10-Q

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 December 31, 2015

Commission File Number I-4383

ESPEY MFG. & ELECTRONICS CORP.

(Exact name of registrant as specified in its charter)

NEW YORK (State of incorporation) 14-1387171 (I.R.S. Employer's Identification No.)

233 Ballston Avenue, Saratoga Springs, New York 12866

(Address of principal executive offices)

518-245-4400

(Registrant's telephone number, including area code)

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.

S Yes          £ No

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

S Yes          £ No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company:

£ Large accelerated filer £ Accelerated filer £ Non-accelerated filer S Smaller reporting company

Indicate by check mark whether the registrant is a shell company.

£ Yes          S No

At February 11, 2016, there were 2,354,184 shares outstanding of the registrant's Common stock, $.33-1/3 par value.

ESPEY MFG. & ELECTRONICS CORP.

Quarterly Report on Form 10-Q

I N D E X

PART I	FINANCIAL INFORMATION		PAGE
	Item 1	Financial Statements:
		Balance Sheets - December 31, 2015 (Unaudited) and June 30, 2015	1
		Statements of Comprehensive Income (Unaudited) - Three and Six Months Ended December 31, 2015 and 2014	2
		Statements of Cash Flows (Unaudited) - Six Months Ended December 31, 2015 and 2014	3
		Notes to Financial Statements (Unaudited)	4
	Item 2	Management's Discussion and Analysis of Financial Condition and Results of Operations	9
	Item 3	Quantitative and Qualitative Disclosures about Market Risk	12
	Item 4	Controls and Procedures	12
PART II	OTHER INFORMATION
	Item 1	Legal Proceedings	13
	Item 2	Unregistered Sales of Equity Securities	13
	Item 3	Defaults upon Senior Securities	13
	Item 4	Mine Safety Disclosures	13
	Item 5	Other Information	13
	Item 6	Exhibits	13
	SIGNATURES		14

PART I: FINANCIAL INFORMATION

ESPEY MFG. & ELECTRONICS CORP.

Balance Sheets

December 31, 2015 (Unaudited) and June 30, 2015

	December 31, 2015			June 30, 2015
ASSETS:
Cash and cash equivalents	$	9,547,218		$	8,859,405
Investment securities		5,224,370			4,159,057
Trade accounts receivable, net of allowance of $3,000		4,038,389			6,694,401
Income taxes receivable		207,551			—
Inventories:
Raw materials		1,464,486			1,481,792
Work-in-process		620,039			561,682
Costs relating to contracts in process, net of advance
payments of $2,174 at December 31, 2015 and
$19,626 at June 30, 2015		9,622,880			9,542,423
Total inventories		11,707,405			11,585,897
Deferred income taxes		257,274			334,681
Prepaid expenses and other current assets		111,379			211,940
Total current assets		31,093,586			31,845,381
Property, plant and equipment, net		2,363,036			2,498,863
Total assets	$	33,456,622		$	34,344,244
LIABILITIES AND STOCKHOLDERS' EQUITY:
Accounts payable	$	604,418		$	976,112
Accrued expenses:
Salaries and wages		242,880			332,387
Vacation		647,525			690,833
ESOP payable		164,800			—
Dividend payable		—			590,672
Other		448,276			548,817
Payroll and other taxes withheld		85,677			47,082
Income taxes payable		—			2,716
Total current liabilities		2,193,576			3,188,619
Deferred tax liability		178,473			224,751
Total liabilities		2,372,049			3,413,370
Commitments and contingencies (see Note 5)
Common stock, par value $.33-1/3 per share.
Authorized 10,000,000 shares; Issued 3,029,874 shares
on December 31, 2015 and June 30, 2015.  Outstanding
2,352,184 and 2,362,687 on December 31, 2015 and
June 30, 2015, respectively (includes 70,417 and
79,167 Unearned ESOP shares, respectively)		1,009,958			1,009,958
Capital in excess of par value		16,889,082			16,785,604
Accumulated other comprehensive loss		(3,511	)		(4,386	)
Retained earnings		22,239,365			21,865,951
		40,134,894			39,657,127
Less:  Unearned ESOP shares		(1,143,957	)		(1,143,957	)
Treasury shares, cost of 677,690 and 667,187 shares on
December 31, 2015 and June 30, 2015, respectively		(7,906,364	)		(7,582,296	)
Total stockholders’ equity		31,084,573			30,930,874
Total liabilities and stockholders' equity	$	33,456,622		$	34,344,244

See accompanying notes to the financial statements.

1 

ESPEY MFG. & ELECTRONICS CORP.

Statements of Comprehensive Income (Unaudited)

Three and Six Months Ended December 31, 2015 and 2014

	Three Months Ended						Six Months Ended
	December 31,						December 31,
	2015			2014			2015		2014
Net sales	$	7,242,020		$	5,697,083		$	13,521,456	$	11,390,555
Cost of sales		5,653,977			3,438,348			9,965,093		7,321,741
Gross profit		1,588,043			2,258,735			3,556,363		4,068,814
Selling, general and administrative expenses		754,958			633,177			1,504,608		1,231,379
Operating income		833,085			1,625,558			2,051,755		2,837,435
Other income
Interest income		10,610			9,061			18,063		17,054
Other		26,563			10,937			44,551		20,594
Total other income		37,173			19,998			62,614		37,648
Income before income taxes		870,258			1,645,556			2,114,369		2,875,083
Provision for income taxes		255,831			426,474			621,412		744,780
Net income	$	614,427		$	1,219,082		$	1,492,957	$	2,130,303
Other comprehensive income, net of tax:
Unrealized (loss) gain on investment securities		(905	)		(1,093	)		874		(1,413	)
Total comprehensive income	$	613,522		$	1,217,989		$	1,493,831	$	2,128,890
Net income per share:
Basic	$	0.27		$	0.54		$	0.65	$	0.94
Diluted	$	0.27		$	0.54		$	0.65	$	0.93
Weighted average number of shares outstanding:
Basic		2,276,401			2,265,460			2,280,262		2,268,205
Diluted		2,294,020			2,274,004			2,298,913		2,281,049
Dividends per share:	$	0.25		$	0.25		$	0.50	$	0.50

See accompanying notes to the financial statements.

2 

ESPEY MFG. & ELECTRONICS CORP.

Statements of Cash Flows (Unaudited)

Six Months Ended December 31, 2015 and 2014

	December 31, 2015			December 31, 2014
Cash Flows from Operating Activities:
Net income	$	1,492,957		$	2,130,303
Adjustments to reconcile net income to net cash
provided by operating activities:
Excess tax benefits from share-based compensation		(15,021	)		(26,835	)
Stock-based compensation		52,249			26,058
Depreciation		218,021			227,753
ESOP compensation expense		224,175			208,678
Loss on disposal of assets		147			233
Deferred income tax expense		31,600			40,707
Changes in assets and liabilities:
Decrease (increase) in trade receivable, net		2,656,012			(192,316	)
(Increase) decrease in income taxes receivable		(207,551	)		677,238
Increase in inventories, net		(121,508	)		(912,542	)
Decrease in prepaid expenses and other current assets		100,561			115,436
(Decrease) increase in accounts payable		(371,694	)		150,252
Decrease in accrued salaries and wages		(89,507	)		(240,224	)
Decrease in vacation accrual		(43,308	)		(160,543	)
Decrease in ESOP payable		(59,375	)		(48,750	)
Decrease in other accrued expenses		(100,541	)		(380,033	)
Increase (decrease) in payroll and other taxes withheld		38,595			(5,829	)
Increase in income taxes payable		12,305			26,835
Net cash provided by operating activities		3,818,117			1,636,421
Cash Flows from Investing Activities:
Additions to property, plant and equipment		(82,341	)		(54,050	)
Purchase of investment securities		(2,347,595	)		(1,427,174	)
Proceeds from sale/maturity of investment securities		1,282,686			1,942,735
Net cash (used in) provided by investing activities		(1,147,250	)		461,511
Cash Flows from Financing Activities:
Dividends on common stock		(1,710,215	)		(1,132,317	)
Purchase of treasury stock		(355,418	)		(320,504	)
Proceeds from exercise of stock options		67,558			9,000
Excess tax benefits from share-based compensation		15,021			26,835
Net cash used in financing activities		(1,983,054	)		(1,416,986	)
Increase in cash and cash equivalents		687,813			680,946
Cash and cash equivalents, beginning of period		8,859,405			9,556,891
Cash and cash equivalents, end of period	$	9,547,218		$	10,237,837
Supplemental Schedule of Cash Flow Information:
Income taxes paid	$	786,000		$	—

See accompanying notes to the financial statements.

3 

ESPEY MFG. & ELECTRONICS CORP.

Notes to Financial Statements (Unaudited)

Note 1. Basis of Presentation

In the opinion of management the accompanying unaudited financial statements contain all adjustments (consisting of only normal recurring adjustments) necessary for a fair presentation of the results for such periods. The results for any interim period are not necessarily indicative of the results to be expected for the full fiscal year. Certain information and footnote disclosures normally included in financial statements prepared in accordance with United States generally accepted accounting principles have been condensed or omitted. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of assets and liabilities. On an ongoing basis, we evaluate our estimates and judgments, including those related to revenue recognition, inventories, income taxes, and stock-based compensation. Management bases its estimates on historical experience and on various other factors that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions. These financial statements should be read in conjunction with the Company's most recent audited financial statements included in its report on Form 10-K for the year ended June 30, 2015. Certain reclassifications may have been made to the prior year financial statements to conform to the current year presentation.

