Company Quick10K Filing
National Presto Industries
Closing Price ($) Shares Out (MM) Market Cap ($MM)
$0.00 7 $779
10-Q 2019-11-22 Quarter: 2019-06-30
10-Q 2019-05-10 Quarter: 2019-03-31
10-K 2019-03-15 Annual: 2018-12-31
10-Q 2018-11-09 Quarter: 2018-09-30
10-Q 2018-08-10 Quarter: 2018-07-01
10-Q 2018-05-11 Quarter: 2018-04-01
10-K 2018-03-16 Annual: 2017-12-31
10-Q 2017-11-13 Quarter: 2017-10-01
10-Q 2017-08-11 Quarter: 2017-07-02
10-Q 2017-05-12 Quarter: 2017-04-02
10-K 2017-03-16 Annual: 2016-12-31
10-Q 2016-11-14 Quarter: 2016-10-02
10-Q 2016-08-12 Quarter: 2016-07-03
10-Q 2016-05-13 Quarter: 2016-04-03
10-K 2016-03-15 Annual: 2015-12-31
10-Q 2015-11-13 Quarter: 2015-10-04
10-Q 2015-08-14 Quarter: 2015-07-05
10-Q 2015-05-15 Quarter: 2015-04-05
10-K 2015-03-16 Annual: 2014-12-31
10-Q 2014-11-07 Quarter: 2014-09-28
10-Q 2014-08-08 Quarter: 2014-06-29
10-Q 2014-05-09 Quarter: 2014-03-30
10-K 2014-03-17 Annual: 2013-12-31
10-Q 2013-11-08 Quarter: 2013-09-29
10-Q 2013-08-09 Quarter: 2013-06-30
10-Q 2013-05-10 Quarter: 2013-03-31
10-K 2013-03-18 Annual: 2012-12-31
10-Q 2012-11-09 Quarter: 2012-09-30
10-Q 2012-08-10 Quarter: 2012-07-01
10-Q 2012-05-11 Quarter: 2012-04-01
10-K 2012-03-15 Annual: 2011-12-31
10-Q 2011-11-14 Quarter: 2011-10-02
10-Q 2011-08-12 Quarter: 2011-07-03
10-Q 2011-05-13 Quarter: 2011-04-03
10-K 2011-03-16 Annual: 2010-12-31
10-Q 2010-11-12 Quarter: 2010-10-02
10-Q 2010-08-12 Quarter: 2010-07-04
10-Q 2010-05-14 Quarter: 2010-04-04
10-K 2010-03-16 Annual: 2009-12-31
8-K 2019-08-15 Exhibits
8-K 2019-07-23 Other Events, Exhibits
8-K 2019-05-21 Officers, Shareholder Vote, Exhibits
8-K 2019-04-26 Earnings, Exhibits
8-K 2019-03-25 Other Events, Exhibits
8-K 2019-02-15 Earnings, Exhibits
8-K 2018-12-11 Officers, Exhibits
8-K 2018-10-26 Earnings, Exhibits
8-K 2018-10-17 Other Events, Exhibits
8-K 2018-09-26 Other Events, Exhibits
8-K 2018-07-27 Earnings, Exhibits
8-K 2018-05-15 Shareholder Vote, Exhibits
8-K 2018-04-27 Earnings, Exhibits
8-K 2018-04-19 Other Events, Exhibits
8-K 2018-02-26 Other Events, Exhibits
8-K 2018-02-09 Earnings, Exhibits
NPK 2019-06-30
Part I – Financial Information
Item 1. Financial Statements
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Item 4. Controls and Procedures
Part II - Other Information
Item 1. Legal Proceedings
Item 6. Exhibits
EX-31.1 npk-20190630xex31_1.htm
EX-31.2 npk-20190630xex31_2.htm
EX-32.1 npk-20190630xex32_1.htm
EX-32.2 npk-20190630xex32_2.htm

National Presto Industries Earnings 2019-06-30

NPK 10Q Quarterly Report

Balance SheetIncome StatementCash Flow

Comparables ($MM TTM)
Ticker M Cap Assets Liab Rev G Profit Net Inc EBITDA EV G Margin EV/EBITDA ROA
AAXN 4,398 746 257 448 265 15 29 4,177 59% 142.5 2%
RGR 953 321 45 446 117 41 93 921 26% 9.9 13%
MHO 795 2,089 1,185 2,395 130 110 166 775 5% 4.7 5%
NPK 779 377 46 310 69 38 54 718 22% 13.3 10%
CCS 772 2,410 1,513 2,367 0 76 113 737 0% 6.5 3%
MBUU 771 451 241 684 166 70 107 857 24% 8.0 15%
VSTO 470 1,861 1,266 1,989 397 -564 -439 1,208 20% -2.8 -30%
AOBC 450 772 329 623 222 9 75 519 36% 6.9 1%
WRTC

10-Q 1 npk-20190630x10q.htm 10-Q 20190630 10Q Q2_Taxonomy2018

 

 





UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

______________________________





FORM 10-Q

______________________________





  QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED June 30, 2019



  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM _____ TO _____



Commission file number 1-2451

______________________________





NATIONAL PRESTO INDUSTRIES, INC.

