Delaware
|
11-2277818
|
(State or other jurisdiction of
|
(I.R.S. Employer I.D. Number)
|
incorporation or organization)
|
|
333 Bayview Avenue, Amityville, New York
|
11701
|
(Address of principal executive offices)
|
(Zip Code)
|
Common Stock, par value $.01 per share
|
The NASDAQ Stock Market LLC
|
(Title of Each Class)
|
(Name of each exchange on which registered)
|
2013
|
2012
|
|||||||
(in thousands)
|
||||||||
Sales to external customers(1):
|
||||||||
Domestic
|
$ | 67,243 | $ | 67,311 | ||||
Foreign
|
4,143 | 3,617 | ||||||
Total Net Sales
|
$ | 71,386 | $ | 70,928 | ||||
Identifiable assets:
|
||||||||
United States
|
$ | 51,141 | $ | 50,838 | ||||
Dominican Republic (2)
|
12,762 | 13,912 | ||||||
Total Identifiable Assets
|
$ | 63,903 | $ | 64,750 |
Quarter Ended Fiscal 2013
|
||||
Common Stock
|
Sept. 30
|
Dec. 31
|
March 31
|
June 30
|
High
|
$ 3.44
|
$ 3.66
|
$ 4.09
|
$ 4.78
|
Low
|
$ 2.90
|
$ 3.09
|
$ 3.50
|
$ 3.91
|
Quarter Ended Fiscal 2012
|
||||
Common Stock
|
Sept. 30
|
Dec. 31
|
March 31
|
June 30
|
High
|
$ 2.98
|
$ 2.51
|
$ 3.13
|
$ 3.13
|
Low
|
$ 2.28
|
$ 1.97
|
$ 2.29
|
$ 2.67
|
PLAN CATEGORY
|
NUMBER OF SECURITIES TO BE ISSUED UPON EXERCISE OF OUTSTANDING OPTIONS
(a)
|
WEIGHTED AVERAGE EXERCISE PRICE OF OUTSTANDING OPTIONS
(b)
|
NUMBER OF SECURITIES REMAINING AVAILABLE FOR FUTURE ISSUANCE (EXCLUDING SECURITIES REFLECTED IN COLUMN (a)
(c)
|
|||
Equity compensation plans approved by security holders:
|
681,140(1)
|
$4.22
|
1,000,000(2) | |||
Equity compensation plans not approved by security holders:
|
__
|
__
|
__
|
|||
Total
|
681,140(1)
|
$4.22
|
1,000,000(2)
|
(1)
|
The 2002 Employee Stock Option Plan and the 2000 Non-employee Stock Option Plan expired in 2012 and 2010, respectively. No further options may be granted under these plans.
|
(2) |
In December 2012, the stockholders approved the 2012 Employee Stock Option Plan which authorizes the granting of awards, the exercise of which would allow up to an aggregate of 950,000 shares of the Company's common stock to be acquired by the holders of such awards. In December 2012, the stockholders also approved the 2012 Non-Employee Stock Option Plan which authorizes the granting of awards, the exercise of which would allow up to an aggregate of 50,000 shares of the Company's common stock to be acquired by the holders of such awards.
|
Fiscal Year Ended and at June 30
|
||||||||||||||||||||
(In thousands, except share and per share data)
|
||||||||||||||||||||
2013(1)
|
2012(1)
|
2011(1)
|
2010(1)
|
2009(1)
|
||||||||||||||||
Statement of earnings data:
|
||||||||||||||||||||
Net Sales
|
$ | 71,386 | $ | 70,928 | $ | 71,392 | $ | 67,757 | $ | 69,565 | ||||||||||
Gross Profit
|
21,724 | 21,152 | 20,101 | 14,522 | 15,096 | |||||||||||||||
Impairment of Goodwill and intangible assets
|
-- | -- | 400 | 923 | 9,686 | |||||||||||||||
Income (Loss) from Operations
|
3,796 | 3,811 | 2,513 | (5,211 | ) | (14,917 | ) | |||||||||||||
Net Income (Loss)
|
3,021 | 2,286 | 1,121 | (6,500 | ) | (13,382 | ) | |||||||||||||
Cash Flow Data:
|
||||||||||||||||||||
Net cash flows provided by operating activities
|
4,899 | 4,096 | 4,364 | 5,285 | 6,792 | |||||||||||||||
Net cash flows used in investing activities
|
(383 | ) | (606 | ) | (737 | ) | (300 | ) | (25,229 | ) | ||||||||||
Net cash flows (used in) provided by financing activities
|
(4,266 | ) | (3,588 | ) | (6,072 | ) | (3,572 | ) | 19,781 | |||||||||||
Per Share Data:
|
||||||||||||||||||||
Net earnings (loss) per common share:
|
||||||||||||||||||||
Basic
|
$ | 0.16 | $ | 0.12 | $ | 0.06 | $ | (0.34 | ) | $ | (0.70 | ) | ||||||||
Diluted
|
$ | 0.16 | $ | 0.12 | $ | 0.06 | $ | (0.34 | ) | $ | (0.70 | ) | ||||||||
Weighted average common shares outstanding:
|
||||||||||||||||||||
Basic
|
19,210,000 | 19,096,000 | 19,096,000 | 19,096,000 | 19,096,000 | |||||||||||||||
Diluted
|
19,362,000 | 19,303,000 | 19,176,000 | 19,096,000 | 19,096,000 | |||||||||||||||
Cash Dividends declared per common share (2)
|
$ | .00 | $ | .00 | $ | .00 | $ | .00 | $ | .00 | ||||||||||
Balance sheet data:
|
||||||||||||||||||||
Working capital (3)
|
$ | 33,221 | $ | 32,205 | $ | 29,185 | $ | 3,502 | $ | 22,404 | ||||||||||
Total assets
|
63,903 | 64,750 | 68,795 | 73,668 | 81,586 | |||||||||||||||
Long-term debt (3)
|
14,800 | 18,657 | 20,205 | -- | 18,749 | |||||||||||||||
Stockholders' equity
|
40,335 | 37,723 | 35,429 | 34,242 | 40,515 |
(1)
|
Includes the operations and assets of Marks USA I which was acquired in August 2008.
|
(2)
|
The Company has never paid a dividend on its common stock. It is the policy of the Board of Directors to retain earnings for use in the Company's business. Any dividends must be approved by the Company's primary lenders.
|
(3)
|
Working capital is calculated by deducting Current Liabilities from Current Assets. As of June 30, 2010, the Company and its banks were in negotiations to amend and restate the existing terms of the credit facilities and term loan. Because the closing and final waivers occurred after the filing date of the June 30, 2010 Form 10-K, the Company classified this debt as current as of June 30, 2010. Upon completion of the closing this debt has been reclassified as long-term.
|
Amount
|
% of Pre-tax Income
|
|||||||
Tax at the U.S. Federal statutory rate
|
$ | 1,091 | 34.0 | % | ||||
Increases (decreases) in taxes resulting from:
|
||||||||
Meals and entertainment
|
59 | 1.8 | % | |||||
State income taxes, net of Federal income tax benefit
|
21 | 0.6 | % | |||||
Foreign source income not subject to tax
|
(740 | ) | (23.0 | )% | ||||
R&D Credits
|
(221 | ) | (6.9 | )% | ||||
Other, net
|
(23 | ) | (0.7 | )% | ||||
Effective tax rate
|
$ | 187 | 5.8 | % |
As of June 30,
|
|||
2013
|
2012
|
||
Current Ratio
|
4.9 to 1
|
4.9 to 1
|
|
Sales to Receivables
|
3.9 to 1
|
4.3 to 1
|
|
Total debt to equity
|
.41 to 1
|
.54 to 1
|
Payments due by period:
|
||||||||||||||||||||
Contractual obligations
|
Total
|
Less than 1 year
|
1-3 years
|
3-5 years
|
More than 5 years
|
|||||||||||||||
Long-term debt obligations
|
$ | 16,400,000 | $ | 1,600,000 | $ | 3,200,000 | $ | 7,400,000 | $ | 4,200,000 | ||||||||||
Land lease (80 years remaining) (1)
|
22,752,000 | 288,000 | 576,000 | 576,000 | 21,312,000 | |||||||||||||||
Operating lease obligations
|
68,000 | 33,000 | 35,000 | -- | -- | |||||||||||||||
Other long-term obligations (employment agreements) (1)
|
987,000 | 914,000 | 73,000 | -- | -- | |||||||||||||||
Total
|
$ | 40,207,000 | $ | 2,835,000 | $ | 3,884,000 | $ | 7,976,000 | $ | 25,512,000 |
(1)
|
See footnote 10 to the accompanying consolidated financial statements.
