are met. These transactions include contract modifications, hedging relationships, and sale or transfer of debt securities classified as held-to-maturity. Entities may apply the provisions of the new standard as of the beginning of the reporting period when the election is made (i.e. as early as the first quarter 2020). Unlike other topics, the provisions of this update are only available until December 31, 2022, when the reference rate replacement activity is expected to have completed. The Company is currently evaluating the impact of this standard on its consolidated financial statements and related disclosures and has yet to elect an adoption date. |
SUMMARY OF ACCOUNTING POLICIE_2
SUMMARY OF ACCOUNTING POLICIES (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
SUMMARY OF ACCOUNTING POLICIES | |
Schedule of retail automotive aerospace and industrial | Revenue generated at Florida Pneumatic. Year Ended December 31, 2019 2018 Increase (decrease) Percent of Percent of Revenue revenue Revenue revenue $ % Automotive $ 14,800,000 34.1 $ 14,430,000 28.5 % $ 370,000 2.6 % Retail customers 12,467,000 28.8 18,234,000 35.9 (5,767,000) (31.6) Aerospace 10,513,000 24.2 12,244,000 24.1 (1,731,000) (14.1) Industrial 4,969,000 11.5 5,151,000 10.2 (182,000) (3.5) Other 608,000 1.4 661,000 1.3 (53,000) (8.0) Total $ 43,357,000 100.0 % $ 50,720,000 100.0 % $ (7,363,000) (14.5) % Revenue generated at Hy-Tech. Year Ended December 31, 2019 2018 Increase (decrease) Percent of Percent of Revenue revenue Revenue revenue $ % OEM $ 7,321,000 47.8 % $ 5,447,000 38.2 % $ 1,874,000 34.4 % ATP 6,290,000 41.1 7,253,000 50.8 (963,000) (13.3) Other 1,706,000 11.1 1,575,000 11.0 131,000 8.3 Total $ 15,317,000 100.0 % $ 14,275,000 100.0 % $ 1,042,000 7.3 % |
Schedule of fees and other expenses relating to the sale | Selling price $ 9,200,000 Selling expenses 451,000 Net proceeds 8,749,000 Land 774,000 Building and improvements 2,956,000 Accumulated depreciation (2,798,000) Net book value 932,000 Gain on sale of the Jupiter Facility $ 7,817,000 |
Schedule of operating lease liabilities | The following is a maturity analysis of the annual undiscounted cash flows reconciled to the carrying value of the operating lease liabilities as of December 31, 2019: As of December 31, 2019 2020 $ 900,000 2021 828,000 2022 739,000 2023 637,000 2024 369,000 Thereafter 1,042,000 Total operating lease payments 4,515,000 Less imputed interest (566,000) Total operating lease liabilities $ 3,949,000 Weighted-average remaining lease term 6.7 years Weighted-average discount rate 4.4 % |
Schedule of computation of basic and diluted earnings per common share | The following table sets forth the computation of basic and diluted earnings per common share: Years Ended December 31, 2019 2018 Numerator for basic and diluted earnings per common share: Net income $ 4,911,000 $ 856,000 Denominator: Denominator for basic income per share—weighted average common shares outstanding 3,207,000 3,628,000 Denominator for diluted income per share—adjusted weighted average common shares and assumed conversions 3,262,000 3,728,000 |
ACQUISITION (Tables)
ACQUISITION (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
ACQUISITION | |
Schedule of estimated purchase price of fair value of cash paid contingent consideration | Total Cash paid at closing $ 3,518,000 Fair value of contingent consideration 64,000 Total estimated purchase price $ 3,582,000 |
Schedule of purchase price allocation | The following table presents purchase price allocation: Accounts receivable $ 218,000 Inventories 630,000 Machinery, equipment and vehicle 1,437,000 Identifiable intangible assets: Customer relationships 995,000 Trademarks and trade names 54,000 Non-compete agreements 95,000 Liabilities assumed (131,000) Goodwill 284,000 Total estimated purchase price $ 3,582,000 |
Schedule of intangible assets useful lives subject to amortization | The intangible assets subject to amortization will be amortized over 15 years for tax purposes. For financial reporting purposes their respective useful lives have been determined as follows: Customer relationships years Non-Compete agreements years Trademarks and trade names indefinite |
Schedule of unaudited pro-forma combined financial information | For the Year Ended For the Year Ended December 31, 2019 December 31, 2018 Revenue $ 61,087,000 $ 68,523,000 Net income $ 5,356,000 $ 1,028,000 Earnings per share – basic $ 1.67 $ 0.28 Earnings per share – diluted $ 1.64 $ 0.28 |
ACCOUNTS RECEIVABLE AND ALLOW_2
ACCOUNTS RECEIVABLE AND ALLOWANCE FOR DOUBTFUL ACCOUNTS (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
ACCOUNTS RECEIVABLE AND ALLOWANCE FOR DOUBTFUL ACCOUNTS | |
Schedule of accounts receivable | Accounts receivable - net consists of: December 31, December 31, 2019 2018 Accounts receivable $ 9,547,000 $ 9,847,000 Allowance for doubtful accounts, sales discounts and chargebacks (234,000) (273,000) $ 9,313,000 $ 9,574,000 |
INVENTORIES (Tables)
INVENTORIES (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
INVENTORIES | |
Schedule of inventories | Inventories consist of: December 31, December 31, 2019 2018 Raw materials $ 2,178,000 $ 1,963,000 Work in process 2,302,000 1,924,000 Finished goods 18,402,000 16,609,000 $ 22,882,000 $ 20,496,000 |
GOODWILL AND OTHER INTANGIBLE_2
GOODWILL AND OTHER INTANGIBLE ASSETS (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
GOODWILL AND OTHER INTANGIBLE ASSETS | |
