RESTATEMENT OF CONSOLIDATED FINANCIAL STATEMENTS

6 Months Ended

Mar. 29, 2013

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 financial statements for the fiscal year ended September 30, 2012, the interim fiscal quarter and year to date periods within the year ended September 30, 2012 and the fiscal quarter ended December 28, 2012.

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

	Three months ended			Six months ended
	March 30,			March 30,
	2012			2012
Net Income - Previously reported	$	2,607		$	3,556
Work-in-process inventory adjustments, net of tax		(109	)		(290	)
Net Income - Restated	$	2,498		$	3,266

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 Consolidated Statements of Income and Cash Flows for the three months and six months then ended follows:

	Consolidated Balance Sheet
	September 30, 2012
	As reported			Adjustment			Restated
				(in thousands)
ASSETS
Current assets:
Cash	$	2,662		$	-		$	2,662
Accounts receivable, net of allowance		23,193			-			23,193
Inventories, net		19,348			(1,651	)		17,697
Deferred income taxes		1,365			-			1,365
Other current assets		401			-			401
Total current assets		46,969			(1,651	)		45,318
Fixed assets, net		17,120			-			17,120
Intangible assets, net		5,511			-			5,511
Goodwill		13,810			-			13,810
Deferred income taxes		5,433			585			6,018
Other assets		121			-			121
Total assets	$	88,964		$	(1,066	)	$	87,898
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current portion of long-term debt	$	6,533		$	-		$	6,533
Account payable		15,697			-			15,697
Accrued payroll and related expenses		2,676			-			2,676
Other accrued expenses		946			-			946
Customer deposits		146			-			146
Total current liabilities		25,998			-			25,998
Long-term debt		21,104			-			21,104
Total liabilities		47,102			-			47,102
STOCKHOLDERS' EQUITY		-			-			-
500,000 shares authorized; none issued or outstanding
Common stock, $0.01 par value:
Authorized: 50,000,000 shares
Issued: 10,943,185 and 10,839,997 shares, respectively
Outstanding: 9,927,727 and 9,824,539 shares, respectively		109			-			109
Additional paid-in capital		43,075			-			43,075
Accumulated income (deficit)		113			(1,066	)		(953	)
Treasury stock, at cost: 1,015,458 shares		(1,435	)		-			(1,435	)
Total stockholders' equity		41,862			(1,066	)		40,796
Total liabilities and stockholders' equity	$	88,964		$	(1,066	)	$	87,697

	Consolidated Income Statements
	Three months ended							Six months ended
	March 30, 2012							March 30, 2012
	As reported		Adjustment			Restated		As reported			Adjustment			Restated
	(in thousands)
Net sales	$	38,020	$	-		$	38,020	$	71,878		$	-		$	71,878
Cost of sales		29,764		173			29,937		58,136			461			58,597
Gross profit		8,256		(173	)		8,083		13,742			(461	)		13,281
Selling and administrative expenses		3,770		-			3,770		8,307			-			8,307
Operating profit		4,486		(173	)		4,313		5,435			(461	)		4,974
Interest and financing expense		292		-			292		644			-			644
Other (income)/expense		58		-			58		(849	)		-			(849	)
Income before provision for income taxes		4,136		(173	)		3,963		5,640			(461	)		5,179
Provision for income taxes		1,529		(64	)		1,465		2,084			(171	)		1,913
Net income	$	2,607	$	(109	)	$	2,498	$	3,556		$	(290	)	$	3,266
Net income per common and common equivalent share:
Basic	$	0.27	$	(0.01	)	$	0.26	$	0.37		$	(0.03	)	$	0.34
Diluted		0.26		(0.01	)		0.25		0.36			(0.03	)		0.33
Weighted average number of common and common equivalent shares outstanding:
Basic		9,666,920					9,666,920		9,656,431						9,656,431
Diluted		10,038,406					10,038,406		9,951,727						9,951,727

	Consolidated Statement of Cash Flow
	Six months ended
	March 30, 2012
	As reported			Adjustment			Restated
	(in thousands)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$	3,556		$	(290	)	$	3,266
Non-cash adjustments:
Stock-based compensation		245			-			245
Depreciation and amortization		2,070			-			2,070
Change in contingent consideration		(871	)		-			(871	)
Directors' fees paid in stock		22			-			22
(Gain)/loss on sale of fixed assets		4			-			4
Reserve for doubtful accounts		125			-			125
Deferred tax expense		2,084			(171	)		1,913
Changes in current assets and liabilities:
Accounts receivable		(1,681	)		-			(1,681	)
Inventories		(2,912	)		461			(2,451	)
Other current assets		(9	)		-			(9	)
Accounts payable		3,553			-			3,553
Accrued expenses		(515	)		-			(515	)
Customer deposits		(66	)		-			(66	)
Net cash flows from operating activities		5,605			-			5,605
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of fixed assets		(1,698	)		-			(1,698	)
Proceeds from (net cost of) disposal of fixed assets		18			-			18
Net cash flows from investing activities		(1,680	)		-			(1,680	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Advances from revolving credit facility		29,622			-			29,622
Repayments of revolving credit facility		(30,081	)		-			(30,081	)
Borrowings under other loan agreements		-			-			-
Repayments under loan agreements and notes		(3,492	)		-			(3,492	)
Proceeds from exercise of stock options		9			-			9
Proceeds from employee stock plan purchases		17			-			17
Net cash flows from financing activities		(3,925	)		-			(3,925	)
Net cash flows for the period		-			-			-
Cash and cash equivalents, beginning of period		-			-			-
Cash and cash equivalents, end of period	$	-		$	-		$	-
Supplemental cash flow information:
Interest paid	$	604		$	-		$	604
Income taxes paid		74			-			74