|
Fiscal year ended June 30,
|
||||||||||||
2013
|
2012
|
% Increase/ (decrease)
|
||||||||||
Net sales
|
$ | 71,386 | $ | 70,928 | 0.6 | % | ||||||
Gross profit
|
21,724 | 21,152 | 2.7 | % | ||||||||
Gross profit as a % of net sales
|
30.4 | % | 29.8 | % | 2.0 | % | ||||||
Selling, general and administrative
|
17,928 | 17,341 | 3.4 | % | ||||||||
Selling, general and administrative as a % of net sales
|
25.1 | % | 24.4 | % | 2.9 | % | ||||||
Income from operations
|
3,796 | 3,811 | -- | % | ||||||||
Interest expense, net
|
574 | 1,149 | (50.0 | )% | ||||||||
Other expense, net
|
14 | 109 | (87.2 | )% | ||||||||
Provision for income taxes
|
187 | 267 | (30.0 | )% | ||||||||
Net income
|
3,021 | 2,286 | 32.2 | % |
Page
|
|
Report of Independent Registered Public Accounting Firm
|
FS-1
|
Consolidated Financial Statements:
|
|
Consolidated Balance Sheets as of June 30, 2013 and 2012
|
FS-2
|
Consolidated Statements of Income for the Fiscal Years Ended June 30, 2013 and 2012
|
FS-4
|
Consolidated Statements of Stockholders' Equity for the Fiscal Years Ended June 30, 2013 and 2012
|
FS-5
|
Consolidated Statements of Cash Flows for the Fiscal Years Ended June 30, 2013 and 2012
|
FS-6
|
Notes to Consolidated Financial Statements
|
FS-7
|
|
2013
|
2012
|
||||||
CURRENT ASSETS
|
||||||||
Cash and cash equivalents
|
$ | 3,229 | $ | 2,979 | ||||
Accounts receivable, net of reserves and allowances
|
18,211 | 16,408 | ||||||
Inventories
|
18,471 | 19,448 | ||||||
Prepaid expenses and other current assets
|
1,219 | 964 | ||||||
Income tax receivable
|
64 | -- | ||||||
Deferred income taxes
|
642 | 650 | ||||||
Total Current Assets
|
41,836 | 40,449 | ||||||
Inventories - non-current
|
3,436 | 3,834 | ||||||
Deferred income taxes
|
1,526 | 1,762 | ||||||
Property, plant and equipment, net
|
6,586 | 7,247 | ||||||
Intangible assets, net
|
10,334 | 11,251 | ||||||
Other assets
|
185 | 207 | ||||||
TOTAL ASSETS
|
$ | 63,903 | $ | 64,750 |
2013
|
2012
|
|||||||
CURRENT LIABILITIES
|
||||||||
Current maturities of long term debt
|
$ | 1,600 | $ | 1,600 | ||||
Accounts payable
|
3,318 | 3,163 | ||||||
Accrued expenses
|
2,093 | 1,814 | ||||||
Accrued salaries and wages
|
1,604 | 1,589 | ||||||
Accrued income taxes
|
-- | 78 | ||||||
Total Current Liabilities
|
8,615 | 8,244 | ||||||
Long-term debt, net of current maturities
|
14,800 | 18,657 | ||||||
Accrued income taxes
|
153 | 126 | ||||||
Total Liabilities
|
23,568 | 27,027 | ||||||
COMMITMENTS AND CONTINGENCIES
|
||||||||
STOCKHOLDERS' EQUITY
|
||||||||
Common Stock, par value $0.01 per share; 40,000,000 shares authorized; 20,796,813 and 20,095,713 shares issued; and 19,296,335 and 19,095,713 shares outstanding, respectively
|
208 | 201 | ||||||
Additional paid-in capital
|
15,356 | 14,080 | ||||||
Retained earnings
|
32,078 | 29,057 | ||||||
|
47,642 | 43,338 | ||||||
Less: Treasury Stock, at cost (1,500,478 and 1,000,000 shares, respectively)
|
(7,307 | ) | (5,615 | ) | ||||
TOTAL STOCKHOLDERS' EQUITY
|
40,335 | 37,723 | ||||||
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY
|
$ | 63,903 | $ | 64,750 |
|
2013
|
2012
|
||||||
Net sales
|
$ | 71,386 | $ | 70,928 | ||||
Cost of sales
|
49,662 | 49,776 | ||||||
Gross Profit
|
21,724 | 21,152 | ||||||
Selling, general, and administrative expenses
|
17,928 | 17,341 | ||||||
Operating Income
|
3,796 | 3,811 | ||||||
Other expense:
|
||||||||
Interest expense, net
|
574 | 1,149 | ||||||
Other, net
|
14 | 109 | ||||||
588 | 1,258 | |||||||
Income before Provision for Income Taxes
|
3,208 | 2,553 | ||||||
Provision for Income Taxes
|
187 | 267 | ||||||
Net Income
|
$ | 3,021 | $ | 2,286 | ||||
|
||||||||
Income per share:
|
||||||||
Basic
|
$ | 0.16 | $ | 0.12 | ||||
Diluted
|
$ | 0.16 | $ | 0.12 | ||||
Weighted average number of shares outstanding:
|
||||||||
Basic
|
19,210,000 | 19,096,000 | ||||||
Diluted
|
19,362,000 | 19,303,000 |
|
Common Stock
|
Treasury Stock
|
||||||||||||||||||||||||||
|
Number of Shares Issued
|
Amount
|
Additional Paid-in Capital
|
Number of Shares
|
Amount
|
Retained Earnings
|
Total
|
|||||||||||||||||||||
BALANCE July 1, 2011
|
20,095,713 | $ | 201 | $ | 14,072 | (1,000,000 | ) | $ | (5,615 | ) | $ | 26,771 | $ | 35,429 | ||||||||||||||
Stock-based compensation expense
|
-- | -- | 8 | - | - | - | 8 | |||||||||||||||||||||
Net income
|
-- | -- | - | - | - | 2,286 | 2,286 | |||||||||||||||||||||
BALANCE June 30, 2012
|
20,095,713 | 201 | 14,080 | (1,000,000 | ) | (5,615 | ) | 29,057 | 37,723 | |||||||||||||||||||
Options exercised
|
729,000 | 7 | 1,371 | -- | -- | -- | 1,378 | |||||||||||||||||||||
Shares surrendered and cancelled under cashless option exercise
|
(27,900 | ) | -- | (95 | ) | -- | -- | -- | (95 | ) | ||||||||||||||||||
Shares surrendered and held in Treasury under cashless option exercise
|
-- | -- | -- | (371,890 | ) | (1,257 | ) | -- | (1,257 | ) | ||||||||||||||||||
Shares repurchased and held in Treasury
|
(128,588 | ) | (435 | ) | (435 | ) | ||||||||||||||||||||||
Net income
|
-- | -- | - | - | - | 3,021 | 3,021 | |||||||||||||||||||||
BALANCE June 30, 2013
|
20,796,813 | $ | 208 | $ | 15,356 | (1,500,478 | ) | $ | (7,307 | ) | $ | 32,078 | $ | 40,335 |
|
2013
|
2012
|