(Exact name of registrant as specified in its charter)



 



 

WISCONSIN

39-0494170

(State or other jurisdiction of incorporation

or organization)

(I.R.S. Employer Identification No.)



 

3925 NORTH HASTINGS WAY

 

EAU CLAIRE, WISCONSIN

54703-3703

(Address of principal executive offices)

(Zip Code)



(Registrant’s telephone number, including area code) 715-839-2121

______________________________



Securities registered pursuant to Section 12(b) of the Securities Exchange Act of 1934:



 

 

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Common Stock, $1 par value

NPK

NYSE



Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes No

 

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes   No



Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company.  See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.



 

 

 

 

 

 

 



 

 

 

 

 

 

 

Large accelerated filer

Accelerated filer

Non-accelerated filer

Smaller reporting company

Emerging growth company

 

 

 

 

 



If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.



Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  Yes    No



There were 6,996,981 shares of the Issuer’s Common Stock outstanding as of June 30, 2019.



 


 

 

 



 

 


 

 

 















3


 

 

 



PART I – FINANCIAL INFORMATION



ITEM 1. FINANCIAL STATEMENTS



NATIONAL PRESTO INDUSTRIES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

June 30, 2019 and December 31, 2018

(Dollars in thousands)





 

 

 

 

 

 

 

 

 

 



 

June 30, 2019 (Unaudited)

 

December 31, 2018

ASSETS

 

 

 

 

 

 

 

 

 

 

CURRENT ASSETS:

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

 

 

$

63,438 

 

 

 

$

56,847 

Marketable securities

 

 

 

 

91,517 

 

 

 

 

134,598 

Accounts receivable, net

 

 

 

 

36,746 

 

 

 

 

52,372 

Inventories:

 

 

 

 

 

 

 

 

 

 

Finished goods

 

$

33,070 

 

 

 

$

28,791 

 

 

Work in process

 

 

74,406 

 

 

 

 

59,580 

 

 

Raw materials

 

 

6,998 

 

114,474 

 

 

5,617 

 

93,988 

Assets held for sale

 

 

 

 

 -

 

 

 

 

375 

Notes receivable, current

 

 

 

 

7,327 

 

 

 

 

7,213 

Other current assets

 

 

 

 

6,270 

 

 

 

 

6,869 

Total current assets

 

 

 

 

319,772 

 

 

 

 

352,262 

PROPERTY, PLANT AND EQUIPMENT

 

$

99,269 

 

 

 

$

96,094 

 

 

Less allowance for depreciation

 

 

58,802 

 

40,467 

 

 

56,951 

 

39,143 

GOODWILL

 

 

 

 

11,485 

 

 

 

 

11,485 

INTANGIBLE ASSETS, net

 

 

 

 

1,000 

 

 

 

 

1,000 

NOTES RECEIVABLE

 

 

 

 

7,073 

 

 

 

 

6,966 

RIGHT-OF-USE LEASE ASSETS

 

 

 

 

3,715 

 

 

 

 

 -

DEFERRED INCOME TAXES

 

 

 

 

1,046 

 

 

 

 

1,088 

OTHER ASSETS

 

 

 

 

 -

 

 

 

 

1,674 



 

 

 

$

384,558 

 

 

 

$

413,618 



 

 

 

 

 

 

 

 

 

 

The accompanying notes are an integral part of the condensed consolidated financial statements.

 





4


 

 

 

NATIONAL PRESTO INDUSTRIES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

June 30, 2019 and December 31, 2018

(Dollars in thousands)





 

 

 

 

 

 

 

 

 

 



 

June 30, 2019 (Unaudited)

 

December 31, 2018

LIABILITIES AND STOCKHOLDERS' EQUITY

 

 

 

 

 

 

 

 

 

 



 

 

 

 

 

 

 

 

 

 

LIABILITIES

 

 

 

 

 

 

 

 

 

 

  CURRENT LIABILITIES:

 

 

 

 

 

 

 

 

 

 

Accounts payable

 

 

 

$

28,311 

 

 

 

$

34,100 

Federal and state income taxes

 

 

 

 

849 

 

 

 

 

1,384 

Lease liabilities

 

 

 

 

483 

 

 

 

 

 -

Accrued liabilities

 

 

 

 

12,484 

 

 

 

 

12,011 

  Total current liabilities

 

 

 

 

42,127 

 

 

 

 

47,495 

LEASE LIABILITIES - NON-CURRENT

 

 

 

 

3,232 

 

 

 

 

 -

COMMITMENTS AND CONTINGENCIES

 

 

 

 

 

 

 

 

 

 



 

 

 

 

 

 

 

 

 

 

STOCKHOLDERS' EQUITY

 

 

 

 

 

 

 

 

 

 

Common stock, $1 par value:

 

 

 

 

 

 

 

 

 

 

  Authorized: 12,000,000 shares

 

 

 

 

 

 

 

 

 

 

  Issued: 7,440,518 shares

 

$

7,441 

 

 

 

$

7,441 

 

 

Paid-in capital

 

 

10,914 

 

 

 

 

10,360 

 

 

Retained earnings

 

 

334,730 

 

 

 

 

362,709 

 

 

Accumulated other comprehensive loss

 

 

180 

 

 

 

 

21 

 

 



 

 

353,265 

 

 

 

 

380,531 

 

 

Treasury stock, at cost

 

 

14,066 

 

 

 

 

14,408 

 

 

     Total stockholders' equity

 

 

 

 

339,199 

 

 

 

 

366,123 



 

 

 

$

384,558 

 

 

 

$

413,618 



 

 

 

 

 

 

 

 

 

 

The accompanying notes are an integral part of the condensed consolidated financial statements.