Schedule of Changes in the carrying amount of goodwill | Changes in the carrying amount of goodwill are as follows: Balance, January 1, 2019 $ 4,436,000 Currency translation adjustment 6,000 Acquisition of Hy-Tech Illinois 284,000 Balance, December 31, 2019 $ 4,726,000 |
Schedule of Other intangible assets | Other intangible assets were as follows: December 31, 2019 December 31, 2018 Accumulated Net book Accumulated Net book Cost amortization value Cost amortization value Other intangible assets: Customer relationships (1) $ 7,825,000 $ 2,724,000 $ 5,101,000 $ 6,821,000 $ 2,135,000 $ 4,686,000 Trademarks and trade names (1) 2,375,000 — 2,375,000 2,308,000 — 2,308,000 Trademarks and trade names 200,000 45,000 155,000 200,000 32,000 168,000 Engineering drawings 330,000 225,000 105,000 330,000 202,000 128,000 Non-compete agreements (1) 331,000 235,000 96,000 233,000 223,000 10,000 Patents 1,405,000 978,000 427,000 1,405,000 905,000 500,000 Totals $ 12,466,000 $ 4,207,000 $ 8,259,000 $ 11,297,000 $ 3,497,000 $ 7,800,000 (1) A portion of these intangibles are maintained in a foreign currency and are therefore subject to foreign exchange rate fluctuations. Changes in the carrying amount of other intangibles are as follows: Accumulated Cost amortization Net book value Balance, January 1, 2019 $ 11,297,000 $ 3,497,000 $ 7,800,000 Amortization — 703,000 (703,000) Acquisition of Hy-Tech Illinois 1,144,000 — 1,144,000 Currency translation adjustment 25,000 7,000 18,000 Balance, December 31, 2019 $ 12,466,000 $ 4,207,000 $ 8,259,000 The weighted average amortization period for intangible assets was as follows: December 31, 2019 December 31, 2018 Customer relationships 8.7 9.3 Trademarks and trade names 11.5 12.5 Engineering drawings 7.1 7.7 Non-compete agreements 3.7 2.3 Patents 7.1 7.9 |
Schedule of Amortization expense of intangible assets | Amortization expense of intangible assets subject to amortization was as follows: Year ended December 31, 2019 2018 $ 703,000 $ 702,000 Amortization expense for each of the next five years and thereafter is estimated to be as follows: 2020 $ 767,000 2021 759,000 2022 758,000 2023 754,000 2024 706,000 Thereafter 2,140,000 $ 5,884,000 |
STOCK OPTIONS - STOCK COMPENS_2
STOCK OPTIONS - STOCK COMPENSATION (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
STOCK OPTIONS - STOCK COMPENSATION | |
Schedule of estimated fair value of its Common Stock options | For the years ended December 31, 2019 Risk-free interest rate 2.73 % Expected term 10 years Volatility 62.08 % Dividend yield 2.34 % Fair value of options granted $ 4.60 |
Schedule of share-based compensation stock options | The following table contains information on the status of the Company’s stock options: Weighted Number Average Aggregate of Exercise Price Intrinsic Shares per share Value Outstanding, January 1, 2018 418,233 $ 5.17 Granted — — Exercised (200,158) 4.02 Forfeited — — Expired — — Outstanding, December 31, 2018 218,075 6.22 Granted 8,000 8.55 Exercised — — Forfeited — — Expired — — Outstanding, December 31, 2019 226,075 $ 6.30 $ 219,983 Vested, December 31, 2019 188,409 $ 6.08 $ 219,983 |
Schedule of share-based compensation arrangement by share-based payment award and options vested and expected to vest | The following is a summary of changes in non-vested shares, all of which are expected to vest: December 31, 2019 2018 Weighted Weighted Average Average Option Grant-Date Option Grant-Date Shares Fair Value Shares Fair Value Non-vested shares, beginning of year 59,333 $ 4.41 89,000 $ 4.41 Granted 8,000 4.60 — — Vested (29,667) 4.41 (29,667) 4.41 Forfeited — — — — Non-vested shares, end of year 37,666 $ 4.45 59,333 $ 4.41 |
Schedule of stock options outstanding and exercisable | The following table summarizes information about stock options outstanding and exercisable at December 31, 2019: Options Outstanding Options Exercisable Weighted Average Weighted Weighted Average Remaining Average Remaining Weighted Number Contractual Exercise Number Contractual Average outstanding Life (Years) Price exercisable Life (Years) Exercise Price 1.0 $ 2.92 17,244 1.0 $ 2.92 1.4 $ 4.37 18,812 1.4 $ 4.37 2.4 $ 4.29 2,090 2.4 $ 4.29 2.5 $ 4.74 41,809 2.5 $ 4.74 3.3 $ 7.86 49,120 3.3 $ 7.86 7.7 $ 7.09 59,334 7.7 $ 7.09 9.2 $ 8.55 — — — 4.7 $ 6.30 188,409 4.1 $ 6.08 |
INCOME TAXES (Tables)
INCOME TAXES (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
INCOME TAXES | |
Schedule of Components of Income Tax Expense (Benefit) | Income tax expense (benefit) in the consolidated statements of income and comprehensive income consists of: Years Ended December 31, 2019 2018 Current: Federal $ 1,078,000 $ (39,000) State and local 312,000 24,000 Foreign 3,000 19,000 Total current 1,393,000 4,000 Deferred: Federal 513,000 268,000 State and local (105,000) (15,000) Foreign (4,000) (4,000) Total deferred 404,000 249,000 Totals $ 1,797,000 $ 253,000 |
Schedule of Deferred tax assets (liabilities) | Deferred tax assets (liabilities) consist of: December 31, 2019 2018 Deferred tax assets: Bad debt reserves $ 17,000 $ 17,000 Inventory reserves 653,000 615,000 Warranty and other reserves 77,000 78,000 Stock-based compensation 212,000 184,000 Goodwill 866,000 940,000 Acquisition costs 223,000 170,000 Net operating losses - federal — 340,000 Net operating losses - state 77,000 91,000 Other 20,000 18,000 2,145,000 2,453,000 Deferred tax (liabilities): Prepaid expenses (79,000) (373,000) Depreciation (1,154,000) (732,000) Intangibles (696,000) (720,000) Net deferred tax assets $ 216,000 $ 628,000 |
Schedule of components of income before income taxes | The components of income before income taxes consisted of the following: Years ended December 31, 2019 2018 United States operations $ 6,715,000 $ 1,004,000 International operations (7,000) 105,000 Income before tax $ 6,708,000 $ 1,109,000 |
