XML 26 R15.htm IDEA: XBRL DOCUMENT v3.21.2
Inventories
 9 Months Ended
Sep. 30, 2021
Inventories [Abstract]  
Inventories
Note 6. Inventories
Effective January 1, 2021, the Company changed its method of accounting for inventory from the LIFO method to the FIFO method. Costs determined using the LIFO method were utilized on approximately 45.1% of inventories at December 31, 2020, prior to this change in method, and consisted primarily of tobacco inventory. The Company believes the FIFO method is preferable because it: (i) conforms the accounting for all inventory with the method utilized for the majority of its inventory; (ii) better represents how management assesses and reports on the performance of the tobacco and other LIFO product lines as LIFO is excluded from management’s economic decision making; (iii) better aligns the accounting with the physical flow of that inventory; and (iv) better reflects inventory at more current costs.
The Company applied this change retrospectively to all prior periods presented. This change resulted in a $4.5 million increase in Accumulated earnings as of December 31, 2020, from $12.1 million to $16.6 million and a $4.3 million decrease in Accumulated deficit as of December 31, 2019, from $15.3 million to $11.0 million. In addition, the following financial statement line items in the Company’s Consolidated Balance Sheets as of December 31, 2020 and its Consolidated Statements of Income and Consolidated Statements of Cash Flows for the three and nine months ended September 30, 2020 were adjusted as follows:
Consolidated Statement of Income
  
For the three months ended
September 30, 2020
  
   
As Originally Reported
    
Effect of LIFO Change
    
As Adjusted
  
Cost of sales
  
$
55,867
    
$
-
    
$
55,867
  
Income before income taxes
  
$
9,612
    
$
-
 
$
9,612
  
Income tax expense
  
$
1,816
    
$
-
    
$
1,816
  
Net income attributable to Turning Point Brands, Inc.
  
$
7,796
    
$
-
 
$
7,796
  
Earnings per common share:
                        
Basic
  
$
0.41
    
$
-
 
$
0.41
  
Diluted
  
$
0.40
    
$
-
 
$
0.40
  


 
For the nine months ended
September 30, 2020
  
   
As Originally Reported
    
Effect of LIFO Change
    
As Adjusted
  
Cost of sales
  
$
161,996
    
$
156
    
$
162,152
  
Income before income taxes
  
$
26,327
    
$
(156
)
  
$
26,171
  
Income tax expense
  
$
6,029
    
$
-
    
$
6,029
  
Net income attributable to Turning Point Brands, Inc.
  
$
20,298
    
$
(156
)
  
$
20,142
  
Earnings per common share:
                        
Basic
  
$
1.04
    
$
(0.01
)
  
$
1.03
  
Diluted
  
$
1.02
    
$
(0.01
)
  
$
1.01
  

Consolidated Balance Sheets
  
December 31, 2020
  
   
As Originally Reported
    
Effect of LIFO Change
    
As Adjusted
  
Inventories
  
$
79,750
    
$
6,106
    
$
85,856
  
Deferred income taxes
  
$
4,082
    
$
1,584
    
$
5,666
  
Accumulated earnings (deficit)
  
$
12,058
    
$
4,522
    
$
16,580
  

Consolidated Statement of Cash Flows
  
For the nine months ended
September 30, 2020
  
   
As Originally Reported
    
Effect of LIFO Change
    
As Adjusted
  
Consolidated net income
  
$
20,298
    
$
(156
)
  
$
20,142
  
Deferred income taxes
  
$
876
    
$
-
    
$
876
  
Inventories
  
$
(2,364
)
  
$
156
    
$
(2,208
)

The components of inventories are as follows:

 
September 30,
2021
    
December 31,
2020
  
Raw materials and work in process
  
$
6,892
    
$
8,137
  
Leaf tobacco
    
38,151
      
32,948
  
Finished goods - Zig-Zag Products
    
26,839
      
14,903
  
Finished goods - Stoker’s Products
    
11,666
      
9,727
  
Finished goods - NewGen products
    
13,554
      
18,916
  
Other
    
1,503
      
1,225
  
Inventories
  
$
98,605
    
$
85,856
  

The inventory valuation allowance was $6.8 million and $9.9 million as of September 30, 2021, and December 31, 2020, respectively.