 





















5


 

 

 



NATIONAL PRESTO INDUSTRIES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

Three and Six Months Ended June 30, 2019 and July 1, 2018

(Unaudited)

(In thousands except per share data)





 

 

 

 

 

 

 

 

 

 

 

 



 

Three Months Ended

 

Six Months Ended



 

2019

 

2018

 

2019

 

2018

Net sales

 

$

71,745 

 

$

79,227 

 

$

135,595 

 

$

156,053 

Cost of sales

 

 

57,069 

 

 

59,782 

 

 

108,427 

 

 

116,331 

  Gross profit

 

 

14,676 

 

 

19,445 

 

 

27,168 

 

 

39,722 

Selling and general expenses

 

 

6,039 

 

 

5,631 

 

 

12,483 

 

 

11,782 

Intangibles amortization

 

 

 -

 

 

1,416 

 

 

 -

 

 

2,161 

  Operating profit

 

 

8,637 

 

 

12,398 

 

 

14,685 

 

 

25,779 

Other income

 

 

1,638 

 

 

997 

 

 

3,270 

 

 

1,892 

  Earnings from continuing operations before provision for income taxes

 

 

10,275 

 

 

13,395 

 

 

17,955 

 

 

27,671 

Provision for income taxes from continuing operations

 

 

2,122 

 

 

2,619 

 

 

3,851 

 

 

5,901 

  Earnings from continuing operations

 

$

8,153 

 

$

10,776 

 

$

14,104 

 

$

21,770 

  Earnings (loss) from discontinued operations, net of tax

 

 

 

 

(1)

 

 

 

 

(9)

     Net earnings

 

$

8,156 

 

$

10,775 

 

$

14,107 

 

$

21,761 



 

 

 

 

 

 

 

 

 

 

 

 

Weighted average shares outstanding:

 

 

 

 

 

 

 

 

 

 

 

 

  Basic and diluted

 

 

7,019 

 

 

7,006 

 

 

7,016 

 

 

7,002 



 

 

 

 

 

 

 

 

 

 

 

 

Earnings per share, basic and diluted:

 

 

 

 

 

 

 

 

 

 

 

 

  From continuing operations

 

$

1.16 

 

$

1.54 

 

$

2.01 

 

$

3.11 

  From discontinued operations

 

 

0.00 

 

 

0.00 

 

 

0.00 

 

 

0.00 

     Net earnings per share

 

$

1.16 

 

$

1.54 

 

$

2.01 

 

$

3.11 



 

 

 

 

 

 

 

 

 

 

 

 

Comprehensive income:

 

 

 

 

 

 

 

 

 

 

 

 

  Net earnings

 

$

8,156 

 

$

10,775 

 

$

14,107 

 

$

21,761 

  Other comprehensive income, net of tax:

 

 

 

 

 

 

 

 

 

 

 

 

     Unrealized gain on available-for-sale securities

 

 

89 

 

 

21 

 

 

158 

 

 

65 

Comprehensive income

 

$

8,245 

 

$

10,796 

 

$

14,265 

 

$

21,826 



 

 

 

 

 

 

 

 

 

 

 

 

Cash dividends declared and paid per common share

 

$

0.00 

 

$

0.00 

 

$

6.00 

 

$

6.00 



 

 

 

 

 

 

 

 

 

 

 

 

The accompanying notes are an integral part of the condensed consolidated financial statements.



















6


 

 

 



NATIONAL PRESTO INDUSTRIES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

Six Months Ended June  30, 2019 and July 1, 2018

(Unaudited)

(Dollars in thousands)













 

 

 

 

 

 



 

2019

 

2018

Cash flows from operating activities:

 

 

 

 

 

 

Net earnings

 

$

14,107 

 

$

21,761 

Adjustments to reconcile net earnings to net cash provided by operating activities:

 

 

 

 

 

 

  Provision for depreciation

 

 

1,899 

 

 

2,057 

  Intangibles amortization

 

 

 -

 

 

2,161 

  Provision for doubtful accounts

 

 

 -

 

 

12 

  Non-cash retirement plan expense

 

 

359 

 

 

379 

  Other

 

 

65 

 

 

139 

  Changes in operating accounts:

 

 

 

 

 

 

     Accounts receivable, net

 

 

15,626 

 

 

21,469 

     Inventories

 

 

(20,486)

 

 

6,791 

     Other assets and current assets

 

 

2,273 

 

 

275 

     Accounts payable and accrued liabilities

 

 

(5,406)

 

 

(847)

     Federal and state income taxes

 