Schedule reconciliation of the Federal statutory rate | A reconciliation of the Federal statutory rate to the total effective tax rate applicable to income is as follows: Years ended December 31, 2019 2018 Federal income tax computed at statutory rates 21.0 % 21.0 % (Decrease) increase in taxes resulting from: State and local taxes, net of Federal tax benefit 2.4 0.6 Permanent differences - net 3.1 5.2 Foreign rate differential — (0.7) Tax Cuts and Jobs Act of 2017 — (3.4) Other 0.3 0.1 Income tax expense 26.8 % 22.8 % |
SUMMARY OF ACCOUNTING POLICIE_3
SUMMARY OF ACCOUNTING POLICIES - Sale of real property (Details) - USD ($) | Jun. 18, 2019 | Dec. 31, 2019 | Dec. 31, 2018 |
Sale of real property | |||
Land | $ 507,000 | $ 1,281,000 | |
Building and improvements | 3,303,000 | 6,262,000 | |
Accumulated depreciation | (18,760,000) | (20,380,000) | |
Net book value | 10,109,000 | $ 9,775,000 | |
Florida Pneumatic [Member] | |||
Sale of real property | |||
Selling price | $ 9,200,000 | ||
Selling expense | 451,000 | ||
Net proceeds | 8,749,000 | ||
Land | 774,000 | ||
Building and improvements | 2,956,000 | ||
Accumulated depreciation | (2,798,000) | ||
Net book value | 932,000 | ||
Gain on sale of the Jupiter Facility | $ 7,817,000 | $ 7,817,000 |
SUMMARY OF ACCOUNTING POLICIE_4
SUMMARY OF ACCOUNTING POLICIES - maturity analysis of the annual undiscounted cash flows (Details) - USD ($) | Dec. 31, 2019 | Jan. 01, 2019 | Dec. 31, 2018 |
operating lease liabilities | |||
2020 | $ 900,000 | ||
2021 | 828,000 | ||
2022 | 739,000 | ||
2023 | 637,000 | ||
2024 | 369,000 | ||
Thereafter | 1,042,000 | ||
Total operating lease payments | 4,515,000 | ||
Less imputed interest | (566,000) | ||
Total operating lease liabilities | $ 3,949,000 | $ 418,000 | $ 3,949,000 |
Weighted-average remaining lease term | 6 years 8 months 12 days | ||
Weighted-average discount rate | 4.40% |
SUMMARY OF ACCOUNTING POLICIE_5
SUMMARY OF ACCOUNTING POLICIES - Operating lease liabilities (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Schedule Of Summary Of Accounting Policies [Line Items] | ||
Property, Plant and Equipment, Cost Capitalization | 1,000 | |
Advertising Expense | $ 1,690,000 | $ 1,375,000 |
Selling, General and Administrative Expense | 21,869,000 | 21,705,000 |
Shipping and Handling [Member] | ||
Schedule Of Summary Of Accounting Policies [Line Items] | ||
Selling, General and Administrative Expense | $ 1,883,000 | $ 2,370,000 |
Maximum [Member] | ||
Schedule Of Summary Of Accounting Policies [Line Items] | ||
Finite-Lived Intangible Asset, Useful Life | 20 years | |
Minimum [Member] | ||
Schedule Of Summary Of Accounting Policies [Line Items] | ||
Finite-Lived Intangible Asset, Useful Life | 3 years | |
Machinery and Equipment [Member] | Maximum [Member] | ||
Schedule Of Summary Of Accounting Policies [Line Items] | ||
Property, Plant and Equipment, Useful Life | 10 years | |
Machinery and Equipment [Member] | Minimum [Member] | ||
Schedule Of Summary Of Accounting Policies [Line Items] | ||
Property, Plant and Equipment, Useful Life | 3 years | |
Building [Member] | Maximum [Member] | ||
Schedule Of Summary Of Accounting Policies [Line Items] | ||
Property, Plant and Equipment, Useful Life | 31 years | |
Building [Member] | Minimum [Member] | ||
Schedule Of Summary Of Accounting Policies [Line Items] | ||
Property, Plant and Equipment, Useful Life | 27 years 6 months | |
Accounts Receivable [Member] | ||
Schedule Of Summary Of Accounting Policies [Line Items] | ||
Concentration Risk, Percentage | 27.20% | 32.60% |
Sales Revenue, Segment [Member] | ||
Schedule Of Summary Of Accounting Policies [Line Items] | ||
Concentration Risk, Percentage | 20.70% | 26.50% |
SUMMARY OF ACCOUNTING POLICIE_6
SUMMARY OF ACCOUNTING POLICIES - Basic and diluted earnings per common share (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Earnings Per Share, Basic and Diluted [Abstract] | ||
Net income | $ 4,911,000 | $ 856,000 |
Denominator: | ||
Denominator for basic income per share-weighted average common shares outstanding | 3,207,000 | 3,628,000 |
Denominator for diluted income per share-adjusted weighted average common shares and assumed conversions | 3,262,000 | 3,728,000 |
SUMMARY OF ACCOUNTING POLICIE_7
SUMMARY OF ACCOUNTING POLICIES - Retail automotive industrial and aerospace (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Schedule Of Summary Of Accounting Policies [Line Items] | ||
Revenues | $ 58,674,000 | $ 64,995,000 |
Florida Pneumatic [Member] | ||
Schedule Of Summary Of Accounting Policies [Line Items] | ||
Revenues | $ 43,357,000 | $ 50,720,000 |
Percentage Of Revenue | 100.00% | 100.00% |
Increase (decrease) | $ (7,363,000) | |
Percentage Of Change In Revenue | (14.50%) | |
Florida Pneumatic [Member] | Automotive [Member] | ||
Schedule Of Summary Of Accounting Policies [Line Items] | ||
Revenues | $ 14,800,000 | $ 14,430,000 |
Percentage Of Revenue | 34.10% | 28.50% |
Increase (decrease) | $ 370,000 | |
Percentage Of Change In Revenue | 2.60% | |
Florida Pneumatic [Member] | Retail customers [Member] | ||
Schedule Of Summary Of Accounting Policies [Line Items] | ||
Revenues | $ 12,467,000 | $ 18,234,000 |
Percentage Of Revenue | 28.80% | 35.90% |
Increase (decrease) | $ (5,767,000) | |
Percentage Of Change In Revenue | (31.60%) | |
Florida Pneumatic [Member] | Aerospace [Member] | ||
Schedule Of Summary Of Accounting Policies [Line Items] | ||