||||||
CASH FLOWS FROM OPERATING ACTIVITIES
|
||||||||
Net income
|
$ | 3,021 | $ | 2,286 | ||||
Adjustments to reconcile net income to net cash provided by operating activities:
|
||||||||
Depreciation and amortization
|
1,974 | 2,275 | ||||||
Charge to obsolescence reserve
|
354 | 504 | ||||||
Provision for doubtful accounts
|
20 | 10 | ||||||
Deferred income taxes
|
244 | 199 | ||||||
Non-cash stock based compensation expense
|
-- | 8 | ||||||
Changes in operating assets and liabilities:
|
||||||||
Accounts receivable
|
(1,823 | ) | 1,222 | |||||
Inventories
|
1,021 | 401 | ||||||
Prepaid expenses and other current assets
|
(254 | ) | (15 | ) | ||||
Income tax receivable
|
(64 | ) | -- | |||||
Other assets
|
8 | 26 | ||||||
Accounts payable, accrued expenses, accrued salaries and wages, accrued income taxes
|
398 | (2,820 | ) | |||||
Net Cash Provided by Operating Activities
|
4,899 | 4,096 | ||||||
CASH FLOWS FROM INVESTING ACTIVITIES
|
||||||||
Purchases of property, plant, and equipment
|
(383 | ) | (606 | ) | ||||
Net Cash Used in Investing Activities
|
(383 | ) | (606 | ) | ||||
CASH FLOWS FROM FINANCING ACTIVITIES
|
||||||||
Principal payments on long-term debt
|
(3,857 | ) | (3,520 | ) | ||||
Cash paid for purchase of treasury stock
|
(435 | ) | -- | |||||
Tax benefit from stock option exercise
|
26 | -- | ||||||
Cash paid for deferred financing costs
|
-- | (68 | ) | |||||
Net Cash Used in Financing Activities
|
(4,266 | ) | (3,588 | ) | ||||
Net Change in Cash and Cash Equivalents
|
250 | (98 | ) | |||||
CASH AND CASH EQUIVALENTS - Beginning
|
2,979 | 3,077 | ||||||
CASH AND CASH EQUIVALENTS - Ending
|
$ | 3,229 | $ | 2,979 | ||||
SUPPLEMENTAL CASH FLOW INFORMATION
|
||||||||
Interest paid, net
|
$ | 543 | $ | 1,136 | ||||
Income taxes paid
|
$ | 31 | $ | 467 | ||||
Surrender of Common Shares
|
$ | 1,257 | $ | -- |
June 30, 2013
|
June 30, 2012
|
|||||||||||||||||||||||
Cost
|
Accumulated amortization
|
Net book value
|
Cost
|
Accumulated amortization
|
Net book value
|
|||||||||||||||||||
Other intangible assets:
|
||||||||||||||||||||||||
Customer relationships
|
$ | 9,800 | $ | (5,469 | ) | $ | 4,331 | $ | 9,800 | $ | (4,601 | ) | $ | 5,199 | ||||||||||
Non-compete agreement
|
340 | (237 | ) | 103 | 340 | (188 | ) | 152 | ||||||||||||||||
Trade name
|
5,900 | -- | 5,900 | 5,900 | -- | 5,900 | ||||||||||||||||||
$ | 16,040 | $ | (5,706 | ) | $ | 10,334 | $ | 16,040 | $ | (4,789 | ) | $ | 11,251 |
Net Income
|
Weighted Average Shares
|
Net Income per Share
|
||||||||||||||||||||||
2013
|
2012
|
2013
|
2012
|
2013
|
2012
|
|||||||||||||||||||
Basic EPS
|
$ | 3,021 | $ | 2,286 | 19,210 | 19,096 | $ | 0.16 | $ | 0.12 | ||||||||||||||
Effect of Dilutive Securities:
|
||||||||||||||||||||||||
Stock Options
|
-- | -- | 152 | 207 | -- | -- | ||||||||||||||||||
Diluted EPS
|
$ | 3,021 | $ | 2,286 | 19,362 | 19,303 | $ | 0.16 | $ | 0.12 |
June 30,
|
||||||||
2013
|
2012
|
|||||||
Component parts
|
$ | 13,112 | $ | 13,155 | ||||
Work-in-process
|
3,125 | 3,199 | ||||||
Finished product
|
5,670 | 6,928 | ||||||
$ | 21,907 | $ | 23,282 | |||||
Classification of inventories, net of reserves:
|
||||||||
Current
|
$ | 18,471 | $ | 19,448 | ||||
Non-current
|
3,436 | 3,834 | ||||||
$ | 21,907 | $ | 23,282 |
June 30,
|
|||||||||||
2013
|
2012
|
Useful Life in Years
|
|||||||||
Land
|
$ | 904 | $ | 904 | -- | ||||||
Buildings
|
8,911 | 8,911 |
30 to 40
|
||||||||
Molds and dies
|
6,794 | 6,748 |
3 to 5
|
||||||||
Furniture and fixtures
|
2,328 | 2,317 |
5 to 10
|
||||||||
Machinery and equipment
|
19,431 | 19,107 |
7 to 10
|
||||||||
Leasehold improvements
|
372 | 372 |
Shorter of the lease term or life of asset
|
||||||||
38,740 | 38,359 | ||||||||||
Less: accumulated depreciation and amortization
|
32,154 | 31,112 | |||||||||
$ | 6,586 | $ | 7,247 |
For the Years Ended June 30,
|
||||||||
2013
|
2012
|
|||||||
Current income taxes:
|
||||||||
Federal
|
$ | (89 | ) | $ | 11 | |||
State
|
32 | 57 | ||||||
Foreign
|
-- | -- | ||||||
(57 | ) | 68 | ||||||
Deferred income tax provision (benefit)
|
244 | 199 | ||||||
Provision (benefit) for income taxes
|
$ | 187 | $ | 267 |
For the Years Ended June 30,
|
||||||||||||||||
2013
|
2012
|
|||||||||||||||
Amount
|
% of Pre-tax Income
|
Amount
|
% of Pre-tax Income
|
|||||||||||||
Tax at Federal statutory rate
|
$ | 1,091 | 34.0 | % | $ | 868 | 34.0 | % | ||||||||
Increases (decreases) in taxes resulting from:
|
||||||||||||||||
Meals and entertainment
|
59 | 1.8 | % | 56 | 2.2 | % | ||||||||||
State income taxes, net of Federal income tax benefit
|
21 | 0.6 | % | 39 | 1.5 | % | ||||||||||
Foreign source income not subject to tax
|
(740 | ) | (23.0 | )% | (515 | ) | (20.2 | )% | ||||||||
Stock based compensation expense
|
-- | -- | 3 | 0.1 | % | |||||||||||
Tax reserve reversal
|
-- | -- | (61 | ) | (2.4 | )% | ||||||||||
R&D Credit refund
|
(221 | ) | (6.9 | )% | (81 | ) | (3.2 | )% | ||||||||
Other, net
|
(23 | ) | (0.7 | )% | (42 | ) | (1.6 | )% | ||||||||
Effective tax rate
|
$ | 187 | 5.8 | % | $ | 267 | 10.4 | % |
Current Deferred Tax Assets
(Liabilities)
|
Long-term Deferred Tax
Assets (Liabilities)
|
|||||||||||||||
2013
|
2012
|
2013
|
2012
|
|||||||||||||