 

(577)

 

 

(4,371)

        Net cash provided by operating activities

 

 

7,860 

 

 

49,826 



 

 

 

 

 

 

Cash flows from investing activities:

 

 

 

 

 

 

Marketable securities purchased

 

 

(95,301)

 

 

(59,771)

Marketable securities - maturities and sales

 

 

138,583 

 

 

74,666 

Proceeds from divestiture of business, net of cash paid

 

 

 -

 

 

3,660 

Purchase of property, plant and equipment

 

 

(3,566)

 

 

(4,001)

Proceeds from insurance settlement

 

 

807 

 

 

2,474 

Sale of property, plant and equipment

 

 

 -

 

 

  Net cash provided by investing activities

 

 

40,523 

 

 

17,029 



 

 

 

 

 

 

Cash flows from financing activities:

 

 

 

 

 

 

Dividends paid

 

 

(42,087)

 

 

(41,989)

Proceeds from sale of treasury stock

 

 

518 

 

 

528 

Other

 

 

(223)

 

 

(6)

  Net cash used in financing activities

 

 

(41,792)

 

 

(41,467)



 

 

 

 

 

 

Net increase in cash and cash equivalents

 

 

6,591 

 

 

25,388 

Cash and cash equivalents at beginning of period

 

 

56,847 

 

 

11,222 

Cash and cash equivalents at end of period

 

$

63,438 

 

$

36,610 



 

 

 

 

 

 

The accompanying notes are an integral part of the condensed consolidated financial statements.

























7


 

 

 



NATIONAL PRESTO INDUSTRIES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

Three Months Ended June 30, 2019 and July 1, 2018

(Unaudited)

(In thousands except per share data)







 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 



Shares of Common Stock Outstanding

 

 

Common Stock

 

 

Paid-in Capital

 

 

Retained  Earnings

 

 

Accumulated Comprehensive Income (Loss)

 

 

Treasury Stock

 

 

Total

Balance April 1, 2018

6,977 

 

$

7,441 

 

$

9,640 

 

$

333,754 

 

$

(42)

 

$

(14,535)

 

$

336,258 

Net earnings

 

 

 

 

 

 

 

 

 

10,775 

 

 

 

 

 

 

 

 

10,775 

Unrealized gain on available-for-sale securities, net of tax

 

 

 

 

 

 

 

 

 

 

 

 

21 

 

 

 

 

 

21 

Other

 

 

 

 

 

249 

 

 

 

 

 

 

 

 

44 

 

 

293 

Balance July 1, 2018

6,978 

 

$

7,441 

 

$

9,889 

 

$

344,529 

 

$

(21)

 

$

(14,491)

 

$

347,347 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance March 31, 2019

6,995 

 

$

7,441 

 

$

10,692 

 

$

326,574 

 

$

90 

 

$

(14,128)

 

$

330,669 

Net earnings

 

 

 

 

 

 

 

 

 

8,156 

 

 

 

 

 

 

 

 

8,156 

Unrealized gain on available-for-sale securities, net of tax

 

 

 

 

 

 

 

 

 

 

 

 

89 

 

 

 

 

 

89 

Other

 

 

 

 

 

222 

 

 

 

 

 

 

 

62 

 

 

285 

Balance June 30, 2019

6,997 

 

$

7,441 

 

$

10,914 

 

$

334,730 

 

$

180 

 

$

(14,066)

 

$

339,199 



The accompanying notes are an integral part of the Condensed Consolidated Financial Statements.

8


 

 

 

NATIONAL PRESTO INDUSTRIES, INC.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

Six Months Ended June 30, 2019 and July 1, 2018

(Unaudited)

(In thousands except per share data)







 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 



Shares of Common Stock Outstanding

 

 

Common Stock

 

 

Paid-in Capital

 

 

Retained  Earnings

 

 

Accumulated Comprehensive Income (Loss)

 

 

Treasury Stock

 

 

Total

Balance December 31, 2017

6,968 

 

$

7,441 

 

$

9,074 

 

$

364,757 

 

$

(86)

 

$

(14,810)

 

$

366,376 

Net earnings

 

 

 

 

 

 

 

 

 

21,761 

 

 

 

 

 

 

 

 

21,761 

Unrealized gain on available-for-sale securities, net of tax

 

 

 

 

 

 

 

 

 

 

 

 

65 

 

 

 

 

 

65 

Dividends paid March 15, $1.00 per share regular, $5.00 per share extra

 

 

 

 

 

 

 

 

 

(41,989)

 

 

 

 

 

 

 

 

(41,989)

Other

10 

 

 

 

 

 

815 

 

 

 

 

 

 

 

 

319 

 

 

1,134 

Balance July 1, 2018

6,978 

 

$

7,441 

 

$

9,889 

 

$

344,529 

 

$

(21)

 

$

(14,491)

 

$

347,347 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance December 31, 2018

6,981 

 

$

7,441 

 

$

10,360 

 

$

362,709 

 

$

21 

 

$

(14,408)

 

$

366,123 

Net earnings

 

 

 

 

 

 

 

 

 

14,107 

 

 

 

 

 

 

 

 

14,107 

Unrealized gain on available-for-sale securities, net of tax

 

 

 

 

 

 

 

 

 

 

 

 

158 

 

 

 

 

 

158 

Dividends paid March 15, $1.00 per share regular, $5.00 per share extra

 

 

 

 

 

 

 

 

 

(42,087)

 

 

 

 

 

 

 

 

(42,087)

Other

16 

 

 

 

 

 

554 

 

 

 

 

 

 

342 

 

 

898 

Balance June 30, 2019

6,997 

 

$

7,441 

 

$

10,914 

 

$

334,730 

 

$

180 

 

$

(14,066)

 

$

339,199 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

The accompanying notes are an integral part of the Condensed Consolidated Financial Statements.



