Revenues | $ 10,513,000 | $ 12,244,000 |
Percentage Of Revenue | 24.20% | 24.10% |
Increase (decrease) | $ (1,731,000) | |
Percentage Of Change In Revenue | (14.10%) | |
Florida Pneumatic [Member] | Industrial [Member] | ||
Schedule Of Summary Of Accounting Policies [Line Items] | ||
Revenues | $ 4,969,000 | $ 5,151,000 |
Percentage Of Revenue | 11.50% | 10.20% |
Increase (decrease) | $ (182,000) | |
Percentage Of Change In Revenue | (3.50%) | |
Florida Pneumatic [Member] | Other [Member] | ||
Schedule Of Summary Of Accounting Policies [Line Items] | ||
Revenues | $ 608,000 | $ 661,000 |
Percentage Of Revenue | 1.40% | 1.30% |
Increase (decrease) | $ (53,000) | |
Percentage Of Change In Revenue | (8.00%) | |
Hy-Tech [Member] | ||
Schedule Of Summary Of Accounting Policies [Line Items] | ||
Revenues | $ 15,317,000 | $ 14,275,000 |
Percentage Of Revenue | 100.00% | 100.00% |
Increase (decrease) | $ 1,042,000 | |
Percentage Of Change In Revenue | 7.30% | |
Hy-Tech [Member] | Other [Member] | ||
Schedule Of Summary Of Accounting Policies [Line Items] | ||
Revenues | $ 1,706,000 | $ 1,575,000 |
Percentage Of Revenue | 11.10% | 11.00% |
Increase (decrease) | $ 131,000 | |
Percentage Of Change In Revenue | 8.30% | |
Hy-Tech [Member] | OEM [Member] | ||
Schedule Of Summary Of Accounting Policies [Line Items] | ||
Revenues | $ 7,321,000 | $ 5,447,000 |
Percentage Of Revenue | 47.80% | 38.20% |
Increase (decrease) | $ 1,874,000 | |
Percentage Of Change In Revenue | 34.40% | |
Hy-Tech [Member] | ATP brands [Member] | ||
Schedule Of Summary Of Accounting Policies [Line Items] | ||
Revenues | $ 6,290,000 | $ 7,253,000 |
Percentage Of Revenue | 41.10% | 50.80% |
Increase (decrease) | $ (963,000) | |
Percentage Of Change In Revenue | (13.30%) |
SUMMARY OF ACCOUNTING POLICIE_8
SUMMARY OF ACCOUNTING POLICIES - Additional information (Details) | Dec. 31, 2019USD ($)ft²item$ / product | Jun. 18, 2019USD ($) | Dec. 31, 2019USD ($)ft² | Dec. 31, 2018USD ($) | Jan. 01, 2019USD ($) |
Schedule Of Summary Of Accounting Policies [Line Items] | |||||
Operating Lease, Right-of-Use Asset | $ 3,859,000 | $ 3,859,000 | $ 0 | $ 394,000 | |
Operating Lease, Liability | 3,949,000 | 3,949,000 | 3,949,000 | 418,000 | |
Accrued Rent, Current | 24,000 | ||||
Operating Lease, Expense | 582,000 | ||||
Operating Lease, Right-of-Use Asset | $ 3,859,000 | $ 3,859,000 | $ 0 | $ 394,000 | |
Gears Acquisition | |||||
Schedule Of Summary Of Accounting Policies [Line Items] | |||||
Area of Land | ft² | 42,000 | 42,000 | |||
Operating Lease, Right-of-Use Asset | $ 99,000 | $ 99,000 | |||
Lessee, Operating Lease, Term of Contract | 5 years | 5 years | |||
Operating Lease, Cost | $ 165,800 | ||||
Lessee, Operating Lease, Renewal Term | 3 years | 3 years | |||
Operating Lease, Right-of-Use Asset | $ 99,000 | $ 99,000 | |||
Accounts Receivable [Member] | |||||
Schedule Of Summary Of Accounting Policies [Line Items] | |||||
Concentration Risk, Percentage | 27.20% | 32.60% | |||
Florida Pneumatic [Member] | |||||
Schedule Of Summary Of Accounting Policies [Line Items] | |||||
Area of Land | ft² | 42,000 | 42,000 | |||
Lease Income | $ 32,345 | ||||
Gain (Loss) on Disposition of Assets for Financial Service Operations | $ 7,817,000 | $ 7,817,000 | |||
Number Of Types Of Pneumatic Hand Tools Imported Or Manufactured | item | 75 | ||||
Florida Pneumatic [Member] | Minimum [Member] | |||||
Schedule Of Summary Of Accounting Policies [Line Items] | |||||
Sale Price Per Product | $ / product | 50 | ||||
Florida Pneumatic [Member] | Maximum [Member] | |||||
Schedule Of Summary Of Accounting Policies [Line Items] | |||||
Sale Price Per Product | $ / product | 1,000 | ||||
Hy-Tech [Member] | Minimum [Member] | |||||
Schedule Of Summary Of Accounting Policies [Line Items] | |||||
Sale Price Per Product | $ / product | 300 | ||||
Hy-Tech [Member] | Maximum [Member] | |||||
Schedule Of Summary Of Accounting Policies [Line Items] | |||||
Sale Price Per Product | $ / product | 42,000 |
ACQUISITION (Details)
ACQUISITION (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Business Acquisition [Line Items] | ||
Cash paid at closing | $ 3,518,000 | $ 0 |
Gears Acquisition | ||
Business Acquisition [Line Items] | ||
Cash paid at closing | 3,518,000 | |
Fair value of contingent consideration | 64,000 | |
Total estimated purchase price | $ 3,582,000 |
ACQUISITION - Purchase price al
ACQUISITION - Purchase price allocation (Details) - Gears Acquisition | Dec. 31, 2019USD ($) |
Business Acquisition [Line Items] | |
Accounts receivable | $ 218,000 |
Inventories | 630,000 |
Machinery, equipment and vehicle | 1,437,000 |
Identifiable intangible assets: | |
Liabilities assumed | (131,000) |
Goodwill | 284,000 |
Total estimated purchase price | 3,582,000 |
Trademarks and Trade Names [Member] | |
Identifiable intangible assets: | |
Trademarks and trade names | 54,000 |
Customer Relationships [Member] | |
Identifiable intangible assets: | |
Customer relationships | 995,000 |
Non-compete agreements [Member] | |
Identifiable intangible assets: | |
Non-compete agreements | $ 95,000 |
ACQUISITION - Intangible useful
ACQUISITION - Intangible useful life (Details) | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Gears Acquisition | ||
Acquired Finite-Lived Intangible Assets [Line Items] | ||
Acquired Finite-lived Intangible Assets, Weighted Average Useful Life | 15 years | |
Customer Relationships [Member] | ||
Acquired Finite-Lived Intangible Assets [Line Items] | ||
Acquired Finite-lived Intangible Assets, Weighted Average Useful Life | 8 years 8 months 12 days | 9 years 3 months 18 days |
