RESTATEMENT OF CONSOLIDATED FINANCIAL STATEMENTS

3 Months Ended

Dec. 28, 2012

Organization, Consolidation and Presentation Of Financial Statements [Abstract]

Accounting Changes and Error Corrections [Text Block]

NOTE 2. RESTATEMENT OF CONSOLIDATED FINANCIAL STATEMENTS

We have restated our Consolidated Balance Sheets at December 28, 2012 and September 30, 2012 and our Consolidated Statements of Income, Changes in Stockholders’ Equity and Cash Flows for the three months ended December 28, 2012 and December 30, 2011.

The summary impact of the restatement adjustments on the Company’s previously reported unaudited consolidated net income for three months ended December 28, 2012 and December 30, 2011 follows:

	Three months ended
	December 28,			December 30,
	2012			2011
	(in thousands)
Net Income - Previously reported	$	239			948
Work-in-process inventory adjustments, net of tax		(340	)		(182	)
Net Income - Restated	$	(101	)		766

The Company has identified an error in accounting for work-in-process inventory at SCB, one of its wholly owned subsidiaries. During the quarter ended March 29, 2013 the Company began to analyze the cost structure of SCB including labor, overhead and selling and administrative expenses. Throughout the second half of fiscal 2012 and the first half of fiscal 2013 SCB’s expenses incurred increased each period. Over the same period, the labor and overhead capitalized into work-in-process inventory also increased. The Company initially believed the increase in capitalized work-in-process labor and overhead resulted from unfavorable variances due to increased expenses in relation to revenue during those periods. Upon further review, it was determined the Company overcapitalized labor and overhead costs in SCB’s work-in-process inventory. The overcapitalization was a result of failure to accurately factor in the stage of completion for the work-in-process inventory.

The impact of the restatement on the previously issued Consolidated Balance Sheets and our Consolidated Statements of Income and Cash Flows for the three months then ended follows:

	Consolidated Balance Sheets
	December 28, 2012									September 30, 2012
	As reported			Adjustment			Restated			As reported			Adjustment			Restated
	(unaudited)
ASSETS	(in thousands, except share and per share data)
Current assets:
Cash	$	2,778		$	-		$	2,778		$	2,662		$	-		$	2,662
Accounts receivable, net of allowance		20,279			-			20,279			23,193			-			23,193
Inventories, net		21,898			(2,190	)		19,708			19,348			(1,651	)		17,697
Deferred income taxes		1,366			-			1,366			1,365			-			1,365
Other current assets		753			-			753			401			-			401
Total current assets		47,074			(2,190	)		44,884			46,969			(1,651	)		45,318
Fixed assets, net		17,318			-			17,318			17,120			-			17,120
Intangible assets, net		5,398			-			5,398			5,511			-			5,511
Goodwill		13,810			-			13,810			13,810			-			13,810
Deferred income taxes		5,392			784			6,176			5,433			585			6,018
Other assets		107			-			107			121			-			121
Total assets	$	89,099		$	(1,406	)	$	87,693		$	88,964		$	(1,066	)	$	87,898
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current portion of long-term debt	$	3,380		$	-		$	3,380		$	6,533		$	-		$	6,533
Accounts payable		12,360			-			12,360			15,697			-			15,697
Accrued payroll and related expenses		1,991			-			1,991			2,676			-			2,676
Other accrued expenses		755			-			755			946			-			946
Customer deposits		90			-			90			146			-			146
Total current liabilities		18,576			-			18,576			25,998			-			25,998
Long-term debt		28,227			-			28,227			21,104			-			21,104
Total liabilities		46,803			-			46,803			47,102			-			47,102
STOCKHOLDERS' EQUITY
Preferred stock, $0.01 par value: 500,000 shares authorized; none issued or outstanding		-			-			-			-			-			-
Common stock, $0.01 par value: Authorized: 50,000,000 shares Issued: 11,026,733 and 10,943,185 shares, respectively Outstanding: 10,011,275 and 9,927,727 shares, respectively		110			-			110			109			-			109
Additional paid-in capital		43,269			-			43,269			43,075			-			43,075
Retained earnings/(accumulated deficit)		352			(1,406	)		(1,054	)		113			(1,066	)		(953	)
Treasury stock, at cost: 1,015,458 shares		(1,435	)		-			(1,435	)		(1,435	)		-			(1,435	)
Total stockholders' equity		42,296			(1,406	)		40,890			41,862			(1,066	)		40,796
Total liabilities and stockholders' equity	$	89,099		$	(1,406	)	$	87,693		$	88,964		$	(1,066	)	$	87,898

