|
CONNECTICUT
|
06-0236700
|
(State or other jurisdiction of incorporation or organization)
|
(I.R.S. Employer Identification No.)
|
60 ROUND HILL ROAD, FAIRFIELD, CONNECTICUT
|
06824
|
(Address of principal executive offices)
|
(Zip Code)
|
Page | ||||
Part I — FINANCIAL INFORMATION
|
||||
Item 1. | Financial Statements (Unaudited) | |||
Condensed Consolidated Balance Sheets as of September 30, 2011 and
December 31, 2010
|
3 | |||
Condensed Consolidated Statements of Operations for the three and
nine months ended September 30, 2011 and 2010
|
5 | |||
Condensed Consolidated Statements of Cash Flows for the nine months
ended September 30, 2011 and 2010
|
6 | |||
Notes to Condensed Consolidated Financial Statements
|
7 | |||
Item 2. |
Management’s Discussion and Analysis of Financial Condition
and Results of Operations
|
12 | ||
Item 3. | Quantitative and Qualitative Disclosure About Market Risk | 15 | ||
Item 4. | Controls and Procedures | 15 | ||
Part II — OTHER INFORMATION
|
||||
Item 1. | Legal Proceedings | 16 | ||
Item 1A. | Risk Factors | 16 | ||
Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds | 16 | ||
Item 3. | Defaults Upon Senior Securities | 16 | ||
Item 4. | Removed and reserved | 16 | ||
Item 5. | Other Information | 16 | ||
Item 6. | Exhibits | 17 | ||
Signatures | 18 |
ACME UNITED CORPORATION
|
CONDENSED CONSOLIDATED BALANCE SHEETS
|
(all amounts in thousands)
|
September 30,
|
December 31,
|
|||||||
2011
|
2010
|
|||||||
(unaudited)
|
(Note 1)
|
|||||||
ASSETS
|
||||||||
Current assets:
|
||||||||
Cash and cash equivalents
|
$ | 6,270 | $ | 6,601 | ||||
Accounts receivable, less allowance
|
16,661 | 12,331 | ||||||
Inventories:
|
||||||||
Finished goods
|
21,821 | 21,109 | ||||||
Work in process
|
71 | 172 | ||||||
Raw materials and supplies
|
912 | 1,012 | ||||||
22,804 | 22,293 | |||||||
Prepaid expenses and other current assets
|
1,075 | 1,403 | ||||||
Total current assets
|
46,810 | 42,628 | ||||||
Property, plant and equipment:
|
||||||||
Land
|
295 | 160 | ||||||
Buildings
|
2,465 | 2,438 | ||||||
Machinery and equipment
|
9,546 | 8,905 | ||||||
12,306 | 11,503 | |||||||
Less accumulated depreciation
|
9,925 | 9,287 | ||||||
2,381 | 2,216 | |||||||
Note receivable
|
1,794 | 1,839 | ||||||
Intangible assets, net
|
3,326 | 1,866 | ||||||
Other assets
|
1,033 | 1,032 | ||||||
Total assets
|
$ | 55,344 | $ | 49,581 |
ACME UNITED CORPORATION
|
||||||||
CONDENSED CONSOLIDATED BALANCE SHEETS (continued)
|
||||||||
(all amounts in thousands, except share amounts)
|
||||||||
September 30,
|
December 31,
|
|||||||
2011
|
2010
|
|||||||
(unaudited)
|
(Note 1)
|
|||||||
LIABILITIES
|
||||||||
Current liabilities:
|
||||||||
Accounts payable
|
$ | 4,435 | $ | 5,679 | ||||
Other accrued liabilities
|
3,869 | 3,539 | ||||||
Total current liabilities
|
8,304 | 9,218 | ||||||
Bank debt
|
18,106 | 13,522 | ||||||
Other
|
1,373 | 1,489 | ||||||
Total liabilities
|
27,783 | 24,229 | ||||||
STOCKHOLDERS' EQUITY
|
||||||||
Common stock, par value $2.50:
|
||||||||
authorized 8,000,000 shares;
|
||||||||
issued - 4,416,824 shares in 2011
|
||||||||
and 4,374,574 shares in 2010,
|
||||||||
including treasury stock
|
11,040 | 10,936 | ||||||
Additional paid-in capital
|
4,962 | 4,603 | ||||||
Retained earnings
|
24,349 | 22,399 | ||||||
Treasury stock, at cost - 1,315,237 shares
|
||||||||
in 2011 and 1,305,237 shares in 2010
|
(11,808 | ) | (11,711 | ) | ||||
Accumulated other comprehensive income:
|
||||||||
Foreign currency translation adjustment