Customer Relationships [Member] | Gears Acquisition | ||
Acquired Finite-Lived Intangible Assets [Line Items] | ||
Acquired Finite-lived Intangible Assets, Weighted Average Useful Life | 10 years | |
Non-compete agreements [Member] | Gears Acquisition | ||
Acquired Finite-Lived Intangible Assets [Line Items] | ||
Acquired Finite-lived Intangible Assets, Weighted Average Useful Life | 4 years |
ACQUISITION - Unaudited pro-for
ACQUISITION - Unaudited pro-forma combined financial information (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
ACQUISITION | ||
Revenue | $ 61,087,000 | $ 68,523,000 |
Net loss from continuing operations | $ 5,356,000 | $ 1,028,000 |
Earnings per share - Basic | $ 1.67 | $ 0.28 |
Earnings per share - Diluted | $ 1.64 | $ 0.28 |
ACQUISITION - Additional inform
ACQUISITION - Additional information (Details) - USD ($) | Dec. 31, 2019 | Dec. 31, 2019 | Dec. 31, 2018 |
Business Acquisition [Line Items] | |||
Payments to Acquire Businesses, Gross | $ 3,518,000 | $ 0 | |
Business Combination, Contingent Consideration, Liability, Current | $ 0 | 0 | $ 1,000,000 |
Gears Acquisition | |||
Business Acquisition [Line Items] | |||
Business Combination, Contingent Consideration, Liability | $ 64,000 | $ 64,000 | |
Acquired Finite-lived Intangible Assets, Weighted Average Useful Life | 15 years | ||
Payments to Acquire Businesses, Gross | $ 3,518,000 | ||
Maximum Fixed Charge Coverage Ratio Rate | 17.50% |
ACCOUNTS RECEIVABLE AND ALLOW_3
ACCOUNTS RECEIVABLE AND ALLOWANCE FOR DOUBTFUL ACCOUNTS (Details) - USD ($) | Dec. 31, 2019 | Dec. 31, 2018 |
ACCOUNTS RECEIVABLE AND ALLOWANCE FOR DOUBTFUL ACCOUNTS | ||
Accounts receivable | $ 9,547,000 | $ 9,847,000 |
Allowance for doubtful accounts, sales discounts and chargebacks | (234,000) | (273,000) |
Accounts Receivable, Net, Current, Total | $ 9,313,000 | $ 9,574,000 |
INVENTORIES (Details)
INVENTORIES (Details) - USD ($) | Dec. 31, 2019 | Dec. 31, 2018 |
INVENTORIES | ||
Raw material | $ 2,178,000 | $ 1,963,000 |
Work in process | 2,302,000 | 1,924,000 |
Finished goods | 18,402,000 | 16,609,000 |
Inventory net | $ 22,882,000 | $ 20,496,000 |
GOODWILL AND OTHER INTANGIBLE_3
GOODWILL AND OTHER INTANGIBLE ASSETS - Carrying amount of goodwill (Details) | 12 Months Ended |
Dec. 31, 2019USD ($) | |
GOODWILL AND OTHER INTANGIBLE ASSETS | |
Balance, beginning | $ 4,436,000 |
Currency translation adjustment | 6,000 |
Acquisition of Hy-Tech Illinois | 284,000 |
Balance, ending | $ 4,726,000 |
GOODWILL AND OTHER INTANGIBLE_4
GOODWILL AND OTHER INTANGIBLE ASSETS - Other intangible assets - (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Other intangible assets: | ||
Cost | $ 12,466,000 | $ 11,297,000 |
Accumulated amortization | 4,207,000 | 3,497,000 |
Net book value | 8,259,000 | 7,800,000 |
Customer Relationships [Member] | ||
Other intangible assets: | ||
Cost | 7,825,000 | 6,821,000 |
Accumulated amortization | 2,724,000 | 2,135,000 |
Net book value | $ 5,101,000 | $ 4,686,000 |
Acquired Finite-lived Intangible Assets, Weighted Average Useful Life | 8 years 8 months 12 days | 9 years 3 months 18 days |
Trademarks and trade names one [Member] | ||
Other intangible assets: | ||
Cost | $ 2,375,000 | $ 2,308,000 |
Accumulated amortization | 0 | 0 |
Net book value | $ 2,375,000 | $ 2,308,000 |
Acquired Finite-lived Intangible Assets, Weighted Average Useful Life | 11 years 6 months | 12 years 6 months |
Trademarks and Trade Names Two [Member] | ||
Other intangible assets: | ||
Cost | $ 200,000 | $ 200,000 |
Accumulated amortization | 45,000 | 32,000 |
Net book value | 155,000 | 168,000 |
Engineering drawings [Member] | ||
Other intangible assets: | ||
Cost | 330,000 | 330,000 |
Accumulated amortization | 225,000 | 202,000 |
Net book value | $ 105,000 | $ 128,000 |
Acquired Finite-lived Intangible Assets, Weighted Average Useful Life | 7 years 1 month 6 days | 7 years 8 months 12 days |
Non-compete agreements [Member] | ||
Other intangible assets: | ||
Cost | $ 331,000 | $ 233,000 |
Accumulated amortization | 235,000 | 223,000 |
Net book value | $ 96,000 | $ 10,000 |
Acquired Finite-lived Intangible Assets, Weighted Average Useful Life | 3 years 8 months 12 days | 2 years 3 months 18 days |
Patents [Member] | ||
Other intangible assets: | ||
Cost | $ 1,405,000 | $ 1,405,000 |
Accumulated amortization | 978,000 | 905,000 |
Net book value | $ 427,000 | $ 500,000 |
Acquired Finite-lived Intangible Assets, Weighted Average Useful Life | 7 years 1 month 6 days | 7 years 10 months 24 days |
GOODWILL AND OTHER INTANGIBLE_5
GOODWILL AND OTHER INTANGIBLE ASSETS - Amortization expense of intangible assets - (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
GOODWILL AND OTHER INTANGIBLE ASSETS | ||
Amortization of Intangible Assets | $ 703,000 | $ 702,000 |
GOODWILL AND OTHER INTANGIBLE_6
GOODWILL AND OTHER INTANGIBLE ASSETS - Estimated amortization expense (Details) | Dec. 31, 2019USD ($) |
GOODWILL AND OTHER INTANGIBLE ASSETS | |
2020 | $ 767,000 |
2021 | 759,000 |
2022 | 758,000 |
2023 | 754,000 |
2024 | 706,000 |
Thereafter | 2,140,000 |
Total | $ 5,884,000 |
GOODWILL AND OTHER INTANGIBLE_7
GOODWILL AND OTHER INTANGIBLE ASSETS - Changes in the carrying amount of other intangibles (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
GOODWILL AND OTHER INTANGIBLE ASSETS | ||
Beginning Balance, Cost | $ 11,297,000 | |
Amortization, Cost | 0 | |
Acquisition of Hy-Tech adjustment, Cost | 1,144,000 | |
Currency translation adjustment, Cost | 25,000 | |
Ending Balance, Cost | 12,466,000 | $ 11,297,000 |