Note 2. Fair Value of Financial Instruments and Investments

ASC 820 establishes a fair value hierarchy which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The standard describes three levels of inputs that may be used to measure fair value:

§ Level 1: Quoted prices (unadjusted) for identical assets or liabilities in active markets that the entity has the ability to access as of the measurement date.

§ Level 2: Significant other observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data.

§ Level 3: Significant unobservable inputs that reflect a reporting entity’s own assumptions about the assumptions that market participants would use in pricing an asset or liability.

The carrying amounts of financial instruments, including cash and cash equivalents, short term investments, accounts receivable, accounts payable and accrued expenses, approximated fair value as of December 31, 2015 and June 30, 2015 because of the immediate or short-term maturity of these financial instruments.

Investment securities at December 31, 2015 and June 30, 2015 consist of certificates of deposit and municipal bonds which are classified as available-for-sale securities and have been determined to be level 1 assets. The cost, gross unrealized gains, gross unrealized losses and fair value of available-for-sale securities by major security type at December 31, 2015 and June 30, 2015 are as follows:

			Gross		Gross
	Amortized		Unrealized		Unrealized			Fair
	Cost		Gains		Losses			Value
December 31, 2015
Certificates of deposit	$	4,405,000	$	—	$	—		$	4,405,000
Municipal bonds		824,772		1,198		(6,600	)		819,370
Total investment securities	$	5,229,772	$	1,198	$	(6,600	)	$	5,224,370
June 30, 2015
Certificates of deposit	$	3,272,000	$	—	$	—		$	3,272,000
Municipal bonds		893,804		1,288		(8,035	)		887,057
Total investment securities	$	4,165,804	$	1,288	$	(8,035	)	$	4,159,057

The portfolio is diversified and highly liquid and primarily consists of investment grade fixed income instruments. At December 31, 2015, the Company did not have any investments in individual securities that have been in a continuous loss position considered to be other than temporary. Due to the fact that the decline in market value is attributable to changes in interest rates and not credit quality, and because the severity and duration of the unrealized losses were not significant, the Company considered these unrealized losses to be temporary at December 31, 2015.

4 

As of December 31, 2015 and June 30, 2015, the contractual maturities of available-for-sale securities were as follows:

	Years to Maturity
	Less than		One to
	One Year		Five Years		Total
December 31, 2015
Available-for-sale	$	4,979,370	$	245,000	$	5,224,370
June 30, 2015
Available-for-sale	$	3,522,728	$	636,329	$	4,159,057

Note 3. Net Income per Share

Basic net income per share excludes dilution and is computed by dividing net income available to common stockholders by the weighted average number of common shares outstanding for the period. Diluted net income per share reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock or resulted in the issuance of common stock that then shared in the income of the Company. The computation of weighted-average common shares outstanding, assuming dilution, excluded options to purchase 68,550 and 92,625 shares of our common stock for the three and six months ended December 31, 2015 and December 31, 2014, respectively, as the effect of including them would be anti-dilutive. As Unearned ESOP shares are released or committed-to-be-released the shares become outstanding for earnings-per-share computations.

Note 4. Stock Based Compensation

The Company follows ASC 718 in establishing standards for the accounting for transactions in which an entity exchanges its equity instruments for goods or services, as well as transactions in which an entity incurs liabilities in exchange for goods or services that are based on the fair value of the entity’s equity instruments or that may be settled by the issuance of those equity instruments. ASC 718 requires that the cost resulting from all share-based payment transactions be recognized in the financial statements based on the fair value of the share-based payment. ASC 718 establishes fair value as the measurement objective in accounting for share-based payment transactions with employees, except for equity instruments held by employee share ownership plans.

Total stock-based compensation expense recognized in the statements of comprehensive income for the three-month period ended December 31, 2015 and 2014, was $21,783 and $13,029, respectively, before income taxes. The related total deferred tax benefit was approximately $1,765 and $1,371 for the three-month period ended December 31, 2015 and 2014, respectively. Total stock-based compensation expense recognized in the statements of comprehensive income for the six-month period ended December 31, 2015 and 2014, was $52,249 and $26,058, respectively, before income taxes. The related total deferred tax benefit was approximately $4,441 and $2,742 for the six-month period ended December 31, 2015 and 2014, respectively. ASC 718 requires the tax benefits resulting from tax deductions in excess of the compensation cost recognized for those options to be classified and reported as both an operating cash outflow and a financing cash inflow.

As of December 31, 2015, there was approximately $122,238 of unrecognized compensation cost related to stock option awards that is expected to be recognized as expense over the next 2 years. The total deferred tax benefit related to these awards is approximately $10,296.

The Company has one employee stock option plan under which options may be granted, the 2007 Stock Option and Restricted Stock Plan (the "2007 Plan"). The Board of Directors may grant options to acquire shares of common stock to employees of the Company at the fair market value of the common stock on the date of grant. Generally, options granted have a two-year vesting period based on two years of continuous service and have a ten-year contractual life. Option grants provide for accelerated vesting if there is a change in control. Shares issued upon the exercise of options are from those held in Treasury. The 2007 Plan was approved by the Company's shareholders at the Company's Annual Meeting on November 30, 2007 and supersedes the Company's 2000 Stock Option Plan (the "2000 Plan"). Options covering 400,000 shares were authorized for issuance under the 2007 Plan, of which 234,650 have been granted and 165,250 are outstanding as of December 31, 2015. While no further grants of options may be made under the 2000 Plan, as of December 31, 2015, 17,700 options remain outstanding, vested and exercisable from the 2000 Plan.

5 

ASC 718 requires the use of a valuation model to calculate the fair value of stock-based awards. The Company has elected to use the Black-Scholes option valuation model, which incorporates various assumptions including those for volatility, expected life and interest rates.

The table below outlines the weighted average assumptions that the Company used to calculate the fair value of the option award for the six months ended December 31, 2015. There were no options awarded for the six months ended December 31, 2014.

	December 31, 2015
Dividend yield		3.72%
Expected stock price volatility		28.06%
Risk-free interest rate		1.60%
Expected option life (in years)		4.1 yrs
Weighted average fair value per share of options granted during the period		$4.431

The Company pays dividends quarterly and paid cash dividends totaling $0.50 per share for the six months ended December 31, 2015 and 2014. Our Board of Directors assesses the Company’s dividend policy periodically. There is no assurance, that the Board of Directors will either maintain the amount of the regular cash dividend or declare a special dividend during any future years. Expected stock price volatility is based on the historical volatility of the Company’s stock. The risk-free interest rate is based on the implied yield available on U.S. Treasury issues with an equivalent term approximating the expected life of the options. The expected option life (in years) represents the estimated period of time until exercise and is based on actual historical experience.

The following table summarizes stock option activity during the six months ended December 31, 2015:

	Employee Stock Options Plan
						Weighted
	Number of			Weighted		Average
	Shares			Average		Remaining		Aggregate
	Subject			Exercise		Contractual		Intrinsic
	To Option			Price		Term		Value
Balance at July 1, 2015		187,500		$	23.38		6.26
Granted		500		$	26.89		10.00
Exercised		(3,800	)	$	17.78		—
Forfeited or expired		(1,250	)	$	26.09		—
Outstanding at December 31, 2015		182,950		$	23.48		5.83	$	471,369
Vested or expected to vest at December 31, 2015		176,753		$	23.39		5.71	$	471,369
Exercisable at December 31, 2015		139,650		$	22.64		4.74	$	471,369

The aggregate intrinsic value in the table above represents the total pretax intrinsic value (the difference between the closing sale price of the Company’s common stock as reported on the NYSE MKT on December 31, 2015 and the exercise price, multiplied by the number of in-the-money options) that would have been received by the option holders if all option holders had exercised their options on December 31, 2015. This amount changes based on the fair market value of the Company’s common stock. The total intrinsic values of the options exercised during the six months ended December 31, 2015 and 2014 was $6,512 and $16,267, respectively.

The following table summarizes changes in non-vested stock options during the six months ended December 31, 2015:

	Weighted Number			Average Grant
	of Shares			Date Fair
	Subject to Option			Value (per Option)
Non-Vested at July 1, 2015		69,300		$	4.310
Granted		500		$	4.431
Vested		(25,250	)	$	3.777
Forfeited or expired		(1,250	)	$	4.710
Non-Vested at December 31, 2015		43,300		$	4.611

Note 5. Commitments and Contingencies

The Company at certain times enters into standby letters of credit agreements with financial institutions primarily relating to the guarantee of future performance on certain contracts. Contingent liabilities on outstanding standby letters of credit agreements aggregated to zero at December 31, 2015 and 2014. The Company, as a U.S. Government contractor, is subject to audits, reviews, and investigations by the U.S. government related to its negotiation and performance of government contracts and its accounting for such contracts. Failure to comply with applicable U.S. Government standards by a contractor may result in suspension from eligibility for award of any new government contract and a guilty plea or conviction may result in debarment from eligibility for awards. The government may, in certain cases, also terminate existing contracts, recover damages, and impose other sanctions and penalties.