 

9


 

 

 

NATIONAL PRESTO INDUSTRIES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)



NOTE A – BASIS OF PRESENTATION 

The consolidated interim financial statements included herein are unaudited and have been prepared by the Company pursuant to the rules and regulations of the United States Securities and Exchange Commission (“SEC”). In the opinion of management of the Company, the consolidated interim financial statements reflect all the adjustments which were of a normal recurring nature necessary for a fair presentation of the results of the interim periods.  The condensed consolidated balance sheet as of December 31, 2018 is summarized from audited consolidated financial statements, but does not include all the disclosures contained therein and should be read in conjunction with the 2018 Annual Report on Form 10-K.  Interim results for the period are not indicative of those for the year.



On January 3, 2017, the Company and its wholly-owned subsidiary, Presto Absorbent Products, Inc. (“PAPI”), entered into an asset purchase agreement wherein substantially all PAPI assets were sold and certain liabilities were assigned to Drylock Technologies, LTD. (“Drylock”) in exchange for $68,448,000.  The proceeds amount differs from the amount originally disclosed because of the customary post-closing adjustments that were finalized during the second quarter of 2017, totaling $1,448,000.  The asset purchase agreement also provided for additional proceeds of $4,000,000 upon the sale of certain delayed assets, consisting of machinery and equipment that were the subject of an involuntary conversion. The sale of the delayed assets was consummated during the second quarter of 2018 and resulted in no gain or loss.  As a result of aforementioned transactions, the Company classified its results of operations for all periods presented to reflect its Absorbent Products business as a discontinued operation and classified the assets and liabilities of its Absorbent Products business as held for sale.  See Note K for further discussion.



NOTE B – RECLASSIFICATIONS

Certain reclassifications have been made to the prior periods’ financial statements to conform to the current period’s financial statement presentation.  These reclassifications did not affect net earnings or stockholders’ equity as previously reported.



NOTE C – REVENUES

The Company’s revenues are derived from short-term contracts and programs that are typically completed within 3 to 24 months and are recognized in accordance with ASC Topic 606, Revenue from Contracts with Customers. The Company’s contracts each contain one or more performance obligations: the physical delivery of distinct ordered product or products.  The Company provides an assurance type product warranty on its products to the original owner.  In addition, for the Housewares/Small Appliances segment, the Company estimates returns of seasonal products and returns of newly introduced products sold with a return privilege.  Stand-alone selling prices are set forth in each contract and are used to allocate revenue to the corresponding performance obligations.  For the Housewares/Small Appliances segment, contracts include variable consideration, as the prices are subject to customer allowances, which principally consist of allowances for cooperative advertising, defective product, and trade discounts.  Customer allowances are generally allocated to the performance obligations based on budgeted rates agreed upon with customers, as well as historical experience, and yield the Company’s best estimate of the expected value for the variable consideration.



The Company's contracts in the Defense segment are primarily with the U.S. Department of Defense (DOD) and DOD prime contractors. As a consequence, this segment's business essentially depends on the product needs and governmental funding of the DOD. Substantially all of the work performed by the Defense segment directly or indirectly for the DOD is performed on a fixed-price basis. Under fixed-price contracts, the price paid to the contractor is awarded based on competition at the outset of the contract and therefore, with the exception of limited escalation provisions on specific materials, is generally not subject to any adjustments reflecting the actual costs incurred by the contractor.



For the Housewares/Small Appliance segment, revenue is generally recognized as the completed, ordered product is shipped to the customer from the Company’s warehouses.  For the relatively few situations in which revenue should be recognized when product is received by the customer, the Company adjusts revenue accordingly.  For the Defense segment, revenue is primarily recognized when the customer has legal title and formally documents that it has accepted the products.  In some situations, the customer may obtain legal title and accept the products at the Company’s facilities, arranging for transportation at a later date, typically in one to four weeks.  The Company does not consider the short-term storage of the customer owned products to be a material performance obligation, and no part of the transaction price is allocated to it.