Accounts receivable
|
$ | 24 | $ | 23 | $ | -- | $ | -- | ||||||||
Inventories
|
385 | 399 | 455 | 405 | ||||||||||||
Accrued Liabilities
|
233 | 228 | 29 | -- | ||||||||||||
Stock based compensation expense
|
-- | -- | 137 | 137 | ||||||||||||
Goodwill
|
-- | -- | 1,623 | 1,875 | ||||||||||||
R&D credit
|
-- | -- | 360 | 225 | ||||||||||||
Property, plant and equipment
|
-- | -- | (575 | ) | (624 | ) | ||||||||||
Other deferred tax liabilities
|
-- | -- | (503 | ) | (256 | ) | ||||||||||
642 | 650 | 1,526 | 1,762 | |||||||||||||
Valuation allowance
|
-- | -- | -- | -- | ||||||||||||
Net deferred tax assets
|
$ | 642 | $ | 650 | $ | 1,526 | $ | 1,762 |
Tax
|
Interest
|
Total
|
||||||||||
Balance of gross unrecognized tax benefits as of July 1, 2012
|
$ | 126 | $ | -- | $ | 126 | ||||||
Increases to unrecognized tax benefits resulting from the generation of additional R&D credits
|
27 | -- | 27 | |||||||||
Balance of gross unrecognized tax benefits as of June 30, 2013
|
$ | 153 | $ | -- | $ | 153 |
June 30, 2013
|
June 30, 2012
|
|||||||||||||||
Outstanding
|
Interest Rate
|
Outstanding
|
Interest Rate
|
|||||||||||||
Revolving line of credit
|
$ | 5,500 | 2.5 | % | $ | 7,757 | 3.1 | % | ||||||||
Term loans
|
10,900 | 2.5 | % | 12,500 | 3.1 | % | ||||||||||
Total debt
|
$ | 16,400 | 2.5 | % | $ | 20,257 | 3.1 | % |
2013
|
2012
|
|||||||||||||||
Options
|
Weighted average exercise price
|
Options
|
Weighted average exercise price
|
|||||||||||||
Outstanding, beginning of year
|
1,380,140 | $ | 2.95 | 1,380,140 | $ | 2.95 | ||||||||||
Granted
|
-- | -- | -- | -- | ||||||||||||
Terminated
|
-- | -- | -- | -- | ||||||||||||
Exercised
|
729,000 | 1.85 | -- | -- | ||||||||||||
Outstanding, end of year
|
651,140 | $ | 4.18 | 1,380,140 | $ | 2.95 | ||||||||||
Exercisable, end of year
|
651,140 | $ | 4.18 | 1,380,140 | $ | 2.95 | ||||||||||
Weighted average fair value at grant date of options granted
|
n/a | n/a | ||||||||||||||
Total intrinsic value of options exercised
|
$ | 1,301,000 | n/a | |||||||||||||
Total intrinsic value of options outstanding
|
$ | 853,867 | $ | 1,066,760 | ||||||||||||
Total intrinsic value of options exercisable
|
$ | 853,867 | $ | 1,066,760 |
Options outstanding
|
Options exercisable
|
|||||||||||||||||||||
Range of exercise prices
|
Number outstanding at June 30, 2013
|
Weighted average remaining contractual life
|
Weighted average exercise price
|
Number exercisable at June 30, 2013
|
Weighted average exercise price
|
|||||||||||||||||
$ | 1.62 - $ 4.00 | 285,390 | 0.8 | $ | 1.97 | 285,390 | $ | 1.97 | ||||||||||||||
$ | 4.01 - $ 7.50 | 328,250 | 3.8 | 5.29 | 328,250 | 5.29 | ||||||||||||||||
$ | 7.51 - $11.16 | 37,500 | 3.0 | 11.16 | 37,500 | 11.16 | ||||||||||||||||
651,140 | 2.4 | $ | 4.18 | 651,140 | $ | 4.18 |
2013
|
2012
|
|||||||||||||||
Options
|
Weighted average exercise price
|
Options
|
Weighted average exercise price
|
|||||||||||||
Outstanding, beginning of period
|
30,000 | $ | 5.03 | 30,000 | $ | 5.03 | ||||||||||
Granted
|
-- | -- | -- | -- | ||||||||||||
Terminated
|
-- | -- | -- | -- | ||||||||||||
Exercised
|
-- | -- | -- | -- | ||||||||||||
Outstanding, end of period
|
30,000 | $ | 5.03 | 30,000 | $ | 5.03 | ||||||||||
Exercisable, end of period
|
30,000 | $ | 5.03 | 30,000 | $ | 5.03 | ||||||||||
Weighted average fair value at grant date of options granted
|
n/a | n/a | ||||||||||||||
Total intrinsic value of options exercised
|
n/a | n/a | ||||||||||||||
Total intrinsic value of options outstanding
|
$ | 0 | $ | 0 | ||||||||||||
Total intrinsic value of options exercisable
|
$ | 0 | $ | 0 |
Year Ending June 30,
|
Amount
|
|||
2014
|
$ | 33,000 | ||
2015
|
23,000 | |||
2016
|
12,000 | |||
Total
|
$ | 68,000 |
2013
|
2012
|
|||||||
(in thousands)
|
||||||||
Sales to external customers(1):
|
||||||||
Domestic
|
$ | 67,243 | $ | 67,311 | ||||
Foreign
|
4,143 | 3,617 | ||||||
Total Net Sales
|
$ | 71,386 | $ | 70,928 | ||||
Identifiable assets:
|
||||||||
United States
|
$ | 51,141 | $ | 50,838 | ||||
Dominican Republic (2)
|
12,763 | 13,912 | ||||||
Total Identifiable Assets
|
$ | 63,903 | $ | 64,750 |
(a)
|
1. Financial Statements
|
Page
|
|
Report of Independent Registered Public Accounting Firm
|
FS-1
|
Consolidated Financial Statements:
|
|
Consolidated Balance Sheets as of June 30, 2013 and 2012
|
FS-2
|
Consolidated Statements of Operations for the Fiscal Years Ended June 30, 2013 and 2012
|
FS-4
|
Consolidated Statements of Stockholders' Equity for the Fiscal Years Ended June 30, 2013 and 2012
|
FS-5
|
Consolidated Statements of Cash Flows for the Fiscal Years Ended June 30, 2013 and 2012
|
FS-6
|
Notes to Consolidated Financial Statements, June 30, 2013
|
FS-7
|
Exhibit No.
|
Title
|
|
Ex-3.(i)
|
Certificate of Amendment of Certificate of Incorporation
|
Exhibit-3.(i) to Report on Form 10-K for the fiscal year ended June 30, 2011
|
Ex-3.(ii)
|
Certificate of Incorporation as amended
|
Exhibit-3.(ii) to Report on Form 10-K for the fiscal year ended June, 30 2011
|
Ex-3.(iii)
|
Amended and Restated By-Laws
|
Exhibit 3.(ii) to Report on Form 10-K for the fiscal year ended June 30, 2010
|
Ex 4.01
|
Third Amended and Restated Credit Agreement dated June 29, 2012.