6 

Note 6. Recently Issued Accounting Standards

In May 2014, the FASB issued ASU No. 2014-09, “Revenue from Contracts with Customers,” which supersedes nearly all existing revenue recognition guidance under U.S. GAAP. The core principle of ASU 2014-09 is to recognize revenues when promised goods or services are transferred to customers in an amount that reflects the consideration to which an entity expects to be entitled for those goods or services. ASU 2014-09 defines a five step process to achieve this core principle and, in doing so, more judgment and estimates may be required within the revenue recognition process than are required under existing U.S. GAAP. The standard is effective for annual periods beginning after December 15, 2017, and interim periods therein, using either of the following transition methods: (i) a full retrospective approach reflecting the application of the standard in each prior reporting period with the option to elect certain practical expedients, or (ii) a retrospective approach with the cumulative effect of initially adopting ASU 2014-09 recognized at the date of adoption (which includes additional footnote disclosures). Early adoption is permitted for annual periods beginning after December 15, 2016 and interim periods therein. We are currently evaluating the impact of our pending adoption of ASU 2014-09 on our financial statements and have not yet determined the method by which we will adopt the standard in fiscal 2019.

In July 2015, the FASB issued ASU No. 2015-11, “Inventory (Topic 330): Simplifying the Measurement of Inventory”. ASU 2015-11 requires inventory measured using any method other than last-in, first out or the retail inventory method to be subsequently measured at the lower of cost and net realizable value, rather than at the lower of cost or market. Net realizable value is defined as the estimated selling price, less the estimated costs to complete, dispose, and transport such inventory. ASU No. 2015-11 will be effective for fiscal years and interim periods beginning after December 15, 2016. ASU No. 2015-11 is required to be applied prospectively and early adoption is permitted. The Company’s adoption of ASU No. 2015-11 is not expected to have a material impact on the Company’s financial position or results of operations.

In November 2015, the FASB issued ASU 2015-17, “Income Taxes (Topic 740): Balance Sheet Classification of Deferred Taxes”. The guidance requires the classification of deferred tax assets and liabilities as noncurrent in a classified balance sheet. The current requirement that deferred tax assets and liabilities of a tax-paying component of an entity be offset and presented as a single amount is not affected by this update. ASU No. 2015-17 will be effective for annual periods beginning after December 15, 2016, and interim periods within those annual periods. ASU No. 2015-17 may be applied prospectively or retrospectively, and early adoption is permitted. The Company is evaluating the impact that ASU 2015-17 will have on the Company's financial statements.

Note 7. Employee Stock Ownership Plan

The Company sponsors a leveraged employee stock ownership plan (the "ESOP") that covers all nonunion employees who work 1,000 or more hours per year and are employed on June 30. The Company makes annual contributions to the ESOP equal to the ESOP's debt service less dividends on unallocated shares received by the ESOP. All dividends on unallocated shares received by the ESOP are used to pay debt service. Dividends on allocated ESOP shares are recorded as a reduction of retained earnings. As the debt is repaid, shares are released and allocated to active employees, based on the proportion of debt service paid in the year. The Company accounts for its ESOP in accordance with FASB ASC 718-40. Accordingly, the shares purchased by the ESOP are reported as Unearned ESOP Shares in the statement of financial position. As shares are released or committed-to-be-released, the Company reports compensation expense equal to the current average market price of the shares, and the shares become outstanding for earnings-per-share (EPS) computations. ESOP compensation expense was $111,081 and $97,487 for the three-month periods ended December 31, 2015 and 2014, respectively. ESOP compensation expense was $224,175 and $208,678 for the six-month periods ended December 31, 2015 and 2014, respectively.

7 

The ESOP shares as of December 31, 2015 and 2014 were as follows:

	December 31, 2015		December 31, 2014
Allocated Shares		423,568		441,531
Committed-to-be-released shares		8,750		9,167
Unreleased shares		70,417		88,333
Total shares held by the ESOP		502,735		539,031
Fair value of unreleased shares	$	1,813,238	$	2,102,325

During the three and six months ended December 31, 2015 the Company repurchased 14,303 shares previously held in the ESOP for $355,418. During the three and six months ended December 31, 2014 the Company repurchased 3,644 and 13,553 shares previously held in the ESOP for $85,671 and $320,504, respectively.

8 

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations

Overview

Espey Mfg. & Electronics Corp. (“Espey”) is a power electronics design and original equipment manufacturing (OEM) company with a long history of developing and delivering highly reliable products for use in military and severe environment applications. Design, manufacturing, and testing is performed in our 150,000+ square foot facility located at 233 Ballston Ave, Saratoga Springs, New York. Espey is classified as a “smaller reporting company” for purposes of the reporting requirements under the Securities Exchange Act of 1934, as amended. Espey’s common stock is publicly-traded on the NYSE MKT under the symbol “ESP.”

Espey began operations after incorporation in New York in 1928. We strive to remain competitive as a leader in high power energy conversion and transformer solutions through the design and manufacture of new and improved products by using advanced and “cutting edge” electronics technologies.

Espey is ISO 9001:2008 and AS9100:2009 certified. Our primary products are power supplies, power converters, filters, power transformers, magnetic components, power distribution equipment, UPS systems, antennas and high power radar systems. The applications of these products include AC and DC locomotives, shipboard power, shipboard radar, airborne power, ground-based radar, and ground mobile power.

Espey services include design and development to specification, build to print, design services, design studies, environmental testing services, metal fabrication, painting services, and development of automatic testing equipment. Espey is vertically integrated, meaning that the Company produces individual components (including inductors), populates printed circuit boards, fabricates metalwork, paints, wires, qualifies, and fully tests items, mechanically, electrically and environmentally, in house. Portions of the manufacturing and testing process are subcontracted to vendors from time to time.

The Company markets its products primarily through its own direct sales organization and through outside sales representatives. Business is solicited from large industrial manufacturers and defense companies, the government of the United States, foreign governments and major foreign electronic equipment companies. In certain countries the Company has external sales representatives to help solicit and coordinate foreign contracts. Espey is also on the eligible list of contractors with the United States Department of Defense and generally is automatically solicited by Defense Department procurement agencies for their needs falling within the major classes of products produced by the Company. In addition, the Company directly pursues opportunities from the United States Department of Defense for prime contracts. Espey contracts with the Federal Government under cage code 20950 as Espey Mfg. & Electronics Corp.

There is competition in all classes of products manufactured by the Company from divisions of the largest electronic companies, as well as many small companies. The Company's sales do not represent a significant share of the industry's market for any class of its products. The principal methods of competition for electronic products of both a military and industrial nature include, among other factors, price, product performance, the experience of the particular company and history of its dealings in such products.

Our business is not seasonal. However, the concentration of our business in equipment for military applications and our customer concentrations expose us to on-going associated risks including, without limitation, dependence on appropriations from the United States Government and the governments of foreign nations, program allocations, and the potential of governmental termination of orders for convenience.

Uncertainty in federal defense spending continues to drive competition in the industry. Based upon discussions during contract negotiations with our major customers over the past several years, we believe that many of our competitors have been aggressively investing in upfront product design costs and lowering profit margins as a strategic means of maintaining existing business and enhancing market share at the expense of short term profit. This change in the market place has put pressure on the pricing of our current products and will result in lower margins on new business and some of our legacy business. In order to compete effectively for new business, in some cases we invest in upfront design costs, thereby reducing initial profitability as a means of procuring new long-term programs. Accordingly, we have adjusted our pricing strategy in order to achieve a balance which enables us both to retain repeat programs while being more competitive in bidding on new programs.

The Company's backlog was approximately $43.0 million at December 31, 2015, which includes $27.4 million from two significant customers, compared to $41.2 million at December 31, 2014, which included $26.2 million from two significant customers. The backlog at December 31, 2015 also includes a $10.1 million delivery order attributable to an award of a significant contract from the Federal Government which had been protested to the United States Government Accountability Office by a competing bidder. The protest was subsequently withdrawn. Revenues under this contract are not expected to be realized until fiscal year 2017. The backlog for the Company represents the estimated remaining sales value of work to be performed under firm contracts. This includes items that have been authorized and appropriated by Congress and/or funded by the customer. The unfunded portions of the backlog at December 31, 2015 and 2014 were $0 and $2.3 million, respectively, representing firm multi-year orders for which funding had not yet been appropriated by Congress or funded by our customer. While there is no guarantee that future budgets and appropriations will provide funding for a given program, management has included in unfunded backlog only those programs that it believes are likely to receive funding based on discussions with customers and program status.

9 

Management expects revenues in fiscal year 2016 to increase approximately 6% as compared with fiscal year 2015 revenues. Current expectations are for gross margins to be lower compared to prior year due to product mix, competitive pricing pressures, new program investments, and a one-time reduction to cost of sales in the prior year discussed within the Results of Operations, below. New orders received in the first six months of fiscal 2016 were approximately $20.2 million as compared to $16.8 million of new orders received in the first six months of fiscal 2015. It is presently anticipated that a minimum of $13million of orders comprising the December 31, 2015 backlog will be filled during the fiscal year ending June 30, 2016. The minimum of $13 million does not include any shipments, which may be made against orders subsequently received during the fiscal year ending June 30, 2016.