10


 

 

 

The timing of revenue recognition, billings, and cash collections results in billed accounts receivable, and customer advances and deposits (contract liabilities) on the Company’s Condensed Consolidated Balance Sheets. For the Defense segment, the Company occasionally receives advances or deposits from certain customers before revenue is recognized, resulting in contract liabilities.  These advances or deposits do not represent a significant financing component.  As of June 30, 2019 and December 31, 2018,  $8,322,000 and $9,579,000, respectively, of contract liabilities were included in Accounts Payable on the Company’s Condensed Consolidated Balance Sheets.  The Company recognized revenue of $2,443,000 during the six-month period ended June 30, 2019 that was included in the Defense segment contract liability at the beginning of that period. The Company monitors its estimates of variable consideration, which includes customer allowances for cooperative advertising, defective product, and trade discounts, and returns of seasonal and newly introduced product, all of which pertain to the Housewares/Small Appliances segment, and periodically makes cumulative adjustments to the carrying amounts of these contract liabilities as appropriate.  During the three and six month periods ended June 30, 2019 and July 1, 2018, the Company reduced its estimate of returns of seasonal and newly introduced product by $265,000 and $421,000, respectively.    There were no other material adjustments to the aforementioned estimates during the same periods.  There were no amounts of revenue recognized during the same periods related to performance obligations satisfied in a previous period.  The portion of contract transaction prices allocated to unsatisfied performance obligations, also known as the contract backlog, in the Company’s Defense segment were $366,244,000 and $333,592,000 as of June 30, 2019 and December 31, 2018, respectively.  The Company anticipates that the unsatisfied performance obligations will be fulfilled in an 18 to 24-month period.  The performance obligations in the Housewares/Small Appliances segment have original expected durations of less than one year.



The Company’s principal sources of revenue are derived from two segments: Housewares/Small Appliance and Defense, as shown in Note E. Management utilizes the performance measures by segment to evaluate the financial performance of and make operating decisions for the Company.



NOTE D – EARNINGS PER SHARE 

Basic earnings per share is based on the weighted average number of common shares and participating securities outstanding during the period.  Diluted earnings per share also includes the dilutive effect of additional potential common shares issuable.  Unvested stock awards, which contain non-forfeitable rights to dividends whether paid or unpaid (“participating securities”), are included in the number of shares outstanding for both basic and diluted earnings per share calculations. 

11


 

 

 



NOTE E – BUSINESS SEGMENTS 

In the following summary, operating profit represents earnings before other income and income taxes.  The Company's segments operate discretely from each other with no shared manufacturing facilities.  Costs associated with corporate activities (such as cash and marketable securities management) and the assets associated with such activities are included within the Housewares/Small Appliances segment for all periods presented.





 

 

 

 

 

 

 

 

 

 

 

 



 

 

 

 

 

 

 

 

 

 

 

 



 

(in thousands)



 

Housewares / Small Appliances

 

Defense Products

 

Assets Held for Sale

 

Total

Quarter ended June 30, 2019

 

 

 

 

 

 

 

 

 

 

 

 

External net sales

 

$

19,148 

 

$

52,597 

 

$

 

 

$

71,745 

Gross profit

 

 

2,055 

 

 

12,621 

 

 

 

 

 

14,676 

Operating profit (loss)

 

 

(1,333)

 

 

9,970 

 

 

 

 

 

8,637 

Total assets

 

 

240,759 

 

 

143,799 

 

 

 -

 

 

384,558 

Depreciation and amortization

 

 

370 

 

 

581 

 

 

 

 

 

951 

Capital expenditures

 

 

(101)

 

 

817 

 

 

 

 

 

716 



 

 

 

 

 

 

 

 

 

 

 

 

Quarter ended July 1, 2018

 

 

 

 

 

 

 

 

 

 

 

 

External net sales

 

$

17,978 

 

$

61,249 

 

$

 

 

$

79,227 

Gross profit

 

 

2,248 

 

 

17,197 

 

 

 

 

 

19,445 

Operating profit (loss)

 

 

(298)

 

 

12,696 

 

 

 

 

 

12,398 

Total assets

 

 

247,352 

 

 

141,656 

 

 

528 

 

 

389,536 

Depreciation and amortization

 

 

332 

 

 

2,089 

 

 

 

 

 

2,421 

Capital expenditures

 

 

3,203 

 

 

297 

 

 

 

 

 

3,500 



 

 

 

 

 

 

 

 

 

 

 

 



 

 

 

 

 

 

 

 

 

 

 

 



 

 

 

 

 

 

 

 

 

 

 

 



 

(in thousands)



 

Housewares / Small Appliances

 

Defense Products

 

Assets Held for Sale

 

Total

Six Months ended June 30, 2019

 

 

 

 

 

 

 

 

 

 

 

 

External net sales

 

$

38,857 

 

$

96,738 

 

$

 

 

$

135,595 

Gross profit

 

 

4,239 

 

 

22,929 

 

 

 

 

 

27,168 

Operating profit (loss)

 

 

(2,862)

 

 

17,547 

 

 

 

 

 

14,685 

Total assets

 

 

240,759 

 

 

143,799 

 

 

 -

 

 

384,558 

Depreciation and amortization

 

 

736 

 

 

1,163 

 

 

 

 

 

1,899 

Capital expenditures

 

 

129 

 

 

3,095 

 

 

 

 

 

3,224 



 

 

 

 

 

 

 

 

 

 

 

 

Six Months ended July 1, 2018

 

 

 

 

 

 

 

 

 

 

 

 

External net sales

 