|
Exhibit 4.01 to Report on Form 8-K dated June 29, 2012
|
Ex 4.02
|
Second Amended and Restated Term A Loan Note
|
Exhibit 4.01 to Report on Form 8-K dated June 29, 2012
|
Ex 4.03
|
Second Amended and Restated Term B Loan Note
|
Exhibit 4.01 to Report on Form 8-K dated June 29, 2012
|
Ex 4.04
|
Second Amended and Restated Revolving Credit Note
|
Exhibit 4.01 to Report on Form 8-K dated June 29, 2012
|
Ex 4.05
|
Second Amended and Restated Swing Line Note
|
Exhibit 4.01 to Report on Form 8-K dated June 29, 2012
|
Ex 4.06
|
Continuing General Security Agreement
|
Exhibit 4.01 to Report on Form 8-K dated June 29, 2012
|
Ex 4.07
|
Reaffirmation of Collateral Documents
|
Exhibit 4.01 to Report on Form 8-K dated June 29, 2012
|
Ex 4.08
|
Reaffirmation of Negative Pledge
|
Exhibit 4.01 to Report on Form 8-K dated June 29, 2012
|
*Ex-10.A (ii)
|
2002 Employee Stock Option Plan
|
Exhibit 10.A(II) to Report on Form 10-K for the fiscal year ended June 30, 2008
|
*Ex-10.B
|
2012 Employee Stock Option Plan
|
Appendix A to Proxy Statement dated October 29, 2012 for Annual Meeting of Stockholders to be held on December 11, 2012
|
*Ex-10.C
|
2012 Non-Employee Stock Option Plan
|
Appendix B to Proxy Statement dated October 29, 2012 for Annual Meeting of Stockholders to be held on December 11, 2012
|
*Ex-10.I
|
Amended and Restated Employment Agreement with Richard Soloway
|
Exhibit 10.I to Report on Form 10-K for fiscal year ended June 30, 2010
|
*Ex-10.J
|
Employment Agreement between the Registrant and Jorge Hevia dated December 20, 1999
|
Exhibit 10.J to Report on Form 8-K dated November 29, 2012
|
*Ex-10.K
|
Two (2) Year Extension, dated November 29, 2011, of Employment Agreement between the Registrant and Jorge Hevia
|
Exhibit 10.K to Report on Form 8-K dated November 29, 2012
|
*Ex-10.L
|
Severence Agreement between the Registrant and Kevin S. Buchel dated February 25, 1999.
|
E-17
|
*Ex-10.M
|
Indemnification Agreement dated August 9, 1999
|
Exhibit 10.M to Report on Form 10-K for fiscal year ended June 30, 2012
|
Ex-14.0
|
Code of Ethics
|
Exhibit 14.0 to Report on Form 10-K for the fiscal year ended June 30, 2010
|
Ex-16.01
|
Letter of Baker Tilly Virchow Krause, LLP dated June 3, 2013.
|
Exhibit 10.J to Report on Form 8-K dated June 3, 2013
|
Ex-21.0
|
Subsidiaries of the Registrant
|
E-18
|
Ex-23.1
|
Consent of Independent Auditors
|
E-19
|
Ex-31.1
|
Section 302 Certification of Chief Executive Officer
|
E-20
|
Ex-31.2
|
Section 302 Certification of Chief Financial Officer
|
E-21
|
Ex-32.1
|
Certification of Chief Executive Officer Pursuant to 18 USC Section 1350 and Section 906 of Sarbanes - Oxley Act of 2002
|
E-22
|
Ex-32.2
|
Certification of Chief Financial Officer Pursuant to 18 USC Section 1350 and Section 906 of Sarbanes - Oxley Act of 2002
|
E-23
|
Ex-101.INS
|
XBRL Instance Document **
|
|
Ex-101.SCH
|
XBRL Taxonomy Extension Schema Document**
|
|
Ex-101.CAL
|
XBRL Taxonomy Extension Calculation Linkbase Document**
|
|
Ex-101.LAB
|
XBRL Taxonomy Extension Label Linkbase Document**
|
|
Ex-101.PRE
|
XBRL Taxonomy Extension Presentation Linkbase Document**
|
|
Ex-101.DEF
|
XBRL Taxonomy Extension Definition Linkbase Document**
|
By: /s/ RICHARD SOLOWAY
|
|
Richard Soloway
|
|
Chairman of the Board of
|
|
Directors, President and Secretary
|
|
(Principal Executive Officer)
|
Signature
|
Title
|
Date
|
||
/s/RICHARD SOLOWAY
|
Chairman of the Board of Directors,
|
September 17, 2013
|
||
Richard Soloway
|
President and Secretary and Director
|
|||
(Principal Executive Officer)
|
||||
/s/KEVIN S. BUCHEL
|
Senior Vice President of Operations
|
September 17, 2013
|
||
Kevin S. Buchel
|
and Finance and Treasurer and Director
|
|||
(Principal Financial and Accounting Officer)
|
||||
/s/PAUL STEPHEN BEEBER
|
Director
|
September 17, 2013
|
||
Paul Stephen Beeber
|
||||
/s/RANDY B. BLAUSTEIN
|
Director
|
September 17, 2013
|
||
Randy B. Blaustein
|
||||
/s/ARNOLD BLUMENTHAL
|
Director
|
September 17, 2013
|
||
Arnold Blumenthal
|
||||
/s/DONNA SOLOWAY
|
Director
|
September 17, 2013
|
||
Donna Soloway
|
||||
/s/ANDREW J. WILDER
|
Director
|
September 17, 2013
|
||
Andrew J. Wilder
|
Very truly yours,
|
|
NAPCO Security Systems, Inc.
|
|
/S/ RICHARD SOLOWAY
|
|
Richard L. Soloway
|
|
Chairman
|
Name
|
State or Jurisdiction of Organization
|
|
Alarm Lock Systems, Inc.
|
Delaware
|
|
Marks USA I, LLC
|
New York
|
|
Continental Instruments, LLC
|
New York
|
|
Napco DR, S.A.
|
Dominican Republic
|
|
Napco Americas
|
Cayman Islands
|
|
Napco Security Systems International, Inc.
|
New York
|
|
Napco/Alarm Lock Exportadora, S.A.
|
Dominican Republic
|
|
Napco/Alarm Lock Grupo Internacional, S.A.
|
Dominican Republic
|
|
Video Alert, LLC
|
New York
|
/s/RICHARD SOLOWAY
|
|
Richard Soloway
|
|
Chief Executive Officer
|
|
(Principal Executive Officer)
|
/s/KEVIN S. BUCHEL
|
|
Kevin S. Buchel
|
|
Chief Financial Officer
|
|
(Principal Financial Officer)
|
/s/RICHARD SOLOWAY
|
|
Richard Soloway
|
|
Chief Executive Officer
|
|
(Principal Executive Officer)
|
/s/KEVIN S. BUCHEL
|
|
Kevin S. Buchel
|
|
Chief Financial Officer
|
|
(Principal Financial Officer)
|
Geographical Data
|
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2013
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Geographical Data |
NOTE 11 - Geographical Data
The
Company is engaged in one major line of business: the development,
manufacture, and distribution of security alarm products and door
security devices for commercial and residential
use. Sales to unaffiliated customers are primarily
shipped from the United States. The Company has customers worldwide
with major concentrations in North America and Europe.
The
following represents selected consolidated geographical data for
and as of the fiscal years ended June 30, 2013 and
2012:
Financial Information Relating to Domestic and Foreign
Operations
(1)
All of the Company's sales originate in the United
States and are shipped primarily from the Company's facilities in
the United States. There were no sales into any one foreign country
in excess of 10% of total Net Sales.
(2)
Consists primarily of inventories (2013 = $9,105; 2012 = $9,866)
and fixed assets (2013 = $3,546; 2012 = $3,936) located at the
Company's principal manufacturing facility in the Dominican
Republic.
|
CONSOLIDATED STATEMENTS OF INCOME (USD $)
In Thousands, except Share data, unless otherwise specified |
12 Months Ended | |||||
---|---|---|---|---|---|---|
Jun. 30, 2013
|
Jun. 30, 2012
|
|||||
Net sales | $ 71,386 | [1] | $ 70,928 | [1] | ||
Cost of sales | 49,662 | 49,776 | ||||
Gross Profit | 21,724 | 21,152 | ||||
Selling, general, and administrative expenses | 17,928 | 17,341 | ||||
Operating Income | 3,796 | 3,811 | ||||
Other expense: | ||||||
Interest expense, net | 574 | 1,149 | ||||
Other, net | 14 | 109 | ||||
Other expense, net | 588 | 1,258 | ||||
Income before Provision for Income Taxes | 3,208 | 2,553 | ||||
Provision for Income Taxes | 187 | 267 | ||||
Net Income | $ 3,021 | $ 2,286 | ||||
Income per share: | ||||||
Basic | $ 0.16 | $ 0.12 | ||||
Diluted | $ 0.16 | $ 0.12 | ||||
Weighted average number of shares outstanding: | ||||||
Basic | 19,210,000 | 19,096,000 | ||||
Diluted | 19,362,000 | 19,303,000 | ||||
|
Property, Plant, and Equipment
|
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2013
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Property, Plant, and Equipment |
NOTE 4 - Property, Plant, and Equipment
Property,
plant and equipment consist of the following (in
thousands):
Depreciation
and amortization expense on property, plant, and equipment was
approximately $1,043,000 and $1,101,000 in fiscal 2013 and 2012,
respectively.