|
174 | 281 | ||||||
Unrecognized pension costs
|
(1,156 | ) | (1,156 | ) | ||||
(982 | ) | (875 | ) | |||||
Total stockholders’ equity
|
27,561 | 25,352 | ||||||
Total liabilities and stockholders’ equity
|
$ | 55,344 | $ | 49,581 |
ACME UNITED CORPORATION
|
||||||||||||||||
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
|
||||||||||||||||
(UNAUDITED)
|
||||||||||||||||
(all amounts in thousands, except per share amounts)
|
||||||||||||||||
Three Months Ended
|
Nine Months Ended
|
|||||||||||||||
September 30
|
September 30
|
|||||||||||||||
2011
|
2010
|
2011
|
2010
|
|||||||||||||
Net sales
|
$ | 19,036 | $ | 16,083 | $ | 57,466 | $ | 49,789 | ||||||||
Cost of goods sold
|
12,396 | 10,426 | 36,835 | 31,468 | ||||||||||||
Gross profit
|
6,640 | 5,657 | 20,631 | 18,321 | ||||||||||||
Selling, general and administrative expenses
|
5,520 | 5,000 | 16,868 | 15,418 | ||||||||||||
Operating income
|
1,120 | 657 | 3,763 | 2,903 | ||||||||||||
Non-operating items:
|
||||||||||||||||
Interest:
|
||||||||||||||||
Interest expense
|
112 | 86 | 323 | 217 | ||||||||||||
Interest income
|
(42 | ) | (39 | ) | (132 | ) | (112 | ) | ||||||||
Interest expense, net
|
70 | 47 | 191 | 105 | ||||||||||||
Other expense (income), net
|
20 | (3 | ) | (2 | ) | 36 | ||||||||||
Total other expense
|
90 | 44 | 189 | 141 | ||||||||||||
Income before income taxes
|
1,030 | 613 | 3,574 | 2,762 | ||||||||||||
Income tax expense
|
348 | 1 | 1,029 | 371 | ||||||||||||
Net income
|
$ | 682 | $ | 612 | $ | 2,545 | $ | 2,391 | ||||||||
Basic earnings per share
|
$ | 0.22 | $ | 0.20 | $ | 0.82 | $ | 0.76 | ||||||||
Diluted earnings per share
|
$ | 0.22 | $ | 0.19 | $ | 0.82 | $ | 0.74 | ||||||||
Weighted average number of common shares outstanding-
|
||||||||||||||||
denominator used for basic per share computations
|
3,102 | 3,111 | 3,090 | 3,147 | ||||||||||||
Weighted average number of dilutive stock options
|
||||||||||||||||
outstanding
|
18 | 80 | 15 | 71 | ||||||||||||
Denominator used for diluted per share computations
|
3,120 | 3,192 | 3,105 | 3,218 | ||||||||||||
Dividends declared per share
|
$ | 0.07 | $ | 0.06 | $ | 0.19 | $ | 0.16 |
ACME UNITED CORPORATION
|
||||||||
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
|
||||||||
(UNAUDITED)
|
||||||||
(all amounts in thousands)
|
||||||||
Nine Months Ended
|
||||||||
September 30,
|
||||||||
2011
|
2010
|
|||||||
Operating Activities:
|
||||||||
Net income
|
$ | 2,545 | $ | 2,391 | ||||
Adjustments to reconcile net income
|
||||||||
to net cash used by operating activities:
|
||||||||
Depreciation
|
596 | 572 | ||||||
Amortization
|
122 | 86 | ||||||
Stock compensation expense
|
318 | 280 | ||||||
Changes in operating assets and liabilities:
|
||||||||
Accounts receivable
|
(3,817 | ) | (4,302 | ) | ||||
Inventories
|
693 | (2,678 | ) | |||||
Prepaid expenses and other current assets
|
364 | (7 | ) | |||||
Accounts payable
|
(1,579 | ) | 979 | |||||
Other accrued liabilities
|
219 | (315 | ) | |||||
Total adjustments
|
(3,084 | ) | (5,385 | ) | ||||
Net cash used by operating activities
|
(539 | ) | (2,994 | ) | ||||
Investing Activities:
|
||||||||
Purchase of property, plant, and equipment
|
(599 | ) | (644 | ) | ||||
Purchase of patents and trademarks
|
(81 | ) | (79 | ) | ||||
Acquisition of Pac-Kit Safety Equipment Company
|
(3,127 | ) | - | |||||
Net cash used by investing activities
|
(3,807 | ) | (723 | ) | ||||
Financing Activities:
|
||||||||
Borrowing of long-term debt
|
4,584 | 6,266 | ||||||