$

34,035 

 

$

122,018 

 

$

 

 

$

156,053 

Gross profit

 

 

4,147 

 

 

35,575 

 

 

 

 

 

39,722 

Operating profit (loss)

 

 

(1,173)

 

 

26,952 

 

 

 

 

 

25,779 

Total assets

 

 

247,352 

 

 

141,656 

 

 

528 

 

 

389,536 

Depreciation and amortization

 

 

668 

 

 

3,550 

 

 

 

 

 

4,218 

Capital expenditures

 

 

4,912 

 

 

378 

 

 

 

 

 

5,290 



 

 

 

 

 

 

 

 

 

 

 

 

12


 

 

 

















NOTE F - FAIR VALUE OF FINANCIAL INSTRUMENTS

The Company utilizes the methods of fair value as described in Financial Accounting Standard Board (“FASB”) Accounting Standard Codification (“ASC”) 820, Fair Value Measurements and Disclosures, to value its financial assets and liabilities. ASC 820 utilizes a three-tier fair value hierarchy which prioritizes the inputs used in measuring fair value. These tiers include: Level 1, defined as observable inputs such as quoted prices in active markets; Level 2, defined as inputs other than quoted prices in active markets that are either directly or indirectly observable; and Level 3, defined as unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions.



The carrying amounts for cash and cash equivalents, accounts receivable, notes receivable, accounts payable, and accrued liabilities approximate fair value due to the immediate or short-term maturity of these financial instruments. 



NOTE G - CASH, CASH EQUIVALENTS AND MARKETABLE SECURITIES 

The Company considers all highly liquid marketable securities with an original maturity of three months or less to be cash equivalents.  Cash equivalents include money market funds.  The Company deposits its cash in high quality financial institutions.  The balances, at times, may exceed federally insured limits.  Money market funds are reported at fair value determined using quoted prices in active markets for identical securities (Level 1, as defined by FASB ASC 820).



The Company has classified all marketable securities as available-for-sale which requires the securities to be reported at estimated fair value, with unrealized gains and losses, net of tax, reported as a separate component of stockholders' equity.  Highly liquid, tax-exempt variable rate demand notes with put options exercisable in three months or less are classified as marketable securities.



At June 30, 2019 and December 31, 2018, cost for marketable securities was determined using the specific identification method.  A summary of the amortized costs and fair values of the Company’s marketable securities at the end of the periods presented is shown in the following table.  All of the Company’s marketable securities are classified as Level 2, as defined by FASB ASC 820, with fair values determined using significant other observable inputs, which include quoted prices in markets that are not active, quoted prices of similar securities, recently executed transactions, broker quotations, and other inputs that are observable.





 

 

 

 

 

 

 

 

 

 

 

 



 

 

 

 

 

 

 

 

 

 

 

 



 

(In Thousands)



 

MARKETABLE SECURITIES



 

Amortized Cost

 

Fair Value

 

Gross Unrealized Gains

 

Gross Unrealized Losses

June 30, 2019

 

 

 

 

 

 

 

 

 

 

 

 

Tax-exempt  Municipal Bonds

 

$

51,541 

 

$

51,768 

 

$

227 

 

$

 -

Variable Rate Demand Notes

 

 

39,749 

 

 

39,749 

 

 

 -

 

 

 -

Total Marketable Securities

 

$

91,290 

 

$

91,517 

 

$

227 

 

$

 -



 

 

 

 

 

 

 

 

 

 

 

 

December 31, 2018

 

 

 

 

 

 

 

 

 

 

 

 

Tax-exempt Municipal Bonds

 

$

40,156 

 

$

40,182 

 

$

44 

 

$

18 

Variable Rate Demand Notes

 

 

94,416 

 

 

94,416 

 

 

 -

 

 

 -

Total Marketable Securities

 

$

134,572 

 

$

134,598 

 

$

44 

 

$

18 



Proceeds from maturities and sales of available-for-sale securities totaled $55,319,000 and $11,353,000 for the three month periods ended June 30, 2019 and July 1, 2018, respectively, and totaled $138,583,000 and $74,666,000 for the six month periods then ended, respectively.  There were no gross gains or losses related to sales of marketable securities during the same periods.  Net unrealized gains included in other comprehensive income were $112,000 and $27,000 before taxes for the three month periods ended June 30, 2019 and July 1, 2018, respectively, and were $201,000 and $82,000 before taxes for the six month periods then ended, respectively.  No unrealized gains or losses were reclassified out of accumulated other comprehensive income during the same periods.



13


 

 

 

The contractual maturities of the marketable securities held at June 30, 2019 are as follows: $29,684,000 within one year; $21,305,000 beyond one year to five years; $4,148,000 beyond five years to ten years, and $36,380,000 beyond ten years. All of the instruments in the beyond five year ranges are variable rate demand notes which can be tendered for cash at par plus interest within seven days.  Despite the stated contractual maturity date, to the extent a tender is not honored, the notes become immediately due and payable.