|
Stock Options (Tables)
|
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2013
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stock Incentive Plan 2002 [Member]
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Share-based Compensation, Stock Options, Activity | The
following table reflects activity under the 2002 Plan for the years
ended June 30,:
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Share-based Compensation, Shares Authorized under Stock Option Plans, by Exercise Price Range | The
following table summarizes information about stock options
outstanding under the 2002 Plan at June 30, 2013:
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stock Incentive Plan 2000 [Member]
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Share-based Compensation, Stock Options, Activity | The
following table reflects activity under the 2000 Plan for the years
ended June 30,
|
Nature of Business and Summary of Significant Accounting Policies (Policies)
|
12 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2013
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Nature of Business |
Nature of Business:
Napco
Security Technologies, Inc. and Subsidiaries (the "Company") is a
diversified manufacturer of security products, encompassing
electronic door-locking devices, intrusion and fire alarms and
building access control systems. These products are used for
commercial, residential, institutional, industrial and governmental
applications, and are sold worldwide principally to independent
distributors, dealers and installers of security
equipment.
The
Company's fiscal year begins on July 1 and ends on June 30.
Historically, the end users of the Company's products want to
install its products prior to the summer; therefore sales of its
products historically peak in the period April 1 through June 30,
the Company's fiscal fourth quarter, and are reduced in the period
July 1 through September 30, the Company's fiscal first quarter. In
addition, demand is affected by the housing and construction
markets.
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Principles of Consolidation | Principles
of Consolidation
The
consolidated financial statements include the accounts of Napco
Security Technologies, Inc. and all of its wholly-owned
subsidiaries. All inter-company balances and transactions have been
eliminated in consolidation.
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accounting Estimates | Accounting
Estimates
The
preparation of financial statements in conformity with accounting
principles generally accepted in the United States of America
requires management to make estimates and assumptions that affect
the reported amounts of assets and liabilities and disclosure of
contingent gains and losses at the date of the financial statements
and the reported amounts of revenues and expenses during the
reporting period. Critical estimates include management's judgments
associated with revenue recognition, reserves for sales returns and
allowances, concentration of credit risk, inventories, intangible
assets and income taxes. Actual results could differ
from those estimates.
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value of Financial Instruments | Fair
Value of Financial Instruments
The
methods and assumptions used to estimate the fair value of the
following classes of financial instruments were: Current Assets and
Current Liabilities: The carrying amount of cash, certificates of
deposits, current receivables and payables and certain other
short-term financial instruments approximate their fair value as of
June 30, 2013 due to their short-term maturities. Long-Term Debt:
The carrying amount of the Company’s long-term debt,
including the current portion, at June 30, 2013 in the amount of
$16,400,000 approximates fair value.
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Cash and Cash Equivalents | Cash
and Cash Equivalents
Cash
and cash equivalents include approximately $460,000 of short-term
time deposits at June 30, 2013 and 2012. The Company
considers all highly liquid investments with original maturities of
three months or less to be cash equivalents. The Company
has cash balances in banks in excess of the maximum amount insured
by the FDIC and other international agencies as of June 30, 2013
and 2012. The Company has historically not experienced any credit
losses with balances in excess of FDIC limits
|
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Accounts Receivable | Accounts
Receivable
Accounts
receivable is stated net of the reserves for doubtful accounts of
$220,000 and $200,000 and for returns and other allowances of
$1,055,000 and $1,184,000 as of June 30, 2013 and 2012,
respectively. Our reserves for doubtful accounts and for
returns and other allowances are subjective critical estimates that
have a direct impact on reported net earnings. These reserves are
based upon the evaluation of accounts receivable agings, specific
exposures, sales levels and historical trends.
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Inventories | Inventories
Inventories
are valued at the lower of cost or fair market value, with cost
being determined on the first-in, first-out (FIFO) method. The
reported net value of inventory includes finished saleable
products, work-in-process and raw materials that will be sold or
used in future periods. Inventory costs include raw materials,
direct labor and overhead. The Company’s overhead expenses
are applied based, in part, upon estimates of the proportion of
those expenses that are related to procuring and storing raw
materials as compared to the manufacture and assembly of finished
products. These proportions, the method of their application, and
the resulting overhead included in ending inventory, are based in
part on subjective estimates and actual results could differ from
those estimates.
In
addition, the Company records an inventory obsolescence reserve,
which represents any excess of the cost of the inventory over its
estimated market value, based on various product sales projections.
This reserve is calculated using an estimated obsolescence
percentage applied to the inventory based on age, historical
trends, requirements to support forecasted sales, and the ability
to find alternate applications of its raw materials and to convert
finished product into alternate versions of the same product to
better match customer demand. In addition, and as
necessary, the Company may establish specific reserves for future
known or anticipated events. There is inherent professional
judgment and subjectivity made by both production and engineering
members of management in determining the estimated obsolescence
percentage. For the fiscal years 2013 and 2012, net charges and
balances in these reserves amounted to $354,000 and $3,392,000; and
$504,000 and $3,038,000, respectively.
The
Company also regularly reviews the period over which its
inventories will be converted to sales. Any inventories
expected to convert to sales beyond 12 months from the balance
sheet date are classified as non-current.
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Property, Plant, and Equipment | Property,
Plant, and Equipment
Property,
plant, and equipment are carried at cost less accumulated
depreciation. Expenditures for maintenance and repairs are charged
to expense as incurred; costs of major renewals and improvements
are capitalized. At the time property and equipment are retired or
otherwise disposed of, the cost and accumulated depreciation are
eliminated from the asset and accumulated depreciation accounts and
the profit or loss on such disposition is reflected in
income.
Depreciation
is recorded over the estimated service lives of the related assets
using primarily the straight-line method. Amortization
of leasehold improvements is calculated by using the straight-line
method over the estimated useful life of the asset or lease term,
whichever is shorter.
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Intangible Assets | Intangible
Assets
Intangible
assets determined to have indefinite lives are not amortized but
are tested for impairment at least annually. Intangible assets with
definite lives are amortized over their useful lives. Intangible
assets are reviewed for impairment at least annually at the
Company’s fiscal year end of June 30 or more often whenever
there is an indication that the carrying amount may not be
recovered.
The
Company’s acquisition of substantially all of the assets and
certain liabilities of Marks in August 2008 included intangible
assets recorded at fair value on the date of acquisition. The
intangible assets are amortized over their estimated useful lives
of twenty years (customer relationships) and seven years
(non-compete agreement). The Marks USA trade name was deemed to
have an indefinite life.
Changes
in intangible assets are as follows (in thousands):
Amortization
expense for intangible assets subject to amortization was
approximately $917,000 and $1,065,000 for the years ended June 30,
2013 and 2012, respectively. Amortization expense for each of the
next five fiscal years is estimated to be as follows: 2014 -
$781,000; 2015 - $667,000; 2016 - $529,000; 2017 - $441,000 and
2018 - $371,000. The weighted average amortization period for
intangible assets was 14.8 years and 15.8 years at June 30,
2013 and 2012, respectively.
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Long-Lived Assets | Long-Lived
Assets
Long-lived
assets are reviewed for impairment whenever events or changes in
circumstances indicate that the carrying amount of the assets in
question may not be recoverable. Impairment would be recorded in
circumstances where undiscounted cash flows expected to be
generated by an asset are less than the carrying value of that
asset.