Proceeds from issuance of common stock
|
146 | 123 | ||||||
Distributions to stockholders
|
(555 | ) | (472 | ) | ||||
Purchase of treasury stock
|
(97 | ) | (1,566 | ) | ||||
Net cash provided by financing activities
|
4,078 | 4,350 | ||||||
Effect of exchange rate changes
|
(63 | ) | 80 | |||||
Net change in cash and cash equivalents
|
(331 | ) | 713 | |||||
Cash and cash equivalents at beginning of period
|
6,601 | 6,519 | ||||||
Cash and cash equivalents at end of period
|
$ | 6,270 | $ | 7,232 |
Balance at
December 31, 2010
|
Payments
|
Balance at
September 30, 2011
|
$ 343
|
$ (65)
|
$ 278
|
Three Months Ended September 30,
|
Nine Months Ended September 30,
|
|||||||||||||||
2011
|
2010
|
2011
|
2010
|
|||||||||||||
Components of net periodic benefit cost:
|
||||||||||||||||
Interest cost
|
$ | 26 | $ | 16 | $ | 77 | $ | 92 | ||||||||
Service cost
|
5 | 6 | 14 | 19 | ||||||||||||
Expected return on plan assets
|
(26 | ) | (24 | ) | (79 | ) | (72 | ) | ||||||||
Amortization of prior service costs
|
3 | 2 | 8 | 7 | ||||||||||||
Amortization of actuarial loss
|
38 | 32 | 113 | 116 | ||||||||||||
$ | 46 | $ | 32 | $ | 133 | $ | 162 |
Three months ended September 30,
|
Nine months ended September 30,
|
|||||||||||||||
Sales to external customers:
|
2011
|
2010
|
2011
|
2010
|
||||||||||||
United States
|
$ | 15,020 | $ | 12,220 | $ | 44,104 | $ | 36,845 | ||||||||
Canada
|
1,829 | 1,765 | 7,008 | 6,214 | ||||||||||||
Europe
|
2,187 | 2,098 | 6,354 | 6,730 | ||||||||||||
Consolidated
|
$ | 19,036 | $ | 16,083 | $ | 57,466 | $ | 49,789 | ||||||||
Operating income (loss):
|
||||||||||||||||
United States
|
$ | 923 | $ | 583 | $ | 2,904 | $ | 2,462 | ||||||||
Canada
|
114 | 185 | 863 | 703 | ||||||||||||
Europe
|
83 | (111 | ) | (4 | ) | (262 | ) | |||||||||
Consolidated
|
$ | 1,120 | $ | 657 | $ | 3,763 | $ | 2,903 | ||||||||
Interest expense, net
|
70 | 47 | 191 | 105 | ||||||||||||
Other expense (income), net
|
20 | (3 | ) | (2 | ) | 36 | ||||||||||
Consolidated income before taxes
|
$ | 1,030 | $ | 613 | $ | 3,574 | $ | 2,762 |
Assets by segment: | ||||||||
(in thousands) | ||||||||
September 30,
|
December 31,
|
|||||||
|
2011
|
2010
|
||||||
United States
|
$ |
43,319
|
$ | 37,685 | ||||
Canada
|
5,899
|
6,205 | ||||||
Europe
|
6,126
|
5,691 | ||||||
Consolidated
|
$ |
55,344
|
$ | 49,581 |
Three Months Ended
|
Nine Months Ended
|
|||||||||||||||
September 30,
|
September 30,
|
|||||||||||||||
2011
|
2010
|
2011
|
2010
|
|||||||||||||
Net income
|
$ | 682 | $ | 612 | $ | 2,545 | $ | 2,391 | ||||||||
Other comprehensive (loss) income -
|
||||||||||||||||
Foreign currency translation
|
(530 | ) | 547 | (107 | ) | (58 | ) | |||||||||
Comprehensive income
|
$ | 152 | $ | 1,159 | $ | 2,438 | $ | 2,333 |
Assets:
|
||||
Accounts Receivable
|
$ | 592 | ||
Inventory | $ | 1,196 | ||
Equipment | $ | 150 | ||
Intangible Assets | $ | 1,500 | ||
Total assets | $ | 3,438 | ||
Liabilities
|
||||
Accounts Payable | 310 |
September 30, 2011 | December 31, 2010 | |||||||
Working capital
|
$ | 38,507 | $ | 33,410 | ||||
Current ratio
|
5.64 | 4.62 | ||||||
Long term debt to equity ratio
|
65.8% | 53.3% |
(a)
|
Evaluation of Internal Controls and Procedures
|
(b)
|
Changes in Internal Control over Financial Reporting
|
By | /s/ Walter C. Johnsen | |
Walter C. Johnsen
Chairman of the Board and
Chief Executive Officer
|
||
Dated: November 7, 2011
|
||
By | /s/ Paul G. Driscoll | |
Paul G. Driscoll
Vice President and
Chief Financial Officer
|
||
Dated: November 7, 2011