In addition to the backlog, the Company currently has outstanding opportunities representing in excess of $50.2 million in the aggregate as of February 1, 2016 for both repeat and new programs. The outstanding quotations encompass various new and previously manufactured power supplies, transformers, and subassemblies. However, there can be no assurance that the Company will acquire any of the anticipated orders described above, many of which are subject to allocations of the United States defense spending and factors affecting the defense industry and industrial locomotive power supply procurement generally.

Management continues to evaluate our sales strategy including the professional and technical resources necessary to keep pace with the changing market conditions and needs of our customers. The Company has added to and re-aligned current sales and engineering resources, in order to focus on penetrating opportunities with new and existing customers. The Company continues quoting current and new customers for programs of varying sizes.

Net sales to two significant customers represented 49.8% of the Company's total sales for the three-month period ended December 31, 2015 and net sales to three significant customers represented 62.9% of the Company's total sales for the three-month period ended December 31, 2014. Net sales to two significant customers represented 54.7% and 50.7% of the Company’s total sales for the six-month periods ended December 31, 2015 and 2014, respectively. This high concentration level with two customers presents significant risk. A loss of one of these customers or programs related to these customers could significantly impact the Company. Historically, a small number of customers have accounted for a large percentage of the Company’s total sales in any given fiscal year. Management continues to pursue opportunities with current and new customers with an overall objective of lowering the concentration of sales and mitigating excessive reliance upon a single major product of a particular program or minimizing the impact of the loss of a single significant customer.

Critical Accounting Policies and Estimates

Management believes our most critical accounting policies include revenue recognition and cost estimates to completion.

A significant portion of our business is comprised of development and production contracts. Generally, revenues on long-term fixed-price contracts are recorded on a percentage of completion basis using units of delivery as the measurement basis for progress toward completion.

Percentage of completion accounting requires judgment relative to expected sales, estimating costs and making assumptions related to technical issues and delivery schedule. Contract costs include material, subcontract costs, labor and an allocation of overhead costs. The estimation of cost at completion of a contract is subject to numerous variables involving contract costs and estimates as to the length of time to complete the contract. Given the significance of the estimation processes and judgments described above, it is possible that materially different amounts of expected sales and contract costs could be recorded if different assumptions were used, based on changes in circumstances, in the estimation process. When a change in expected sales value or estimated cost is determined, changes are reflected in current period earnings.

Results of Operations

Net sales increased for the three months ended December 31, 2015 to $7,242,020 as compared to $5,697,083 for the same period in 2014. Net sales for the six months ended December 31, 2015 increased to $13,521,456 as compared to $11,390,555 for the same period in 2014. The increase in net sales is primarily due to increased shipments of power supplies and magnetics, offset by a decline in spare part sales.

10 

For the three months ended December 31, 2015 and 2014 gross profits were $1,588,043 and $2,258,735, respectively. Gross profit as a percentage of sales was 21.9% and 39.6%, for the three months ended December 31, 2015 and 2014, respectively. For the six months ended December 31, 2015 and 2014, gross profits were $3,556,363 and $4,068,814, respectively. Gross profit as a percentage of sales was 26.3% and 35.7%, for the six months ended December 31, 2015 and 2014, respectively. The primary factors in determining gross profit and net income are overall sales levels and product mix. The gross profits on mature products and build to print contracts are higher as compared to products which are still in the engineering development stage or in early stages of production. In the case of the latter, the Company incurs what it refers to as “loss contracts,” meaning engineering design contracts in which the Company invests with the objective of developing future product sales. In any given accounting period the mix of product shipments between higher margin programs and less mature programs, and expenditures associated with loss contracts, has a significant impact on gross profit and net income. The gross profit percentage decreased in the three and six months ended December 31, 2015 as compared to the same periods ended December 31, 2014 due to the impact of lower margins resulting from product mix. In addition, gross profit for the three and six months ended December 31, 2014 included a favorable one-time reduction to cost of sales totaling $560,000 for a contract settlement related to a previously cancelled program.

Selling, general and administrative expenses were $754,958 for the three months ended December 31, 2015; an increaseof $121,781, compared to the three months ended December 31, 2014. Selling, general and administrative expenses were $1,504,608 for the six months ended December 31, 2015; an increase of $273,229 compared to the six months ended December 31, 2014. The increase for the three and six months ended December 31, 2015 relates primarily to an increase in compensation costs and professional service fees due to an increase in the number of employees, as well as, an increase in outside selling costs.

Other income for the three months ended December 31, 2015 and 2014 was $37,173 and $19,998, respectively. Other income for the six months ended December 31, 2015 and 2014 was $62,614 and $37,648, respectively. The increase is primarily due to an increase in scrap metal sales.

The effective income tax rate for the three and six months ended December 31, 2015 and 2014 was 29.4% and 25.9%, respectively. The effective tax rate is less than the statutory tax rate mainly due to the benefit the Company receives on its “qualified production activities” under The American Jobs Creation Act of 2004 and the benefit derived from the ESOP dividends paid on allocated shares. The increase in the effective tax rate for December 31, 2015 is primarily due to a reduced benefit caused by the reduction in dividends deductible for income tax purposes.

Net income for the three months ended December 31, 2015, was $614,427 or $0.27 per share both basic and diluted, respectively compared to $1,219,082 or $0.54 per share both basic and diluted, for the three months ended December 31, 2014. Net income for the six months ended December 31, 2015, was $1,492,957 or $0.65 per share both basic and diluted compared to $2,130,303 or $0.94 and $0.93 per share, basic and diluted, respectively, for the six months ended December 31, 2014.The decrease in net income per share was mainly due to lower gross profits due to product mix, higher selling, general and administrative expenses and the favorable one-time $560,000 reduction to cost of sales referred to above.

Liquidity and Capital Resources

The Company's working capital is an appropriate indicator of the liquidity of its business, and during the past two fiscal years, the Company, when possible, has funded all of its operations with cash flows resulting from operating activities and when necessary from its existing cash and investments. The Company did not borrow any funds during the last two fiscal years. Management has available a $3,000,000 line of credit to help fund further growth or working capital and letter of credit needs, if necessary, but does not anticipate the need for any borrowed funds in the foreseeable future. Contingent liabilities on outstanding standby letters of credit agreements aggregated to zero at December 31, 2015 and 2014.

The Company's working capital as of December 31, 2015 and 2014 was approximately $28.9 million and $28.1 million, respectively. During the three and six months ended December 31, 2015 the Company repurchased 14,303 shares of its common stock from the Company's Employee Retirement Plan and Trust ("ESOP") for a purchase price of $355,418. During the three and six months ended December 31, 2014 the Company repurchased 3,644 and 13,553 shares of its common stock, respectively, from the ESOP for a purchase price of $85,671 and $320,504, respectively. Under existing authorizations from the Company's Board of Directors, as of December 31, 2015, management is authorized to purchase an additional $1,030,326 of Company stock.

11 

The table below presents the summary of cash flow information for the periods indicated:

	Six Months Ended December 31,
	2015			2014
Net cash provided by operating activities	$	3,818,117		$	1,636,421
Net cash (used in) provided by investing activities		(1,147,250	)		461,511
Net cash used in financing activities		(1,983,054	)		(1,416,986	)

Net cash provided by operating activities fluctuates between periods primarily as a result of differences in sales and net income, provisions for income taxes, the timing of the collection of accounts receivable, purchase of inventory, and payment of accounts payable. The increase in net cash provided by operating activities primarily relates to the decrease in trade accounts receivable offset by a decrease in net income. Net cash provided by investing activities decreased in the first six months of fiscal 2016 due to the timing and reinvestment of matured investment securities. The increase in cash used in financing activities is due primarily to the dividend payable at June 30, 2015, paid in the six months ended December 31, 2015.

The Company currently believes that the cash flow generated from operations and when necessary, from cash and cash equivalents will be sufficient to meet its long-term funding requirements for the foreseeable future.

During the six months ended December 31, 2015 and 2014, the Company expended $82,341 and $54,050, respectively, for plant improvements and new equipment. The Company has budgeted approximately $250,000 for new equipment and plant improvements in fiscal 2016. Management anticipates that the funds required will be available from current operations.

Management also believes that the Company's reserve for bad debts of $3,000 is adequate given the customers with whom the Company does business. Historically, bad debt expense has been minimal.

CAUTIONARY STATEMENT FOR PURPOSES OF THE "SAFE HARBOR" PROVISIONS OF THE PRIVATE

SECURITIES LITIGATION REFORM ACT OF 1995

This report contains "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. The terms "believe," "anticipate," "intend," "goal," "expect," and similar expressions may identify forward-looking statements. These forward-looking statements represent the Company's current expectations or beliefs concerning future events. The matters covered by these statements are subject to certain risks and uncertainties that could cause actual results to differ materially from those set forth in the forward-looking statements, including the Company's dependence on timely development, introduction and customer acceptance of new products, the impact of competition and price erosion, supply and manufacturing constraints, potential new orders from customers and other risks and uncertainties. The foregoing list should not be construed as exhaustive, and the Company disclaims any obligation subsequently to revise any forward-looking statements to reflect events or circumstances after the date of such statements or to reflect the occurrence of anticipated or unanticipated events. The Company wishes to caution readers not to place undue reliance on any such forward-looking statements, which speak only as of the date made.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

The Company is a smaller reporting company as defined under Securities and Exchange Commission Rule 12b-2. Pursuant to the exemption available to smaller reporting company issuers under Item 305 of Regulation S-K, quantitative and qualitative disclosures about market risk, the Company is not required to provide the information for this item.