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Revenue Recognition | Revenue
Recognition
The
Company recognizes revenue when the following criteria are met: (i)
persuasive evidence of an agreement exists, (ii) there is a fixed
and determinable price for the Company's product, (iii) shipment
and passage of title occurs, and (iv) collectability is reasonably
assured. Revenues from product sales are recorded at the time the
product is shipped or delivered to the customer pursuant to the
terms of the sale. The Company reports its sales on a net sales
basis, with net sales being computed by deducting from gross sales
the amount of actual sales returns and other allowances and the
amount of reserves established for anticipated sales returns and
other allowances.
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Sales Returns and Other Allowances | Sales
Returns and Other Allowances
The
Company analyzes sales returns and is able to make reasonable and
reliable estimates of product returns based on the Company’s
past history. Estimates for sales returns are based on several
factors including actual returns and based on expected return data
communicated to it by its customers. Accordingly, the Company
believes that its historical returns analysis is an accurate basis
for its allowance for sales returns. Actual results could differ
from those estimates. As a percentage of gross sales, sales
returns, rebates and allowances were 6% for each of the fiscal
years ended June 30, 2013 and 2012.
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Advertising and Promotional Costs | Advertising
and Promotional Costs
Advertising
and promotional costs are included in "Selling, General and
Administrative" expenses in the consolidated statements of
operations and are expensed as incurred. Advertising
expense for the years ended June 30, 2013 and 2012 was $1,318,000
and $1,081,000, respectively. The increase in Advertising and
promotional costs was due primarily to increased
expenditures on a major tradeshow and media advertising as compared
to the same period a year ago.
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Research and Development Costs | Research
and Development Costs
Research
and development costs incurred by the Company are charged to
expense in the year incurred and are included in "Cost of Sales" in
the consolidated statements of
operations. Company-sponsored research and development
expense for the years ended June 30, 2013 and 2012 was $5,119,000
and $4,264,000, respectively. The increase for the year ended June
30, 2013 was due primarily to expenses relating to development of
the Company’s iBridge™ tablet computer/touch screen
keypad.
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Income Taxes | Income
Taxes
Deferred
tax assets and liabilities are recognized for the future tax
consequences attributable to temporary differences between the
financial statement carrying amounts of existing assets and
liabilities and their respective tax bases. Deferred tax assets and
liabilities are measured using enacted tax rates expected to apply
to taxable income in the years in which those temporary differences
are expected to be recovered or settled. The effect on deferred tax
assets and liabilities of a change in tax rates is recognized in
income in the period that includes the enactment date. Deferred
income tax expense represents the change during the period in the
deferred tax assets and deferred tax liabilities. The components of
the deferred tax assets and liabilities are individually classified
as current and non-current based on their characteristics. Deferred
tax assets are reduced by a valuation allowance when, in the
opinion of management, it is more likely than not that some portion
or all of the deferred tax assets will not be realized. The Company
measures and recognizes the tax implications of positions taken or
expected to be taken in its tax returns on an ongoing
basis.
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Net Income (Loss) Per Share | Net
Income Per Share
Basic
net income per common share (Basic EPS) is computed by dividing net
income by the weighted average number of common shares
outstanding. Diluted net income per common share
(Diluted EPS) is computed by dividing net income by the weighted
average number of common shares and dilutive common share
equivalents and convertible securities then
outstanding.
The
following provides a reconciliation of information used in
calculating the per share amounts for the fiscal years ended June
30 (in thousands, except per share data):
Options
to purchase 370,750 and 649,348 shares of common stock for the
fiscal years ended June 30, 2013 and 2012, respectively, were not
included in the computation of Diluted EPS because their inclusion
would be anti-dilutive. These options were still
outstanding at the end of the respective periods.
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Stock-Based Compensation | Stock-Based
Compensation
The
Company has established two share incentive programs as discussed
in Note 7.
Stock-based
compensation cost is measured at the grant date based on the fair
value of the award and is recognized as expense on a straight-line
basis over the vesting period. Determining the fair value of
share-based awards at the grant date requires assumptions and
judgments about expected volatility and forfeiture rates, among
other factors.
Stock-based
compensation costs of $0 and $8,000 were recognized for fiscal
years 2013 and 2012, respectively. The effect on both Basic and
Diluted Earnings per share was $0.00 for fiscal years 2013 and
2012.
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Foreign Currency | Foreign
Currency
All
assets and liabilities of foreign subsidiaries are translated into
U.S. Dollars at fiscal period-end exchange rates. Income
and expense items are translated at average exchange rates
prevailing during the fiscal year. The realized and
unrealized gains and losses associated with foreign currency
translation, as well as related other comprehensive income, were
not material for the years ended June 30, 2013 and
2012.
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Comprehensive Income | Comprehensive
Income
For
the years ended June 30, 2013 and 2012, the Company's operations
did not give rise to material items includable in comprehensive
income, which were not already included in net
income. Accordingly, the Company's comprehensive income
approximates its net income for all periods presented.
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Segment Reporting | Segment
Reporting
The
Company’s reportable operating segments are determined based
on the Company's management approach. The management
approach is based on the way that the chief operating decision
maker organizes the segments within an enterprise for making
operating decisions and assessing performance. The Company's
results of operations are reviewed by the chief operating decision
maker on a consolidated basis and the Company operates in only one
segment. The Company has presented required geographical
data in Note 11, and no additional segment data has been
presented.
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Shipping and Handling Revenues and Costs | Shipping
and Handling Revenues and Costs
The
Company records the amount billed to customers in net sales
($532,000 and $584,000 in fiscal years 2013 and 2012, respectively)
and classifies the costs associated with these revenues in cost of
sales ($1,090,000 in each of the fiscal years 2013 and
2012).
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Recently Issued Accounting Standards | Recently
Issued Accounting Standards
In
July 2013, the FASB issued authoritative guidance that
requires an entity to present an unrecognized tax benefit, or a
portion of an unrecognized tax benefit, in the financial statements
as a reduction to a deferred tax asset for a net operating loss
(“NOL”) carryforward, a similar tax loss, or a tax
credit carryforward. If either (i) an NOL carryforward,
a similar tax loss, or tax credit carryforward is not available as
of the reporting date under the governing tax law to settle taxes
that would result from the disallowance of the tax position or
(ii) the entity does not intend to use the deferred tax asset
for this purpose (provided that the tax law permits a choice), an
entity should present an unrecognized tax benefit in the financial
statements as a liability and should not net the unrecognized tax
benefit with a deferred tax asset. This guidance becomes
effective prospectively for unrecognized tax benefits that exist as
of the Company’s fiscal 2015 first quarter, with
retrospective application and early adoption permitted. The
Company is currently evaluating the timing of adoption and the
impact of this balance sheet presentation guidance but does not
expect it to have a significant impact on the Company’s
consolidated financial statements.
In
July 2012, the FASB amended its authoritative guidance related to
testing indefinite-lived intangible assets for impairment.
Under the revised guidance, entities testing their
indefinite-lived intangible assets for impairment have the option
of performing a qualitative assessment before performing further
impairment testing. If entities determine, on the basis of
qualitative factors, that it is more-likely-than-not that the asset
is impaired, a quantitative test is required. The guidance
becomes effective in the beginning of the Company’s fiscal
2014, with early adoption permitted. The Company is currently
evaluating the timing of adopting this guidance which is not
expected to have an impact on the Company’s consolidated
financial statements.