NOTE H – OTHER ASSETS

Other Assets includes prepayments that are made from time to time by the Company for certain materials used in the manufacturing process in the Housewares/Small Appliances segment.  The Company expects to utilize the prepayments and related materials over an estimated period of up to two years.  As of June 30, 2019 and December 31, 2018, $4,307,000 and $6,864,000 of such prepayments, respectively, remained unused and outstanding.  At June 30, 2019 and December 31, 2018, $4,307,000 and  $5,190,000, respectively were included in Other Current Assets, representing the Company’s best estimate of the expected utilization of the prepayments and related materials during the twelve-month periods following those dates.



NOTE I – LEASES

The Company accounts for leases under ASC Topic 842, Leases, which was adopted on January 1, 2019.  The Company’s leasing activities include roles as both lessee and lessor.  As lessee, the Company’s primary leasing activities include buildings and structures to support its manufacturing operations at one location in its Defense segment, and warehouse space and equipment to support its distribution center operations in its Housewares/Small Appliances segment.  As lessor, the Company’s primary leasing activity is comprised of manufacturing and office space located adjacent to its corporate offices.  All of the Company’s leases are classified as operating leases.



The Company’s leases as lessee in its Defense segment provide for variable lease payments that are based on changes in the Consumer Price Index.  As lessor, the Company’s primary lease also provides for variable lease payments that are based on changes in the Consumer Price Index, as well as on increases in costs of insurance, real estate taxes, and utilities related to the leased space. Generally, all of the Company’s lease contracts provide for options to extend and terminate them.  The majority of lease terms of the Company’s lease contracts reflect extension options, while none reflect termination options.  



The Company has determined that the rates implicit in its leases are not readily determinable and estimates its incremental borrowing rates utilizing quotes from financial institutions for real estate and equipment, as applicable, over periods of time similar to the terms of its leases. The Company has entered into various short-term leases as lessee and has elected a non-recognition accounting policy, as permitted by ASC Topic 842.







 

 

 

 



 

 

 

 



3 Months Ending

6 Months Ending

Summary of Lease Cost (in thousands)

June 30, 2019

June 30, 2019

Operating lease cost

$

168 

$

336 

Sort-term and variable lease cost

 

57 

 

80 

Total lease cost

$

225 

$

416 





Operating cash used for operating leases was $225,000 and $416,000 for the three and six months ended June  30, 2019, respectively.  The weighted-average remaining lease term was 8.02 years, and the weighted-average discount rate was 5.5% as of June  30, 2019.



Maturities of operating lease liabilities are as follows:





 

 



 

 

Years ending December 31:

(In thousands)

2019 (remaining six months)

$

336 

2020

 

655 

2021

 

644 

2022

 

648 

2023

 

531 

Thereafter

 

1,823 

  Total lease payments

$

4,637 

Less: future interest expense

 

922 

14


 

 

 

  Lease liabilities

$

3,715 



Lease income from operating lease payments for the quarter ended June  30, 2019 was $444,000.  Undiscounted cash flows provided by lease payments are expected as follows:







 

 

Years ending December 31:

(In thousands)

2019 (remaining six months)

$

887 

2020

 

1,761 

2021

 

1,755 

2022

 

1,755 

2023

 

1,755 

Thereafter

 

15,795 

  Total lease payments

$

23,708 



The Company considers risk associated with the residual value of its leased real property to be low, given the nature of the long-term lease agreement, the Company’s ability to control the maintenance of the property, and the creditworthiness of the lessee.  The residual value risk is further mitigated by the long-lived nature of the property, and the propensity of such assets to hold their value or, in some cases, appreciate in value.





NOTE J – COMMITMENTS AND CONTINGENCIES

The Company is involved in largely routine litigation incidental to its business.  Management believes the ultimate outcome of the litigation will not have a material effect on the Company's consolidated financial position, liquidity, or results of operations.



NOTE K – DISCONTINUED OPERATIONS

On January 3, 2017, the Company and its wholly-owned subsidiary, Presto Absorbent Products, Inc. (“PAPI”), entered into an asset purchase agreement wherein substantially all PAPI assets were sold and certain liabilities were assigned to Drylock Technologies, LTD. (“Drylock”) in exchange for $68,448,000. The proceeds amount differs from the amount originally disclosed because of the customary post-closing adjustments that were finalized during the second quarter of 2017, totaling $1,448,000.  The asset purchase agreement also provided for additional proceeds of $4,000,000 upon the sale of certain delayed assets, consisting of machinery and equipment that were the subject of an involuntary conversion.  The sale of the delayed assets was consummated during the second quarter of 2018 and resulted in no gain or loss.  As a result of the aforementioned transactions, the Company classified its results of operations for all periods presented to reflect its Absorbent Products business as a discontinued operation and classified the assets and liabilities of its Absorbent Products business as held for sale. The Company’s pre-tax gain on sale of $11,413,000, net of one-time transaction costs, was recorded in 2017 within earnings from discontinued operations.  This amount differs from the gain previously reported as a result of the post-closing adjustments mentioned above that were finalized in the second quarter of 2017.



The following table summarizes the results of the Absorbent Products business within discontinued operations for each of the periods presented:







 

 

 

 

 

 

 

 

 

 

 



 

 

 

 

 

 

 

 

 

 

 



Three Months Ended