|
By | /s/ Walter C. Johnsen | |
Walter C. Johnsen
Chairman of the Board and
Chief Executive Officer
Dated: November 7, 2011
|
By | /s/ Paul G. Driscoll | |
Paul G. Driscoll
Vice President and
Chief Financial Officer
Dated: November 7, 2011
|
By | /s/ Walter C. Johnsen | |
Walter C. Johnsen
Chairman of the Board and
Chief Executive Officer
|
||
Dated: November 7, 2011
|
By | /s/ Paul G. Driscoll | |
Paul G. Driscoll
Vice President and
Chief Financial Officer
|
||
Dated: November 7, 2011
|
Condensed Consolidated Balance Sheets (Parenthetical) (USD $) | Sep. 30, 2011 | Dec. 31, 2010 |
---|---|---|
Condensed Consolidated Balance Sheets Parenthetical | ||
Common stock, par value | $ 2.50 | $ 2.50 |
Common stock, shares authorized | 8,000,000 | 8,000,000 |
Common stock, shares issued | 4,416,824 | 4,374,574 |
Treasury stock, shares | 1,315,237 | 1,305,237 |
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Document and Entity Information | 9 Months Ended | |
---|---|---|
Sep. 30, 2011 | Nov. 02, 2011 | |
Document And Entity Information | ||
Entity Registrant Name | ACME UNITED CORP | |
Entity Central Index Key | 0000002098 | |
Document Type | 10-Q | |
Document Period End Date | Sep. 30, 2011 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Is Entity a Well-known Seasoned Issuer? | No | |
Is Entity a Voluntary Filer? | No | |
Is Entity's Reporting Status Current? | Yes | |
Entity Filer Category | Smaller Reporting Company | |
Entity Common Stock, Shares Outstanding | 3,127,587 | |
Document Fiscal Period Focus | Q3 | |
Document Fiscal Year Focus | 2011 |
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Comprehensive Income | 9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2011 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Notes to Financial Statements | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Comprehensive Income |
Note 7 – Comprehensive Income
Comprehensive income for the three and nine months ended September 30, 2011 and September 30, 2010 consisted of the following (in thousands):
|
Pension | 9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2011 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Notes to Financial Statements | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Pension |
Note 3 — Pension
Components of net periodic benefit cost are as follows (in thousands):
The Company’s funding policy with respect to its qualified plan is to contribute at least the minimum amount required by applicable laws and regulations. In 2011, the Company is required to contribute approximately $250,000. As of September 30, 2011, the Company has contributed approximately $193,389 to the plan. The Company expects to make contributions to the plan as required during the remainder of the year. |
Business Combination | 9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2011 | ||||||||||||||||||||||||||||||||||||||||||||||
Notes to Financial Statements | ||||||||||||||||||||||||||||||||||||||||||||||
Business Combination |
Note 9 – Business Combination
On February 28, 2011, the Company purchased substantially all of the assets of The Pac-Kit Safety Equipment Company, a leading manufacturer of first aid kits for the industrial, safety, transportation and marine markets. The Company purchased the accounts receivable, inventory, equipment and intangible assets of Pac-Kit for approximately $3.4 million, less liabilities assumed of $310,000, using funds borrowed under the Company’s revolving loan agreement with Wells Fargo.