In
September 2011, the FASB amended its authoritative guidance related
to testing goodwill for impairment. Under the revised
guidance, entities testing goodwill for impairment have the option
of performing a qualitative assessment before performing Step 1 of
the goodwill impairment test. If entities determine, on the
basis of qualitative factors, that the fair value of the reporting
unit is more-likely-than-not less than the carrying amount, the
two-step impairment test would be required. This guidance
becomes effective in the beginning of the Company’s fiscal
2013, with early adoption permitted. The Company does not
expect the guidance to have an impact on the Company’s
consolidated financial statements.
|
Geographic Data (Parenthetical) (Detail) (USD $)
In Thousands, unless otherwise specified |
Jun. 30, 2013
|
Jun. 30, 2012
|
---|---|---|
Revenues from External Customers and Long-Lived Assets [Line Items] | ||
Inventories | $ 18,471 | $ 19,448 |
Fixed assets | 6,586 | 7,247 |
Dominican Republic [Member]
|
||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||
Inventories | 9,105 | 9,866 |
Fixed assets | $ 3,456 | $ 3,936 |
Long-Term Debt (Detail) (USD $)
|
Jun. 30, 2013
|
Jun. 30, 2012
|
---|---|---|
Debt Instrument [Line Items] | ||
Total debt | $ 16,400,000 | $ 20,257,000 |
Interest rate | 2.50% | 3.10% |
Revolving line of credit [Member]
|
||
Debt Instrument [Line Items] | ||
Outstanding | 5,500,000 | 7,757,000 |
Interest rate | 2.50% | 3.10% |
Term loans [Member]
|
||
Debt Instrument [Line Items] | ||
Outstanding | $ 10,900,000 | $ 12,500,000 |
Interest rate | 2.50% | 3.10% |
Geographical Data (Tables)
|
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2013
|
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Schedule of Revenue from External Customers and Long-Lived Assets, by Geographical Areas | The
following represents selected consolidated geographical data for
and as of the fiscal years ended June 30, 2013 and
2012:
Financial Information Relating to Domestic and Foreign
Operations
(1)
All of the Company's sales originate in the United
States and are shipped primarily from the Company's facilities in
the United States. There were no sales into any one foreign country
in excess of 10% of total Net Sales.
(2)
Consists primarily of inventories (2013 = $9,105; 2012 = $9,866)
and fixed assets (2013 = $3,546; 2012 = $3,936) located at the
Company's principal manufacturing facility in the Dominican
Republic.
|
Commitments - Employment Agreements (Narrative) (Detail) (USD $)
|
12 Months Ended |
---|---|
Jun. 30, 2013
Item
|
|
Employee severance agreement [Member]
|
|
Commitments Disclosure [Line Items] | |
Number of agreements | 1 |
Employment contract [Member]
|
|
Commitments Disclosure [Line Items] | |
Number of agreements | 2 |
Employment contract [Member] | Chief executive officer [Member]
|
|
Commitments Disclosure [Line Items] | |
Annual salary commitment | $ 587,000 |
Termination pay commitment rate applied to the average of the prior five calendar years compensation | 299.00% |
Employment contract [Member] | Senior Vice President of Sales and Marketing [Member]
|
|
Commitments Disclosure [Line Items] | |
Annual salary commitment | $ 274,400 |
Employment agreement expiration date | 2014-10 |
Inventories (Detail) (USD $)
In Thousands, unless otherwise specified |
Jun. 30, 2013
|
Jun. 30, 2012
|
---|---|---|
Inventory [Line Items] | ||
Component parts | $ 13,112 | $ 13,155 |
Work-in-process | 3,125 | 3,199 |
Finished product | 5,670 | 6,928 |
Total Inventory | 21,907 | 23,282 |
Current | 18,471 | 19,448 |
Non-current | 3,436 | 3,834 |
Total Inventory | $ 21,907 | $ 23,282 |
401(k) Plan (Narrative) (Detail) (Napco and Subsidiaries 401 (k) Plan [Member], USD $)
|
12 Months Ended | |
---|---|---|
Jun. 30, 2013
|
Jun. 30, 2012
|
|
Napco and Subsidiaries 401 (k) Plan [Member]
|
||
Schedule of Deferred Compensation Plans [Line Items] | ||
Deferred compensation plan expense | $ 89,000 | $ 44,000 |
Commitments and Contingencies (Tables)
|
12 Months Ended | ||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2013
|
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Schedule of Future Minimum Rental Payments for Operating Leases | Minimum
lease payments through the expiration dates of these leases, with
the exception of the land leases referred to below, are as
follows:
|
Business and Credit Concentrations
|
12 Months Ended |
---|---|
Jun. 30, 2013
|
|
Business and Credit Concentrations |
NOTE 2 - Business and Credit Concentrations
The
Company had two customers with accounts receivable balances that
aggregated 22% of the Company’s accounts receivable at June
30, 2013 and one customer with an accounts receivable balance of
15% at June 30, 2012. Sales to any one customer did not exceed 10%
of net sales in any of the past two fiscal years.
|
Income Taxes
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12 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Income Taxes |
NOTE 5 - Income Taxes
The
provision for income taxes is comprised of the following (in
thousands):
A
reconciliation of the U.S. Federal statutory income tax rate to our
actual effective tax rate on earnings before income taxes is as
follows (dollars in thousands):
Deferred
tax assets and deferred tax liabilities at June 30, 2013 and 2012
are as follows (in thousands):
The
Company has identified the United States and New
York State as its major tax jurisdictions. The fiscal 2008
and forward years are still open for examination.
During
the year ending June 30, 2013 the Company increased its reserve for
uncertain income tax positions by $27,000. As of June 30, 2013 the
Company has a long-term accrued income tax liability of $153,000.
The Company’s practice is to recognize interest and penalties
related to income tax matters in income tax expense and accrued
income taxes. As of June 30, 2013, the Company had accrued interest
totaling $0 and $153,000 of unrecognized net tax benefits that, if
recognized, would favorably affect the Company’s effective
income tax rate in any future period.
For
the year ended June 30, 2013 the Company recognized a net income
tax expense of $187,000.
A
reconciliation of the beginning and ending amount of unrecognized
tax benefits is as follows (in thousands):
Napco
US plans to permanently reinvest a substantial portion of its
foreign earnings and as such has not provided US corporate taxes on
the permanently reinvested earnings. As of June 30,
2013, the Company had no undistributed earnings of foreign
subsidiaries.
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Inventories
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Jun. 30, 2013
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Inventories |
NOTE 3 - Inventories
Inventories,
net of reserves are valued at lower of cost (first-in, first-out
method) or market. The Company regularly reviews parts and finished
goods inventories on hand and, when necessary, records a provision
for excess or obsolete inventories. The Company also regularly
reviews the period over which its inventories will be converted to
sales. Any inventories expected to convert to sales beyond 12
months from the balance sheet date are classified as
non-current.
Inventories,
net of reserves consist of the following (in
thousands):
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Significant Accounting Policies - Intangible Assets (Detail) (USD $)
In Thousands, unless otherwise specified |
Jun. 30, 2013
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Jun. 30, 2012
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Intangible Assets by Major Class [Line Items] | ||
Intangible assets, cost | $ 16,040 | $ 16,040 |
Finite-lived intangible assets, accumulated amortization | (5,706) | (4,789) |
Intangible assets, net | 10,334 | 11,251 |
Marks USA trade name [Member]
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Intangible Assets by Major Class [Line Items] | ||
Indefinite-lived intangible assets, excluding goodwill | 5,900 | 5,900 |
Customer relationships [Member]
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Intangible Assets by Major Class [Line Items] | ||
Finite-lived intangible assets, cost | 9,800 | 9,800 |
Finite-lived intangible assets, accumulated amortization | (5,469) | (4,601) |
Finite-lived intangible assets, net | 4,331 | 5,199 |
Non-compete agreement [Member]
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Intangible Assets by Major Class [Line Items] | ||
Finite-lived intangible assets, cost | 340 | 340 |
Finite-lived intangible assets, accumulated amortization | (237) | (188) |
Finite-lived intangible assets, net | $ 103 | $ 152 |