Item 4. Controls and Procedures

(a) The Company's management, with the participation of the Company's chief executive officer and chief financial officer, carried out an evaluation of the effectiveness of our disclosure controls and procedures (as defined in Rule 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934) as of the end of the period covered by this Quarterly Report on Form 10-Q. Based on such evaluation, our chief executive officer and chief financial officer have concluded that our disclosure controls and procedures were effective as of the end of the period covered by this report.

(b) There have been no changes in our internal controls over financial reporting during the period covered by this report that have materially affected, or are reasonably likely to materially affect, our internal controls over financial reporting.

12 

PART II: Other Information and Signatures

Item 1. Legal Proceedings

None

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

(a) Securities Sold - None

(c) Securities Repurchased

Purchases of Equity Securities
			Total Number	Maximum Number
			of Shares	(or Approximate
			Purchased	Dollar Value)
			as Part of	of Shares
	Total	Average	Publicly	that May Yet
	Number	Price	Announced	Be Purchased
	of Shares	Paid	Plan or	Under the Plan
Period	Purchased	per Share	Program	or Program (1)
October 1 to
October 31, 2015	14,303	$24.8492	14,303	$1,030,326

(1) Pursuant to a prior Board of Directors authorization, as of December 31, 2015 the Company can repurchase up to $1,030,326 of its common stock pursuant to an ongoing plan.

Item 3 Defaults Upon Senior Securities

None

Item 4. Mine Safety Disclosures

Not applicable

Item 5. Other Information

None

Item 6. Exhibits

31.1 Certification of the Chief Executive Officer pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

31.2 Certification of the Principal Financial Officer pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

32.1 Certification of the Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

32.2 Certification of the Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

13 

S I G N A T U R E S

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

ESPEY MFG. & ELECTRONICS CORP.

/s/Patrick Enright Jr.

Patrick Enright Jr.

President and Chief Executive Officer

/s/David O’Neil

David O'Neil,

Treasurer and Principal Financial Officer

February 11, 2016

Date

14 

EX-31.1

Exhibit 31.1

Certification of the Chief Executive Officer

Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934,

as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

I, Patrick Enright Jr., certify that:

1. I have reviewed this quarterly report on Form 10-Q of Espey Mfg. & Electronics Corp;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15(d)-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15(d)-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: February 11, 2016

/s/Patrick Enright Jr.  

Patrick Enright Jr.

President and Chief Executive Officer

15 

EX-31.2

Exhibit 31.2

Certification of the Principal Financial Officer

Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934,

as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

I, David O’Neil, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Espey Mfg. & Electronics Corp;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15(d)-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15(d)-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: February 11, 2016

/s/David O’Neil

David O’Neil

Treasurer and Principal Financial Officer

16 

EX-32.1

Exhibit 32.1

Certification of the Chief Executive Officer pursuant to 18 U.S.C. Section 1350,

as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

In connection with this quarterly report of Espey Mfg. & Electronics Corp. (the "Company") on Form 10-Q for the period ended December 31, 2015 as filed with the Securities and Exchange Commission on the date hereof (the “report”), I, Patrick Enright Jr., Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to my knowledge:

1. The report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2. The information contained in this report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: February 11, 2016

/s/Patrick Enright Jr.

Patrick Enright Jr.

President and Chief Executive Officer

17 

EX-32.2

Exhibit 32.2

Certification of the Principal Financial Officer pursuant to 18 U.S.C. Section 1350,

as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

In connection with this quarterly report of Espey Mfg. & Electronics Corp. (the "Company") on Form 10-Q for the period ended December 31, 2015 as filed with the Securities and Exchange Commission on the date hereof (the “report”), I, David O’Neil, Principal Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to my knowledge:

1. The report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2. The information contained in this report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: February 11, 2016

/s/David O’Neil

David O’Neil

Treasurer and Principal Financial Officer

18 

XML

Document and Entity Information - shares	6 Months Ended
	Dec. 31, 2015	Feb. 11, 2016
Document And Entity Information [Abstract]
Entity Registrant Name	ESPEY MFG & ELECTRONICS CORP
Entity Central Index Key	0000033533
Document Type	10-Q
Document Period End Date	Dec. 31, 2015
Amendment Flag	false
Current Fiscal Year End Date	--06-30
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		2,354,184
Document Fiscal Period Focus	Q2
Document Fiscal Year Focus	2016

XML

Balance Sheets - USD ($)	Dec. 31, 2015	Jun. 30, 2015
ASSETS:
Cash and cash equivalents	$ 9,547,218	$ 8,859,405
Investment securities	5,224,370	4,159,057
Trade accounts receivable, net of allowance of $3,000	4,038,389	$ 6,694,401
Income taxes receivable	207,551
Inventories:
Raw materials	1,464,486	$ 1,481,792
Work-in-process	620,039	561,682
Costs relating to contracts in process, net of advance payments of $2,174 at December 31, 2015 and $19,626 at June 30, 2015	9,622,880	9,542,423
Total inventories	11,707,405	11,585,897
Deferred income taxes	257,274	334,681
Prepaid expenses and other current assets	111,379	211,940
Total current assets	31,093,586	31,845,381
Property, plant and equipment, net	2,363,036	2,498,863
Total assets	33,456,622	34,344,244
LIABILITIES AND STOCKHOLDERS' EQUITY:
Accounts payable	604,418	976,112
Accrued expenses:
Salaries and wages	242,880	332,387
Vacation	647,525	$ 690,833
ESOP payable	$ 164,800
Dividend payable		$ 590,672
Other	$ 448,276	548,817
Payroll and other taxes withheld	$ 85,677	47,082
Income taxes payable		2,716
Total current liabilities	$ 2,193,576	3,188,619
Deferred tax liability	178,473	224,751
Total liabilities	$ 2,372,049	$ 3,413,370
Commitments and contingencies (see Note 5)
Common stock, par value $.33-1/3 per share. Authorized 10,000,000 shares; Issued 3,029,874 shares on December 31, 2015 and June 30, 2015. Outstanding 2,352,184 and 2,362,687 on December 31, 2015 and June 30, 2015, respectively (includes 70,417 and 79,167 Unearned ESOP shares, respectively)	$ 1,009,958	$ 1,009,958
Capital in excess of par value	16,889,082	16,785,604
Accumulated other comprehensive loss	(3,511)	(4,386)
Retained earnings	22,239,365	21,865,951
Total stockholders equity before ESOP	40,134,894	39,657,127
Less: Unearned ESOP shares	(1,143,957)	(1,143,957)
Treasury shares, cost of 677,690 and 667,187 shares on December 31, 2015 and June 30, 2015, respectively	(7,906,364)	(7,582,296)
Total stockholders' equity	31,084,573	30,930,874
Total liabilities and stockholders' equity	$ 33,456,622	$ 34,344,244

XML

Balance Sheets (Parenthetical) - USD ($)	Dec. 31, 2015	Jun. 30, 2015
Balance Sheets [Abstract]
Trade accounts receivable, allowance	$ 3,000	$ 3,000
Advance payments of costs related to contracts in process	$ 2,174	$ 19,626
Common stock, par value	$ 0.3333	$ 0.3333
Common stock, shares authorized	10,000,000	10,000,000
Common stock, shares issued	3,029,874	3,029,874
Common stock, shares outstanding	2,352,184	2,362,687
Unearned ESOP, shares	70,417	79,167
Treasury stock, shares	677,690	667,187

XML

Statements of Comprehensive Income - USD ($)	3 Months Ended		6 Months Ended
	Dec. 31, 2015	Dec. 31, 2014	Dec. 31, 2015	Dec. 31, 2014
Statement of Comprehensive Income [Abstract]
Net sales	$ 7,242,020	$ 5,697,083	$ 13,521,456	$ 11,390,555
Cost of sales	5,653,977	3,438,348	9,965,093	7,321,741
Gross profit	1,588,043	2,258,735	3,556,363	4,068,814
Selling, general and administrative expenses	754,958	633,177	1,504,608	1,231,379
Operating income	833,085	1,625,558	2,051,755	2,837,435
Other income
Interest income	10,610	9,061	18,063	17,054
Other	26,563	10,937	44,551	20,594
Total other income	37,173	19,998	62,614	37,648
Income before income taxes	870,258	1,645,556	2,114,369	2,875,083
Provision for income taxes	255,831	426,474	621,412	744,780
Net income	614,427	1,219,082	1,492,957	2,130,303
Other comprehensive income, net of tax:
Unrealized (loss) gain on investment securities	(905)	(1,093)	874	(1,413)
Total comprehensive income	$ 613,522	$ 1,217,989	$ 1,493,831	$ 2,128,890
Net income per share:
Basic	$ 0.27	$ 0.54	$ 0.65	$ 0.94
Diluted	$ 0.27	$ 0.54	$ 0.65	$ 0.93
Weighted average number of shares outstanding:
Basic	2,276,401	2,265,460	2,280,262	2,268,205
Diluted	2,294,020	2,274,004	2,298,913	2,281,049
Dividends per share:	$ 0.25	$ 0.25	$ 0.50	$ 0.50