The Company recorded $1.9 million for assets acquired including accounts receivable, inventory and fixed assets, as well as $1.5 million for intangible assets, consisting of customer relationships and the Pac-Kit trade name. During the nine months ended September 30, 2011, the Company incurred approximately $125,000, of integration and transaction costs associated with the acquisition. These costs were recorded in selling, general and administrative expenses. The Company did not incur any of these expenses during the three months ended September 30, 2011.
The purchase price was allocated to assets acquired and liabilities assumed as follows (in thousands):
Unaudited proforma net sales for the three and nine months ended September 30, 2011 attributable to Pac-Kit were approximately $1.6 million and $4.0 million, respectively. Unaudited proforma net sales attributable to Pac-Kit for the comparable period in 2010 were approximately $1.3 million and $3.4 million, respectively. The nine month period ended September 30, 2011 represents a comparable period based on the acquisition date.
Unaudited proforma net income, attributable to Pac-Kit, for the three months ended September 30, 2011 was approximately $100,000. Unaudited proforma net income, excluding one time transaction and integration costs of $125,000, for the nine months ended September 30, 2011, attributable to Pac-Kit was approximately $225,000. Net income for the comparable periods in 2010 was immaterial to the Company’s financial statements.
Assuming Pac-Kit was acquired on January 1, 2011, unaudited proforma net sales and net income for the nine months ended September 30, 2011 attributable to Pac-Kit were approximately $4.8 million and $255,000, respectively. Assuming Pac-Kit was acquired on January 1, 2011, unaudited proforma net sales for the comparable period in 2010 were approximately $4.2 million. Unaudited proforma net income for the comparable period in 2010 was immaterial to the Company’s consolidated financial statements. |
Fair Value Measurements | 9 Months Ended |
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Sep. 30, 2011 | |
Notes to Financial Statements | |
Fair Value Measurements |
Note 8 – Fair Value Measurements
The carrying values of cash and cash equivalents, accounts receivable, accounts payable and bank debt are a reasonable estimate of fair value because of their short term nature. The carrying value of the Company’s note receivable approximates fair value. Fair value was determined using a discounted cash flow analysis. |
Basis of Presentation and Recent Accounting Pronouncements | 9 Months Ended |
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Sep. 30, 2011 | |
Notes to Financial Statements | |
Basis of Presentation and Recent Accounting Pronouncements |
Note 1 — Basis of Presentation and Recent Accounting Pronouncements
In the opinion of management, the accompanying condensed consolidated financial statements include all adjustments necessary to present fairly the financial position, results of operations and cash flows of Acme United Corporation (the “Company”). These adjustments are of a normal, recurring nature. However, the financial statements do not include all of the disclosures normally required by accounting principles generally accepted in the United States of America or those normally made in the Company's Annual Report on Form 10-K. Please refer to the Company's Annual Report on Form 10-K for the year ended December 31, 2010 for such disclosures. The condensed consolidated balance sheet as of December 31, 2010 was derived from the audited consolidated balance sheet as of that date. The results of operations for interim periods are not necessarily indicative of the results to be expected for the full year. The information included in this Quarterly Report on Form 10-Q should be read in conjunction with the Management’s Discussion and Analysis of Financial Condition and Results of Operations and financial statements and notes thereto, included in the Company’s 2010 Annual Report on Form 10-K.
The Company has evaluated events and transactions subsequent to September 30, 2011 and through the date these consolidated financial statements were included in this Form 10-Q and filed with the SEC.
Recent accounting pronouncements
In June 2011, the FASB issued a new accounting standard on the presentation of comprehensive income. The new standard requires the presentation of comprehensive income, the components of net income and the components of other comprehensive income either in a single continuous statement of comprehensive income or in two separate but consecutive statements. The new standard also requires presentation of adjustments for items that are reclassified from the other comprehensive income to net income in the statement where the components of net income and the components of other comprehensive income are presented. The Company is required to adopt this standard for interim and annual periods beginning after December 15, 2011. The Company is currently evaluating the impact of adopting this guidance, which may result in changes in the presentation of its financial statements. |
Debt and Shareholders Equity | 9 Months Ended |
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Sep. 30, 2011 | |
Notes to Financial Statements | |
Debt and Shareholders Equity |
Note 4 —Debt and Shareholders Equity
The Company’s revolving loan agreement, as amended, provides for borrowings up to $20 million, with all principal amounts outstanding thereunder required to be repaid in a single amount on March 31, 2013. In addition, the Company’s revolving loan agreement requires monthly interest payments. As of September 30, 2011 and December 31, 2010, the Company had outstanding borrowings of $18,106,000 and $13,522,000, respectively, under the revolving loan agreement.