	Consolidated Income Statements
	Three months ended
	December 28, 2012								December 30, 2011
	As reported		Adjustment			Restated			As reported			Adjustment			Restated
	(unaudited; in thousands, except share and per share data)
Net sales	$	32,989	$	-		$	32,989		$	33,859		$	-		$	33,859
Cost of sales		28,285		539			28,824			28,372			288			28,660
Gross profit		4,704		(539	)		4,165			5,487			(288	)		5,199
Selling and administrative expenses		4,046		-			4,046			4,533			-			4,533
Operating profit		658		(539	)		119			954			(288	)		666
Interest and financing expense		279		-			279			353			-			353
Other income		-		-			-			(902	)		-			(902	)
Income/(loss) before provision for income taxes		379		(539	)		(160	)		1,503			(288	)		1,215
Provision for/(benefit from) income taxes		140		(199	)		(59	)		555			(106	)		449
Net income/(loss)	$	239	$	(340	)	$	(101	)	$	948		$	(182	)	$	766
Net income/(loss) per common and common equivalent share:
Basic	$	0.02	$	(0.03	)	$	(0.01	)	$	0.10		$	(0.02	)	$	0.08
Diluted		0.02		(0.03	)		(0.01	)		0.09			(0.01	)		0.08
Weighted average number of common and common equivalent shares outstanding:
Basic		9,647,210					9,647,210			9,645,942						9,645,942
Diluted		9,968,147					9,968,147			10,004,359						10,004,359

	Consolidated Statements of Cash Flow
	Three months ended
	December 28, 2012									December 30, 2011
	As reported			Adjustment			Restated			As reported			Adjustment			Restated
	(unaudited; in thousands)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income/(loss)	$	239		$	(340	)	$	(101	)	$	948		$	(182	)	$	766
Non-cash adjustments:
Stock-based compensation		157			-			157			135			-			135
Depreciation and amortization		1,140			-			1,140			1,015			-			1,015
Change in contingent consideration		-			-			-			(907	)		-			(907	)
Directors' fees paid in stock		5			-			5			11			-			11
Loss on sale of fixed assets		-			-			-			5			-			5
Reserve for doubtful accounts		36			-			36			107			-			107
Deferred tax expense		40			(199	)		(159	)		501			(106	)		395
Changes in current assets and liabilities:					-
Accounts receivable		2,878			-			2,878			(123	)		-			(123	)
Inventories		(2,550	)		539			(2,011	)		(1,018	)		288			(730	)
Other current assets		(352	)		-			(352	)		(183	)		-			(183	)
Accounts payable		(3,337	)		-			(3,337	)		2,262			-			2,262
Accrued expenses		(876	)		-			(876	)		(178	)		-			(178	)
Customer deposits		(56	)		-			(56	)		(12	)		-			(12	)
Net cash flows from operating activities		(2,676	)		-			(2,676	)		2,563			-			2,563
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of fixed assets		(1,211	)		-			(1,211	)		(1,242	)		-			(1,242	)
Proceeds from disposal of fixed assets		-			-			-			17			-			17
Net cash flows from investing activities		(1,211	)		-			(1,211	)		(1,225	)		-			(1,225	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Advances from revolving credit facility		20,284			-			20,284			17,017			-			17,017
Repayments of revolving credit facility		(14,617	)		-			(14,617	)		(16,582	)		-			(16,582	)
Repayments under loan agreements and notes		(1,697	)		-			(1,697	)		(1,783	)		-			(1,783	)
Proceeds from exercise of stock options		8			-			8			-			-			-
Proceeds from employee stock plan purchases		54			-			54			10			-			10
Shares withheld for payment of taxes upon vesting of restricted stock		(29	)		-                     -			(29	)		-			-			-
Net cash flows from financing activities		4,003			-			4,003			(1,338	)		-			(1,338	)
Net cash flows for the period		116			-			116			-			-			-
Cash and cash equivalents, beginning of period		2,662			-			2,662			-			-			-
Cash and cash equivalents, end of period	$	2,778		$	-		$	2,778		$	-		$	-		$	-
Supplemental cash flow information:
Interest paid	$	241		$	-		$	241		$	333		$	-		$	333
Income taxes paid		99			-			99			54			-			54