XML

Statements of Cash Flows - USD ($)	6 Months Ended
	Dec. 31, 2015	Dec. 31, 2014
Cash Flows from Operating Activities:
Net income	$ 1,492,957	$ 2,130,303
Adjustments to reconcile net income to net cash provided by operating activities:
Excess tax benefits from share-based compensation	(15,021)	(26,835)
Stock-based compensation	52,249	26,058
Depreciation	218,021	227,753
ESOP compensation expense	224,175	208,678
Loss on disposal of assets	147	233
Deferred income tax expense	31,600	40,707
Changes in assets and liabilities:
Decrease (increase) in trade receivable, net	2,656,012	(192,316)
(Increase) decrease in income taxes receivable	(207,551)	677,238
Increase in inventories, net	(121,508)	(912,542)
Decrease in prepaid expenses and other current assets	100,561	115,436
(Decrease) increase in accounts payable	(371,694)	150,252
Decrease in accrued salaries and wages	(89,507)	(240,224)
Decrease in vacation accrual	(43,308)	(160,543)
Decrease in ESOP payable	(59,375)	(48,750)
Decrease in other accrued expenses	(100,541)	(380,033)
Increase (decrease) in payroll and other taxes withheld	38,595	(5,829)
Increase in income taxes payable	12,305	26,835
Net cash provided by operating activities	3,818,117	1,636,421
Cash Flows from Investing Activities:
Additions to property, plant and equipment	(82,341)	(54,050)
Purchase of investment securities	(2,347,595)	(1,427,174)
Proceeds from sale/maturity of investment securities	1,282,686	1,942,735
Net cash (used in) provided by investing activities	(1,147,250)	461,511
Cash Flows from Financing Activities:
Dividends on common stock	(1,710,215)	(1,132,317)
Purchase of treasury stock	(355,418)	(320,504)
Proceeds from exercise of stock options	67,558	9,000
Excess tax benefits from share-based compensation	15,021	26,835
Net cash used in financing activities	(1,983,054)	(1,416,986)
Increase in cash and cash equivalents	687,813	680,946
Cash and cash equivalents, beginning of period	8,859,405	9,556,891
Cash and cash equivalents, end of period	9,547,218	$ 10,237,837
Supplemental Schedule of Cash Flow Information:
Income taxes paid	$ 786,000

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Basis of Presentation

6 Months Ended

Dec. 31, 2015

Basis of Presentation [Abstract]

Basis of Presentation

Note 1. Basis of Presentation

In the opinion of management the accompanying unaudited financial statements contain all adjustments (consisting of only normal recurring adjustments) necessary for a fair presentation of the results for such periods. The results for any interim period are not necessarily indicative of the results to be expected for the full fiscal year. Certain information and footnote disclosures normally included in financial statements prepared in accordance with United States generally accepted accounting principles have been condensed or omitted. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of assets and liabilities. On an ongoing basis, we evaluate our estimates and judgments, including those related to revenue recognition, inventories, income taxes, and stock-based compensation. Management bases its estimates on historical experience and on various other factors that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions. These financial statements should be read in conjunction with the Company's most recent audited financial statements included in its report on Form 10-K for the year ended June 30, 2015. Certain reclassifications may have been made to the prior year financial statements to conform to the current year presentation.

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Fair Value of Financial Instruments and Investments

6 Months Ended

Dec. 31, 2015

Fair Value of Financial Instruments and Investments [Abstract]

Fair Value of Financial Instruments and Investments

Note 2. Fair Value of Financial Instruments and Investments

ASC 820 establishes a fair value hierarchy which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The standard describes three levels of inputs that may be used to measure fair value:

§ Level 1: Quoted prices (unadjusted) for identical assets or liabilities in active markets that the entity has the ability to access as of the measurement date.

§ Level 2: Significant other observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data.

§ Level 3: Significant unobservable inputs that reflect a reporting entity's own assumptions about the assumptions that market participants would use in pricing an asset or liability.

The carrying amounts of financial instruments, including cash and cash equivalents, short term investments, accounts receivable, accounts payable and accrued expenses, approximated fair value as of December 31, 2015 and June 30, 2015 because of the immediate or short-term maturity of these financial instruments.

Investment securities at December 31, 2015 and June 30, 2015 consist of certificates of deposit and municipal bonds which are classified as available-for-sale securities and have been determined to be level 1 assets. The cost, gross unrealized gains, gross unrealized losses and fair value of available-for-sale securities by major security type at December 31, 2015 and June 30, 2015 are as follows:

			Gross		Gross
	Amortized		Unrealized		Unrealized			Fair
	Cost		Gains		Losses			Value
December 31, 2015
Certificates of deposit	$	4,405,000	$	—	$	—		$	4,405,000
Municipal bonds		824,772		1,198		(6,600	)		819,370
Total investment securities	$	5,229,772	$	1,198	$	(6,600	)	$	5,224,370
June 30, 2015
Certificates of deposit	$	3,272,000	$	—	$	—		$	3,272,000
Municipal bonds		893,804		1,288		(8,035	)		887,057
Total investment securities	$	4,165,804	$	1,288	$	(8,035	)	$	4,159,057

The portfolio is diversified and highly liquid and primarily consists of investment grade fixed income instruments. At December 31, 2015, the Company did not have any investments in individual securities that have been in a continuous loss position considered to be other than temporary. Due to the fact that the decline in market value is attributable to changes in interest rates and not credit quality, and because the severity and duration of the unrealized losses were not significant, the Company considered these unrealized losses to be temporary at December 31, 2015.

As of December 31, 2015 and June 30, 2015, the contractual maturities of available-for-sale securities were as follows:

	Years to Maturity
	Less than		One to
	One Year		Five Years		Total
December 31, 2015
Available-for-sale	$	4,979,370	$	245,000	$	5,224,370
June 30, 2015
Available-for-sale	$	3,522,728	$	636,329	$	4,159,057

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Net Income per Share

6 Months Ended

Dec. 31, 2015

Net Income per Share [Abstract]

Net Income per Share

Note 3. Net Income per Share

Basic net income per share excludes dilution and is computed by dividing net income available to common stockholders by the weighted average number of common shares outstanding for the period. Diluted net income per share reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock or resulted in the issuance of common stock that then shared in the income of the Company. The computation of weighted-average common shares outstanding, assuming dilution, excluded options to purchase 68,550 and 92,625 shares of our common stock for the three and six months ended December 31, 2015 and December 31, 2014, respectively, as the effect of including them would be anti-dilutive. As Unearned ESOP shares are released or committed-to-be-released the shares become outstanding for earnings-per-share computations.

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Stock Based Compensation

6 Months Ended

Dec. 31, 2015

Stock Based Compensation [Abstract]

Stock Based Compensation

Note 4. Stock Based Compensation

The Company follows ASC 718 in establishing standards for the accounting for transactions in which an entity exchanges its equity instruments for goods or services, as well as transactions in which an entity incurs liabilities in exchange for goods or services that are based on the fair value of the entity's equity instruments or that may be settled by the issuance of those equity instruments. ASC 718 requires that the cost resulting from all share-based payment transactions be recognized in the financial statements based on the fair value of the share-based payment. ASC 718 establishes fair value as the measurement objective in accounting for share-based payment transactions with employees, except for equity instruments held by employee share ownership plans.

Total stock-based compensation expense recognized in the statements of comprehensive income for the three-month period ended December 31, 2015 and 2014, was $21,783 and $13,029, respectively, before income taxes. The related total deferred tax benefit was approximately $1,765 and $1,371 for the three-month period ended December 31, 2015 and 2014 respectively. Total stock-based compensation expense recognized in the statements of comprehensive income for the six-month period ended December 31, 2015 and 2014, was $52,249 and $26,058, respectively, before income taxes. The related total deferred tax benefit was approximately $4,441 and $2,742 for the six-month period ended December 31, 2015 and 2014, respectively. ASC 718 requires the tax benefits  resulting from tax deductions in excess of the compensation cost recognized for those options to be classified and reported as both an operating cash outflow and a financing cash inflow.

As of December 31, 2015, there was approximately $122,238 of unrecognized compensation cost related to stock option awards that is expected to be recognized as expense over the next 2 years. The total deferred tax benefit related to these awards is approximately $10,296.

The Company has one employee stock option plan under which options may be granted, the 2007 Stock Option and Restricted Stock Plan (the "2007 Plan"). The Board of Directors may grant options to acquire shares of common stock to employees of the Company at the fair market value of the common stock on the date of grant. Generally, options granted have a two-year vesting period based on two years of continuous service and have a ten-year contractual life. Option grants provide for accelerated vesting if there is a change in control. Shares issued upon the exercise of options are from those held in Treasury. The 2007 Plan was approved by the Company's shareholders at the Company's Annual Meeting on November 30, 2007 and supersedes the Company's 2000 Stock Option Plan (the "2000 Plan"). Options covering 400,000 shares were authorized for issuance under the 2007 Plan, of which 234,650 have been granted and 165,250 are outstanding as of December 31, 2015. While no further grants of options may be made under the 2000 Plan, as of December 31, 2015, 17,700 options remain outstanding, vested and exercisable from the 2000 Plan.