Beginning Balance, Accumulated Amortization | 3,497,000 | |
Amortization, Accumulated Amortization | 703,000 | 702,000 |
Acquisition of Hy-Tech Illinois, Accumulated Amortization | 0 | |
Currency translation adjustment, Accumulated Amortization | 7,000 | |
Ending Balance, Accumulated Amortization | 4,207,000 | 3,497,000 |
Beginning Balance, Net Book Value | 7,800,000 | |
Amortization, Net Book Value | (703,000) | |
Acquisition of Hy-Tech Illinois, Net Book Value | 1,144,000 | |
Currency translation adjustment, Net Book Value | 18,000 | |
Ending Balance, Net Book Value | $ 8,259,000 | $ 7,800,000 |
DEBT - Additional information (
DEBT - Additional information (Details) - USD ($) | 1 Months Ended | 12 Months Ended | |||
Jun. 30, 2019 | Apr. 30, 2018 | Dec. 31, 2019 | Dec. 31, 2018 | Apr. 30, 2017 | |
Debt Instrument [Line Items] | |||||
Short-term Debt | $ 5,648,000 | $ 2,096,000 | |||
Line of Credit Facility, Average Outstanding Amount | 4,253,000 | 3,113,000 | |||
Payments of Debt Issuance Costs | 72,000 | 3,000 | |||
Short-term Debt [Member] | |||||
Debt Instrument [Line Items] | |||||
Line of Credit Facility, Remaining Borrowing Capacity | $ 9,200,000 | $ 12,024,000 | |||
Short-term Debt [Member] | Base Rate borrowing [Member] | |||||
Debt Instrument [Line Items] | |||||
Debt Instrument, Basis Spread on Variable Rate | 0.50% | ||||
Short-term Debt [Member] | LIBOR Margin [Member] | |||||
Debt Instrument [Line Items] | |||||
Debt Instrument, Basis Spread on Variable Rate | 1.50% | ||||
Term Loan | |||||
Debt Instrument [Line Items] | |||||
Debt Instrument, Basis Spread on Variable Rate | 1.50% | ||||
Repayments of Long-term Debt | $ 100,000 | ||||
Long-term Debt | $ 100,000 | ||||
Revolving Credit Facility [Member] | |||||
Debt Instrument [Line Items] | |||||
Line of Credit Facility, Maximum Borrowing Capacity | $ 16,000,000 | ||||
Line of Credit Facility, Capacity Available for Specific Purpose Other than for Trade Purchases | 2,000,000 | ||||
Capex Borrowing [Member] | |||||
Debt Instrument [Line Items] | |||||
Line of Credit Facility, Maximum Borrowing Capacity | $ 1,600,000 | ||||
Debt Instrument, Face Amount | $ 400,000 | ||||
Debt Instrument, Periodic Payment | $ 6,700 | ||||
Long-term Debt | $ 353,000 |
STOCK OPTIONS - STOCK COMPENS_3
STOCK OPTIONS - STOCK COMPENSATION - Common stock options (Details) | Dec. 31, 2019$ / shares |
STOCK OPTIONS - STOCK COMPENSATION | |
Risk-free interest rate | 2.73% |
Expected term | 10 years |
Volatility | 62.08% |
Dividend yield | 2.34% |
Fair value of options granted | $ 4.60 |
STOCK OPTIONS - STOCK COMPENS_4
STOCK OPTIONS - STOCK COMPENSATION - outstanding options (Details) - USD ($) | Feb. 28, 2019 | Dec. 31, 2019 | Dec. 31, 2018 |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Number of Shares, Outstanding | 226,075 | ||
Weighted Average Exercise Price per share, Granted (in dollars per share) | $ 8.55 | ||
Weighted Average Exercise Price per share, Outstanding (in dollars per share) | $ 6.30 | ||
Weighted Average Remaining Contractual Life, Outstanding (Years) | 4 years 8 months 12 days | ||
Stock Incentive Plan [Member] | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Weighted Average Exercise Price per share, Granted (in dollars per share) | $ 8.55 | ||
Employee Stock Option [Member] | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Number of Shares, Outstanding | 218,075 | 418,233 | |
Number of Shares, Granted | 8,000 | 0 | |
Number of Shares, Exercised | 0 | (200,158) | |
Number of Shares, Forfeited | 0 | 0 | |
Number of Shares, Expired | 0 | 0 | |
Number of Shares, Outstanding | 218,075 | ||
Number of Shares, Vested | 188,409 | ||
Weighted Average Exercise Price per share, Outstanding (in dollars per share) | $ 6.22 | $ 5.17 | |
Weighted Average Exercise Price per share, Exercised (in dollars per share) | 4.02 | ||
Weighted Average Exercise Price per share, Outstanding (in dollars per share) | $ 6.22 | ||
Weighted Average Exercise Price per share, Vested (in dollars per share) | $ 6.08 | ||
Aggregate Intrinsic Value, Outstanding and Vested (in dollars) | $ 219,983 | ||
Aggregate Intrinsic Value, Vested (in dollars) | $ 219,983 |
STOCK OPTIONS - STOCK COMPENS_5
STOCK OPTIONS - STOCK COMPENSATION - Employee Stock Option (Details) - Employee Stock Option [Member] - $ / shares | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Option Shares, Nonvested shares, beginning of year | 59,333 | 89,000 |
Option Shares, Granted | 8,000 | 0 |
Option Shares, Vested | (29,667) | (29,667) |
Option Shares, Forfeited | 0 | 0 |
Option Shares, Nonvested shares, end of year | 37,666 | 59,333 |
Weighted Average Grant-Date Fair Value, Non-vested shares, beginning of year (in dollars per share) | $ 4.41 | $ 4.41 |
Weighted Average Grant-Date Fair Value, Granted (in dollars per share) | 4.60 | 0 |
Weighted Average Grant-Date Fair Value, Vested (in dollars per share) | 4.41 | 4.41 |
Weighted Average Grant-Date Fair Value, Forfeited (in dollars per share) | 0 | 0 |
Weighted Average Grant-Date Fair Value, Non-vested shares, end of year (in dollars per share) | $ 4.45 | $ 4.41 |
STOCK OPTIONS - STOCK COMPENS_6
STOCK OPTIONS - STOCK COMPENSATION - Additional information (Details) - USD ($) | Dec. 31, 2019 | Feb. 14, 2019 | May 31, 2019 | Nov. 30, 2018 | Jun. 30, 2018 | May 31, 2018 | Dec. 31, 2019 | Dec. 31, 2018 | Feb. 28, 2019 | Sep. 12, 2018 |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||||
Share-based Compensation Arrangement by Share-based Payment Award, Number of Shares Available for Grant | 62,062 | 62,062 | 79,437 | |||||||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Number, Beginning Balance | 226,075 | 226,075 | ||||||||