During the nine months ended September 30, 2011, the Company issued 42,250 shares of common stock upon the exercise of outstanding stock options and received total proceeds of $145,925. There were no stock options exercised during the three months ended September 30, 2011. |
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Segment Information |
Note 5— Segment Information
The Company reports financial information based on the organization structure used by management for making operating and investment decisions and for assessing performance. The Company’s reportable business segments consist of (1) United States; (2) Canada and (3) Europe. The activities of the Company’s Asian operating segment are closely linked to those of the U.S. operating segment; accordingly, management reviews the financial results of both segments on a consolidated basis, and the results of the Asian operating segment have been aggregated with the results of the United States operating segment to form one reportable segment called the “United States operating segment”. Each reportable segment derives its revenue from the sales of cutting devices, measuring instruments and safety products for school, office, home, hardware and industrial use.
The chief operating decision maker evaluates the performance of each operating segment based on segment revenues and operating income. Segment amounts below are presented after converting to U.S. dollars and consolidating eliminations.
Financial data by segment:
(in thousands)
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Stock Based Compensation | 9 Months Ended |
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Sep. 30, 2011 | |
Notes to Financial Statements | |
Stock Based Compensation |
Note 6 – Stock Based Compensation
The Company recognizes share-based compensation at fair value of the equity instrument on the grant date. Compensation expense is recognized over the required service period. Share-based compensation expense was $108,766 and $90,866 for the quarters ended September 30, 2011 and September 30, 2010, respectively. Share-based compensation expense was $318,204 and $280,066 for the nine months ended September 30, 2011 and September 30, 2010, respectively. During the three months ended September 30, 2011, the Company issued 107,000 options with a weighted average fair value of $2.10 per share. During the nine months ended September 30, 2011, the Company issued 185,500 options with a weighted average fair value of $2.20. |
Contingencies | 9 Months Ended | ||||||||||||
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Sep. 30, 2011 | |||||||||||||
Notes to Financial Statements | |||||||||||||
Contingencies |
Note 2 — Contingencies
The Company is involved from time to time in disputes and other litigation in the ordinary course of business and may encounter other contingencies, which may include environmental and other matters. The Company presently believes that none of these matters, individually or in the aggregate, would be likely to have a material adverse impact on its financial position, results of operations or liquidity, as set forth in these financial statements.
In December 2008, the Company sold property it owned in Bridgeport, Connecticut to B&E Juices, Inc. for $2.5 million, of which $2.0 million is secured by a mortgage on the property. The property consists of approximately four acres of land and 48,000 sq. feet of warehouse space. The property was the site of the Company’s original scissor factory which opened in 1887 and was closed in 1996.
Under the terms of the sale agreement, and as required by the Connecticut Transfer Act, the Company is required to remediate any environmental contamination on the property. During 2008, the Company hired an independent environmental consulting firm to conduct environmental studies in order to identify the extent of the environmental contamination on the property and to develop a remediation plan. As a result of those studies and the estimates prepared by the independent environmental consulting firm, the Company recorded an undiscounted liability of approximately $1.8 million related to the remediation of the property. This accrual includes the costs of required investigation, remedial activities, and post-remediation operating and maintenance.
Remediation work on the project began in the third quarter of 2009 and a major portion of the work has been completed. At September 30, 2011, the Company had approximately $278,000 remaining in its accrual for environmental remediation, of which approximately $125,000 was classified as a current liability at that date. The Company believes that the remediation project will be completed within five years from the date of the sale.
The change in the accrual for environmental remediation for the nine months ended September 30, 2011 follows (in thousands):
Also, as part of the sale, the Company provided the buyer with a mortgage loan of $2.0 million at six percent interest. The mortgage is payable in monthly installments of principal and interest with the remaining outstanding balance due in full, one year after remediation and monitoring on the property have been completed. |