ASC 718 requires the use of a valuation model to calculate the fair value of stock-based awards. The Company has elected to use the Black-Scholes option valuation model, which incorporates various assumptions including those for volatility, expected life and interest rates.

The table below outlines the weighted average assumptions that the Company used to calculate the fair value of the option award for the six months ended December 31, 2015. There were no options awarded for the six months ended December 31, 2014.

	December 31, 2015
Dividend yield		3.72%
Expected stock price volatility		28.06%
Risk-free interest rate		1.60%
Expected option life (in years)		4.1 yrs
Weighted average fair value per share of options granted during the period		$4.431

The Company pays dividends quarterly and paid cash dividends totaling $0.50 per share for the six months ended December 31, 2015 and 2014. Our Board of Directors assesses the Company's dividend policy periodically. There is no assurance, that the Board of Directors will either maintain the amount of the regular cash dividend or declare a special dividend during any future years. Expected stock price volatility is based on the historical volatility of the Company's stock. The risk-free interest rate is based on the implied yield available on U.S. Treasury issues with an equivalent term approximating the expected life of the options. The expected option life (in years) represents the estimated period of time until exercise and is based on actual historical experience.

The following table summarizes stock option activity during the six months ended December 31, 2015:

	Employee Stock Options Plan
						Weighted
	Number of			Weighted		Average
	Shares			Average		Remaining		Aggregate
	Subject			Exercise		Contractual		Intrinsic
	To Option			Price		Term		Value
Balance at July 1, 2015		187,500		$	23.38		6.26
Granted		500		$	26.89		10.00
Exercised		(3,800	)	$	17.78		—
Forfeited or expired		(1,250	)	$	26.09		—
Outstanding at December 31, 2015		182,950		$	23.48		5.83	$	471,369
Vested or expected to vest at December 31, 2015		176,753		$	23.39		5.71	$	471,369
Exercisable at December 31, 2015		139,650		$	22.64		4.74	$	471,369

The aggregate intrinsic value in the table above represents the total pretax intrinsic value (the difference between the closing sale price of the Company's common stock as reported on the NYSE MKT on December 31, 2015 and the exercise price, multiplied by the number of in-the-money options) that would have been received by the option holders if all option holders had exercised their options on December 31, 2015. This amount changes based on the fair market value of the Company's common stock. The total intrinsic values of the options exercised during the six months ended December 31, 2015 and 2014 was $6,512 and $16,267, respectively.

The following table summarizes changes in non-vested stock options during the six months ended December 31, 2015:

	Weighted Number			Average Grant
	of Shares			Date Fair
	Subject to Option			Value (per Option)
Non-Vested at July 1, 2015		69,300		$	4.310
Granted		500		$	4.431
Vested		(25,250	)	$	3.777
Forfeited or expired		(1,250	)	$	4.710
Non-Vested at December 31, 2015		43,300		$	4.611

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Commitments and Contingencies

6 Months Ended

Dec. 31, 2015

Commitments and Contingencies [Abstract]

Commitments and Contingencies

Note 5. Commitments and Contingencies

The Company at certain times enters into standby letters of credit agreements with financial institutions primarily relating to the guarantee of future performance on certain contracts.  Contingent liabilities on outstanding standby letters of credit agreements aggregated to zero at December 31, 2015 and 2014. The Company, as a U.S. Government contractor, is subject to audits, reviews, and investigations by the U.S. government related to its negotiation and performance of government contracts and its accounting for such contracts. Failure to comply with applicable U.S. Government standards by a contractor may result in suspension from eligibility for award of any new government contract and a guilty plea or conviction may result in debarment from eligibility for awards. The government may, in certain cases, also terminate existing contracts, recover damages, and impose other sanctions and penalties.

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Recently Issued Accounting Standards

6 Months Ended

Dec. 31, 2015

Recently Issued Accounting Standards [Abstract]

Recently Issued Accounting Standards

Note 6. Recently Issued Accounting Standards

In May 2014, the FASB issued ASU No. 2014-09, “Revenue from Contracts with Customers,” which supersedes nearly all existing revenue recognition guidance under U.S. GAAP. The core principle of ASU 2014-09 is to recognize revenues when promised goods or services are transferred to customers in an amount that reflects the consideration to which an entity expects to be entitled for those goods or services. ASU 2014-09 defines a five step process to achieve this core principle and, in doing so, more judgment and estimates may be required within the revenue recognition process than are required under existing U.S. GAAP. The standard is effective for annual periods beginning after December 15, 2017, and interim periods therein, using either of the following transition methods: (i) a full retrospective approach reflecting the application of the standard in each prior reporting period with the option to elect certain practical expedients, or (ii) a retrospective approach with the cumulative effect of initially adopting ASU 2014-09 recognized at the date of adoption (which includes additional footnote disclosures). Early adoption is permitted for annual periods beginning after December 15, 2016 and interim periods therein. We are currently evaluating the impact of our pending adoption of ASU 2014-09 on our financial statements and have not yet determined the method by which we will adopt the standard in fiscal 2019.

In July 2015, the FASB issued ASU No. 2015-11, “Inventory (Topic 330): Simplifying the Measurement of Inventory”. ASU 2015-11 requires inventory measured using any method other than last-in, first out or the retail inventory method to be subsequently measured at the lower of cost and net realizable value, rather than at the lower of cost or market. Net realizable value is defined as the estimated selling price, less the estimated costs to complete, dispose, and transport such inventory. ASU No. 2015-11 will be effective for fiscal years and interim periods beginning after December 15, 2016. ASU No. 2015-11 is required to be applied prospectively and early adoption is permitted. The Company's adoption of ASU No. 2015-11 is not expected to have a material impact on the Company's financial position or results of operations.

In November 2015, the FASB issued ASU 2015-17, “Income Taxes (Topic 740): Balance Sheet Classification of Deferred Taxes”. The guidance requires the classification of deferred tax assets and liabilities as noncurrent in a classified balance sheet. The current requirement that deferred tax assets and liabilities of a tax-paying component of an entity be offset and presented as a single amount is not affected by this update. ASU No. 2015-17 will be effective for annual periods beginning after December 15, 2016, and interim periods within those annual periods. ASU No. 2015-17 may be applied prospectively or retrospectively, and early adoption is permitted. The Company is evaluating the impact that ASU 2015-17 will have on the Company's financial statements.

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Employee Stock Ownership Plan

6 Months Ended

Dec. 31, 2015

Employee Stock Ownership Plan [Abstract]

Employee Stock Ownership Plan

Note 7. Employee Stock Ownership Plan

The Company sponsors a leveraged employee stock ownership plan (the "ESOP") that covers all nonunion employees who work 1,000 or more hours per year and are employed on June 30. The Company makes annual contributions to the ESOP equal to the ESOP's debt service less dividends on unallocated shares received by the ESOP. All dividends on unallocated shares received by the ESOP are used to pay debt service. Dividends on allocated ESOP shares are recorded as a reduction of retained earnings. As the debt is repaid, shares are released and allocated to active employees, based on the proportion of debt service paid in the year. The Company accounts for its ESOP in accordance with FASB ASC 718-40. Accordingly, the shares purchased by the ESOP are reported as Unearned ESOP Shares in the statement of financial position. As shares are released or committed-to-be-released, the Company reports compensation expense equal to the current average market price of the shares, and the shares become outstanding for earnings-per-share (EPS) computations. ESOP compensation expense was $111,081 and $97,487 for the three-month periods ended December 31, 2015 and 2014 respectively. ESOP compensation expense was $224,175 and $208,678 for the six-month periods ended December 31, 2015 and 2014, respectively.

The ESOP shares as of December 31, 2015 and 2014 were as follows:

	December 31, 2015		December 31, 2014
Allocated Shares		423,568		441,531
Committed-to-be-released shares		8,750		9,167
Unreleased shares		70,417		88,333
Total shares held by the ESOP		502,735		539,031
Fair value of unreleased shares	$	1,813,238	$	2,102,325

 
During the three and six months ended December 31, 2015 the Company repurchased 14,303 shares previously held in the ESOP for $355,418. During the three and six months ended December 31, 2014 the Company repurchased 3,644 and 13,553 shares previously held in the ESOP for $85,671 and $320,504, respectively.