Stock Repurchased During Period, Value | $ 3,518,000 | $ 1,516,000 | ||||||||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Weighted Average Grant Date Fair Value | $ 4.60 | |||||||||
Treasury Stock, Shares, Acquired | 389,909 | 85,791 | 18,140 | |||||||
Temporary Equity, Redemption Price Per Share | $ 7.62 | |||||||||
Total purchase price | $ 297,100 | 3,518,000 | $ 1,516,000 | |||||||
Share-based Payment Arrangement, Nonvested Award, Cost Not yet Recognized, Amount | $ 55,000 | $ 55,000 | ||||||||
Share-based Payment Arrangement, Nonvested Award, Cost Not yet Recognized, Period for Recognition | 9 months 18 days | |||||||||
Share-based Compensation Arrangement by Share-based Payment Award, Number of Shares Authorized | 1,100,000 | 1,100,000 | ||||||||
Appreciation Award Description | 1.5 shares for every share granted. | |||||||||
Share Based Compensation Stock Option Plan Authorized | 100,000 | |||||||||
Share Based Compensation Arrangement By Share Based Payment Award Options Nonvested Percentage | 100.00% | |||||||||
Treasury Stock, Value, Acquired, Cost Method | $ 698,000 | $ 150,000 | ||||||||
2018 Repurchase Plan | ||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||||
Stock Repurchased During Period, Shares | 66,602 | 33,398 | ||||||||
Stock Repurchased During Period, Value | $ 547,000 | $ 272,000 | ||||||||
Stock Repurchase Program, Number of Shares Authorized to be Repurchased | 100,000 | |||||||||
Non Employee Director [Member] | ||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||||
Share-based Compensation Arrangement by Share-based Payment Award, Maximum Number of Shares Per Employee | 35,000 | |||||||||
Restricted Stock [Member] | ||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||||
Share-based Compensation Arrangement by Share-based Payment Award, Maximum Number of Shares Per Employee | 165,000 | |||||||||
Common Class A [Member] | ||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||||
Stock Repurchased During Period, Shares | 0 | 0 | ||||||||
Stock Repurchased During Period, Value | $ 0 | $ 0 | ||||||||
Common Class A [Member] | Employees And Directors [Member] | ||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||||
Share-based Compensation Arrangement by Share-based Payment Award, Number of Shares Authorized | 325,000 | 325,000 | ||||||||
Incentive Stock Option Plan 2002 [Member] | ||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Number, Beginning Balance | 34,500 | 34,500 | ||||||||
Incentive Stock Option Plan 2012 [Member] | ||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||||
Share-based Compensation Arrangement by Share-based Payment Award, Number of Shares Available for Grant | 191,575 | 191,575 | ||||||||
Incentive Stock Option Plan 2012 [Member] | Restricted Stock [Member] | ||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||||
Share-based Compensation Arrangement by Share-based Payment Award, Number of Shares Available for Grant | 8.31 | 8.43 | ||||||||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Number, Beginning Balance | 6,250 | 6,250 | ||||||||
Restricted stock-based compensation | $ 52,000 | $ 53,000 | ||||||||
Share-based Compensation Arrangement by Share-based Payment Award, Shares Issued in Period | 1,250 | 1,250 | ||||||||
Stock Compensation Plan [Member] | ||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||||
Share-based Compensation Arrangement by Share-based Payment Award, Maximum Number of Shares Per Employee | 65,000 | |||||||||
Stock Appreciation Rights (SARs) [Member] | ||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||||
Share-based Compensation Arrangement by Share-based Payment Award, Maximum Number of Shares Per Employee | 1,000,000 | |||||||||
Stock Incentive Plan [Member] | ||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||||
Stock Repurchase Program, Number of Shares Authorized to be Repurchased | 8,000 |
STOCK OPTIONS - STOCK COMPENS_7
STOCK OPTIONS - STOCK COMPENSATION (Details) - $ / shares | Feb. 09, 2019 | Dec. 31, 2019 |
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items] | ||
Number outstanding | 226,075 | |
Options Outstanding Weighted Average Remaining Contractual Life (Years) | 4 years 8 months 12 days | |
Weighted Average Exercise Price (in dollars per share) | $ 6.30 | |
Number exercisable | 188,409 | |
Options Exercisable Weighted Average Remaining Contractual Life (Years) | 4 years 1 month 6 days | |
Weighted Average Exercise Price (in dollars per share) | $ 6.08 | |
Trading period | 20 days | |
Exercise Price Range One [Member] | ||
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items] | ||
Number outstanding | 17,244 | |
Options Outstanding Weighted Average Remaining Contractual Life (Years) | 1 year | |
Weighted Average Exercise Price (in dollars per share) | $ 2.92 | |
Number exercisable | 17,244 | |
Options Exercisable Weighted Average Remaining Contractual Life (Years) | 1 year | |
Weighted Average Exercise Price (in dollars per share) | $ 2.92 | |
Exercise Price Range Two [Member] | ||
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items] | ||
Number outstanding | 18,812 | |
Options Outstanding Weighted Average Remaining Contractual Life (Years) | 1 year 4 months 24 days | |
Weighted Average Exercise Price (in dollars per share) | $ 4.37 | |
Number exercisable | 18,812 | |
Options Exercisable Weighted Average Remaining Contractual Life (Years) | 1 year 4 months 24 days | |
Weighted Average Exercise Price (in dollars per share) | $ 4.37 | |