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Fair Value of Financial Instruments and Investments (Tables)

6 Months Ended

Dec. 31, 2015

Fair Value of Financial Instruments and Investments [Abstract]

Schedule of cost, gross unrealized gains, gross unrealized losses and fair value of available-for-sale securities by major security type

			Gross		Gross
	Amortized		Unrealized		Unrealized			Fair
	Cost		Gains		Losses			Value
December 31, 2015
Certificates of deposit	$	4,405,000	$	—	$	—		$	4,405,000
Municipal bonds		824,772		1,198		(6,600	)		819,370
Total investment securities	$	5,229,772	$	1,198	$	(6,600	)	$	5,224,370
June 30, 2015
Certificates of deposit	$	3,272,000	$	—	$	—		$	3,272,000
Municipal bonds		893,804		1,288		(8,035	)		887,057
Total investment securities	$	4,165,804	$	1,288	$	(8,035	)	$	4,159,057

Schedule of contractual maturities of available-for-sale securities

	Years to Maturity
	Less than		One to
	One Year		Five Years		Total
December 31, 2015
Available-for-sale	$	4,979,370	$	245,000	$	5,224,370
June 30, 2015
Available-for-sale	$	3,522,728	$	636,329	$	4,159,057

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Stock Based Compensation (Tables)

6 Months Ended

Dec. 31, 2015

Stock Based Compensation [Abstract]

Schedule of weighted average assumptions for option awards

	December 31, 2015
Dividend yield		3.72%
Expected stock price volatility		28.06%
Risk-free interest rate		1.60%
Expected option life (in years)		4.1 yrs
Weighted average fair value per share of options granted during the period		$4.431

Schedule of stock option activity

	Employee Stock Options Plan
						Weighted
	Number of			Weighted		Average
	Shares			Average		Remaining		Aggregate
	Subject			Exercise		Contractual		Intrinsic
	To Option			Price		Term		Value
Balance at July 1, 2015		187,500		$	23.38		6.26
Granted		500		$	26.89		10.00
Exercised		(3,800	)	$	17.78		—
Forfeited or expired		(1,250	)	$	26.09		—
Outstanding at December 31, 2015		182,950		$	23.48		5.83	$	471,369
Vested or expected to vest at December 31, 2015		176,753		$	23.39		5.71	$	471,369
Exercisable at December 31, 2015		139,650		$	22.64		4.74	$	471,369

Schedule of changes in non-vested stock options

	Weighted Number			Average Grant
	of Shares			Date Fair
	Subject to Option			Value (per Option)
Non-Vested at July 1, 2015		69,300		$	4.310
Granted		500		$	4.431
Vested		(25,250	)	$	3.777
Forfeited or expired		(1,250	)	$	4.710
Non-Vested at December 31, 2015		43,300		$	4.611

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Employee Stock Ownership Plan (Tables)

6 Months Ended

Dec. 31, 2015

Employee Stock Ownership Plan [Abstract]

Schedule of ESOP shares

	December 31, 2015		December 31, 2014
Allocated Shares		423,568		441,531
Committed-to-be-released shares		8,750		9,167
Unreleased shares		70,417		88,333
Total shares held by the ESOP		502,735		539,031
Fair value of unreleased shares	$	1,813,238	$	2,102,325

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Fair Value of Financial Instruments and Investments (Schedule of Cost, Gross Unrealized Gains, Gross Unrealized Losses and Fair Value of Available-For-Sale Securities by Major Security Type) (Details) - USD ($)	Dec. 31, 2015	Jun. 30, 2015
Investment in Fair Value [Line Items]
Amortized Cost	$ 5,229,772	$ 4,165,804
Gross Unrealized Gains	1,198	1,288
Gross Unrealized Losses	(6,600)	(8,035)
Fair Value	5,224,370	4,159,057
Certificates of deposit [Member]
Investment in Fair Value [Line Items]
Amortized Cost	$ 4,405,000	$ 3,272,000
Gross Unrealized Gains
Gross Unrealized Losses
Fair Value	$ 4,405,000	$ 3,272,000
Municipal bonds [Member]
Investment in Fair Value [Line Items]
Amortized Cost	824,772	893,804
Gross Unrealized Gains	1,198	1,288
Gross Unrealized Losses	(6,600)	(8,035)
Fair Value	$ 819,370	$ 887,057

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Fair Value of Financial Instruments and Investments (Schedule of Contractual Maturities of Available-For-Sale Securities) (Details) - USD ($)	Dec. 31, 2015	Jun. 30, 2015
Contractual maturities of available-for-sale securities
Less than One Year	$ 4,979,370	$ 3,522,728
One to Five Years	245,000	636,329
Fair Value	$ 5,224,370	$ 4,159,057

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Net Income per Share (Details) - shares	3 Months Ended		6 Months Ended
	Dec. 31, 2015	Dec. 31, 2014	Dec. 31, 2015	Dec. 31, 2014
Net Income per Share [Abstract]
Anti-dilutive securities	68,550	68,550	92,625	92,625

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Stock-based Compensation (Narrative) (Details) - USD ($)	3 Months Ended		6 Months Ended		96 Months Ended
	Dec. 31, 2015	Dec. 31, 2014	Dec. 31, 2015	Dec. 31, 2014	Dec. 31, 2015
Stock-Based Compensation [Line Items]
Stock based compensation expense	$ 21,783	$ 13,029	$ 52,249	$ 26,058
Deferred tax benefit related to stock based compensation	1,765	$ 1,371	4,441	2,742
Unrecognized compensation costs	122,238		$ 122,238		$ 122,238
Period in which compensation cost will be recognized			2 years
Deferred tax benefit related to unrecognized compensation costs	$ 10,296		$ 10,296		$ 10,296
Outstanding, ending	182,950		182,950		182,950
Options granted			500
Aggregate intrinsic value of options exercised			$ 6,512	$ 16,267
Cash divided paid (in dollars per share)			$ 0.50	$ 0.50
2007 Plan [Member] | Stock Option Plans [Member]
Stock-Based Compensation [Line Items]
Authorized shares under plan	400,000		400,000		400,000
Outstanding, ending	165,250		165,250		165,250
Options granted					234,650
2000 Plan [Member] | Stock Option Plans [Member]
Stock-Based Compensation [Line Items]
Outstanding, ending	17,700		17,700		17,700

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Stock-based Compensation (Schedule of weighted average assumptions for option awards) (Details)	6 Months Ended
	Dec. 31, 2015 $ / shares
Weighted Average Assumptions
Dividend yield	3.72%
Expected stock price volatility	28.06%
Risk-free interest rate	1.60%
Expected option life (in years)	4 years 1 month 6 days
Weighted average fair value per share of options granted	$ 4.431

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Stock-based Compensation (Schedule of stock option activity) (Details) - USD ($)	6 Months Ended	12 Months Ended
	Dec. 31, 2015	Jun. 30, 2015
Number of Shares Subject to Options
Balance, beginning	187,500
Granted	500
Exercised	(3,800)
Forfeited or expired	(1,250)
Outstanding, ending	182,950	187,500
Vested or expected to vest, end of period	176,753
Exercisable, end of period	139,650
Weight Average Exercise Price
Balance, beginning	$ 23.38
Granted	26.89
Exercised	17.78
Forfeited or expired	26.09
Outstanding, ending	23.48	$ 23.38
Vested or expected to vest, end of period	23.39
Exercisable, end of period	$ 22.64
Weighted Average Remaining Contractual Term
Balance, beginning		6 years 3 months 4 days
Granted	10 years
Outstanding, ending	5 years 9 months 29 days
Vested or expected to vest, end of period	5 years 8 months 16 days
Exercisable, end of period	4 years 8 months 26 days
Aggregate Intrinsic Value
Outstanding end of period	$ 471,369
Vested or expected to vest, end of period	471,369
Exercisable, end of period	$ 471,369

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Stock-based Compensation (Schedule of changes in non-vested stock options) (Details)	6 Months Ended
	Dec. 31, 2015 $ / shares shares
Average Grant Date Fair Value
Balance, beginning | $ / shares	$ 4.310
Granted | $ / shares	4.431
Vested | $ / shares	3.777
Forfeited or expired | $ / shares	4.710
Outstanding, ending | $ / shares	$ 4.611
Weighted Average Number of Shares Subject to Option
Non-vested, beginning balance | shares	69,300
Granted | shares	500
Vested | shares	(25,250)
Forfeited or expired | shares	(1,250)
Non-vested, ending balance | shares	43,300

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Commitments and Contingencies (Details) - USD ($)	Dec. 31, 2015	Dec. 31, 2014
Commitments and Contingencies [Abstract]
Accrued amount within the range that appears to be possible outcome	$ 0	$ 0

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Employee Stock Ownership Plan (Narrative) (Details)

3 Months Ended

6 Months Ended

Dec. 31, 2015

USD ($)

shares

Dec. 31, 2014

USD ($)

shares

Dec. 31, 2015

USD ($)

h

shares

Dec. 31, 2014

USD ($)

shares

Employee Stock Ownership Plan (ESOP) Disclosures [Line Items]

ESOP compensation expense

$ 224,175

$ 208,678

Employee Stock Ownership Plan [Member]

Employee Stock Ownership Plan (ESOP) Disclosures [Line Items]

Plan description

The Company sponsors a leveraged employee stock ownership plan (the "ESOP") that covers all nonunion employees who work 1,000 or more hours per year and are employed on June 30.

Number of hours worked per year | h

1,000

ESOP compensation expense

$ 111,081

$ 97,487

$ 224,175

$ 208,678

Stock repurchased (in shares) | shares

14,303

3,644

14,303

13,553

Stock repurchased

$ 355,418

$ 85,671

$ 355,418

$ 320,504

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Employee Stock Ownership Plan (Schedule of ESOP shares) (Details) - Employee Stock Ownership Plan [Member] - USD ($)	Dec. 31, 2015	Dec. 31, 2014
Employee Stock Ownership Plan (ESOP) Disclosures [Line Items]
Allocated shares	423,568	441,531
Committed-to-be-released shares	8,750	9,167
Unreleased shares	70,417	88,333
Total shares held by the ESOP	502,735	539,031
Fair value of unreleased shares	$ 1,813,238	$ 2,102,325