Exercise Price Range Three [Member] | ||
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items] | ||
Number outstanding | 2,090 | |
Options Outstanding Weighted Average Remaining Contractual Life (Years) | 2 years 4 months 24 days | |
Weighted Average Exercise Price (in dollars per share) | $ 4.29 | |
Number exercisable | 2,090 | |
Options Exercisable Weighted Average Remaining Contractual Life (Years) | 2 years 4 months 24 days | |
Weighted Average Exercise Price (in dollars per share) | $ 4.29 | |
Exercise Price Range Four [Member] | ||
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items] | ||
Number outstanding | 41,809 | |
Options Outstanding Weighted Average Remaining Contractual Life (Years) | 2 years 6 months | |
Weighted Average Exercise Price (in dollars per share) | $ 4.74 | |
Number exercisable | 41,809 | |
Options Exercisable Weighted Average Remaining Contractual Life (Years) | 2 years 6 months | |
Weighted Average Exercise Price (in dollars per share) | $ 4.74 | |
Exercise Price Range Five [Member] | ||
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items] | ||
Number outstanding | 49,120 | |
Options Outstanding Weighted Average Remaining Contractual Life (Years) | 3 years 3 months 18 days | |
Weighted Average Exercise Price (in dollars per share) | $ 7.86 | |
Number exercisable | 49,120 | |
Options Exercisable Weighted Average Remaining Contractual Life (Years) | 3 years 3 months 18 days | |
Weighted Average Exercise Price (in dollars per share) | $ 7.86 | |
Exercise Price Range Six [Member] | ||
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items] | ||
Number outstanding | 89,000 | |
Options Outstanding Weighted Average Remaining Contractual Life (Years) | 7 years 8 months 12 days | |
Weighted Average Exercise Price (in dollars per share) | $ 7.09 | |
Number exercisable | 59,334 | |
Options Exercisable Weighted Average Remaining Contractual Life (Years) | 7 years 8 months 12 days | |
Weighted Average Exercise Price (in dollars per share) | $ 7.09 | |
Exercise Price Range Seven [Member] | ||
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items] | ||
Number outstanding | 8,000 | |
Options Outstanding Weighted Average Remaining Contractual Life (Years) | 9 years 2 months 12 days | |
Weighted Average Exercise Price (in dollars per share) | $ 8.55 | |
Number exercisable | 0 | |
Weighted Average Exercise Price (in dollars per share) | $ 0 |
DIVIDENDS - (Details)
DIVIDENDS - (Details) - USD ($) | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2016 | |
DIVIDENDS | |||
Dividends Payable, Amount Per Share | $ 0.05 | $ 0.05 | |
Payments of Dividends | $ 632,000 | $ 723,000 | |
Common Stock, Dividends, Per Share, Cash Paid | $ 0.05 | $ 0.05 | |
Quarterly Cash Dividends Per Share Declared | 0.05 |
INCOME TAXES (Details)
INCOME TAXES (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Current: | ||
Federal | $ 1,078,000 | $ (39,000) |
State and local | 312,000 | 24,000 |
Foreign | 3,000 | 19,000 |
Total current | 1,393,000 | 4,000 |
Deferred: | ||
Federal | 513,000 | 268,000 |
State and local | (105,000) | (15,000) |
Foreign | (4,000) | (4,000) |
Total deferred | 404,000 | 249,000 |
Totals | $ 1,797,000 | $ 253,000 |
INCOME TAXES - Deferred tax ass
INCOME TAXES - Deferred tax assets (Details) - USD ($) | Dec. 31, 2019 | Dec. 31, 2018 |
Deferred tax assets: | ||
Bad debt reserves | $ 17,000 | $ 17,000 |
Inventory reserves | 653,000 | 615,000 |
Warranty and other reserves | 77,000 | 78,000 |
Stock-based compensation | 212,000 | 184,000 |
Goodwill | 866,000 | 940,000 |
Acquisition costs | 223,000 | 170,000 |
Net operating losses - federal | 0 | 340,000 |
Net operating losses - state | 77,000 | 91,000 |
Other | 20,000 | 18,000 |
Deferred Tax Assets | 2,145,000 | 2,453,000 |
Deferred tax (liabilities): | ||
Prepaid expenses | (79,000) | (373,000) |
Depreciation | (1,154,000) | (732,000) |
Intangibles | (696,000) | (720,000) |
Net deferred tax assets | $ 216,000 | $ 628,000 |
INCOME TAXES - Components of in
INCOME TAXES - Components of income (loss) before income tax (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
INCOME TAXES | ||
United States operations | $ 6,715,000 | $ 1,004,000 |
International operations | (7,000) | 105,000 |
Income before tax | $ 6,708,000 | $ 1,109,000 |
INCOME TAXES - Reconciliation o
INCOME TAXES - Reconciliation of tax rate (Details) | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
INCOME TAXES | |||
Federal income tax computed at statutory rates | 21.00% | 21.00% | 35.00% |
(Decrease) increase in taxes resulting from: | |||
State and local taxes, net of Federal tax benefit | 2.40% | 0.60% | |
Permanent differences - net | 3.10% | 5.20% | |
Foreign rate differential | 0.00% | (0.70%) | |
Tax Cuts and Jobs Act of 2017 | 0.00% | (3.40%) | |
Other | 0.30% | 0.10% | |
Income tax expense | 26.80% | 22.80% |
INCOME TAXES - Additional infor
INCOME TAXES - Additional information (Details) - USD ($) | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
INCOME TAXES | |||
Operating Loss Carryforwards | $ 4,112,000 | ||
Effective Income Tax Rate Reconciliation, at Federal Statutory Income Tax Rate, Percent | 21.00% | 21.00% | 35.00% |
Reduction in effective tax rate, percentage | 0.034 |
COMMITMENTS AND CONTINGENCIES -
COMMITMENTS AND CONTINGENCIES - Additional information (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
COMMITMENTS AND CONTINGENCIES. | ||
Defined Contribution Plan, Cost Recognized | $ 438,000 | $ 380,000 |
Purchase Obligation | 4,871,000 | $ 6,700,000 |
Operating Lease, Expense | $ 582,000 |