Delaware, U.S.A.
|
63-1009183
|
(State or other jurisdiction of incorporation)
|
(I.R.S. Employer Identification No.)
|
Suite 112, 60 Centurian Drive | L3R 9R2 | ||
Markham, Ontario, Canada | (Zip Code) | ||
(Address of principal executive offices) |
Class | Outstanding July 29, 2011 | |
Common Stock, $0.01 par value | 22,437,616 shares | |
Page No. | |||
PART I. FINANCIAL INFORMATION | |||
ITEM 1. | Financial Statements | ||
a) | Consolidated Balance Sheets (Unaudited) | 2 | |
b) | Consolidated Income Statements (Unaudited) | 3 | |
c) | Consolidated Statements of Shareholders’ Equity (Unaudited) | 4 | |
d) | Consolidated Statements of Cash Flows (Unaudited) | 5 | |
e) | Notes to Consolidated Financial Statements (Unaudited) | 6 | |
ITEM 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations | 14 | |
ITEM 3. | Quantitative and Qualitative Disclosures About Market Risk | 22 | |
ITEM 4. | Controls and Procedures | 22 | |
PART II. | OTHER INFORMATION | ||
ITEM 2. | Unregistered Sales of Equity Securities and Use of Proceeds | 23 | |
ITEM 6. | Exhibits | ||
SIGNATURES | 25 | ||
EXHIBITS | 26 |
June 30,
2011
|
December 31,
2010 (1)
|
|||||||
Assets
|
||||||||
Current assets:
|
||||||||
Cash and cash equivalents
|
$ | 6,431,000 | $ | 5,316,000 | ||||
Accounts receivable, net of allowance for doubtful accounts of $62,000 at June 30, 2011 and $77,000 at December 31, 2010
|
5,706,000 | 3,816,000 | ||||||
Inventories
|
15,120,000 | 17,318,000 | ||||||
Prepaid expenses and other current assets
|
3,559,000 | 3,719,000 | ||||||
Deferred income taxes
|
443,000 | 443,000 | ||||||
Total current assets
|
31,259,000 | 30,612,000 | ||||||
Property and equipment, net
|
3,832,000 | 4,162,000 | ||||||
Goodwill
|
55,000 | 55,000 | ||||||
Intangible assets, net
|
144,000 | 164,000 | ||||||
Equity investments in and advances to unconsolidated affiliates
|
2,175,000 | 1,941,000 | ||||||
Total assets
|
$ | 37,465,000 | $ | 36,934,000 | ||||
Liabilities and Shareholders’ Equity
|
||||||||
Current liabilities:
|
||||||||
Accounts payable
|
$ | 620,000 | $ | 487,000 | ||||
Accrued liabilities
|
469,000 | 296,000 | ||||||
Total current liabilities
|
1,089,000 | 783,000 | ||||||
Deferred income taxes
|
639,000 | 639,000 | ||||||
Total liabilities
|
1,728,000 | 1,422,000 | ||||||
Shareholders’ equity:
|
||||||||
Common stock, $0.01 par value, 50,000,000 shares authorized, 22,327,855 and 22,424,285 issued and outstanding at June 30, 2011 and December 31, 2010, respectively
|
223,000 | 224,000 | ||||||
Additional paid-in capital
|
23,538,000 | 23,504,000 | ||||||
Retained earnings
|
11,976,000 | 11,784,000 | ||||||
Total shareholders’ equity
|
35,737,000 | 35,512,000 | ||||||
Total liabilities and shareholders’ equity
|
$ | 37,465,000 | $ | 36,934,000 |
(1)
|
The consolidated balance sheet as of December 31, 2010 has been prepared using information from the audited financial statements at that date.
|
For the Three Months Ended
June 30,
|
For the Six Months Ended
June 30,
|
|||||||||||||||
2011
|
2010
|
2011
|
2010
|
|||||||||||||
Net sales
|
$ | 10,278,000 | $ | 11,221,000 | $ | 19,223,000 | $ | 22,850,000 | ||||||||
Cost of goods sold
|
6,407,000 | 7,000,000 | 12,079,000 | 13,640,000 | ||||||||||||
Gross profit
|
3,871,000 | 4,221,000 | 7,144,000 | 9,210,000 | ||||||||||||
Expenses:
|
||||||||||||||||
Selling, general and administrative
|
3,296,000 | 3,518,000 | 6,678,000 | 7,302,000 | ||||||||||||
Depreciation and amortization
|
206,000 | 218,000 | 449,000 | 426,000 | ||||||||||||
Income from operations
|
369,000 | 485,000 | 17,000 | 1,482,000 | ||||||||||||
Other income:
|
||||||||||||||||
Equity in income of unconsolidated affiliates
|
107,000 | 99,000 | 234,000 | 172,000 | ||||||||||||
Net gain on sales of assets
|
- | - | 41,000 | - | ||||||||||||
Interest, net
|
9,000 | 5,000 | 15,000 | 15,000 | ||||||||||||
Income before provision for income taxes
|
485,000 | 589,000 | 307,000 | 1,669,000 | ||||||||||||
Provision for income taxes
|
181,000 | 217,000 | 115,000 | 611,000 | ||||||||||||
Net income
|
$ | 304,000 | $ | 372,000 | $ | 192,000 | $ | 1,058,000 | ||||||||
Basic net income per share
|
$ | 0.01 | $ | 0.02 | $ | 0.01 | $ | 0.05 | ||||||||
Diluted net income per share
|
$ | 0.01 | $ | 0.02 | $ | 0.01 | $ | 0.05 | ||||||||
Basic weighted average shares outstanding
|
22,427,403 | 22,424,285 | 22,431,009 | 22,423,788 | ||||||||||||
Diluted weighted average shares outstanding
|
22,427,403 | 22,869,037 | 22,431,009 | 23,019,380 |
Common Stock
|
||||||||||||||||||||
Shares
|
Amount
|
Additional
Paid-in
Capital
|
Retained
Earnings
|
Total
|
||||||||||||||||
Balance at December 31, 2010 | 22,424,285 | $ | 224,000 | $ | 23,504,000 | $ | 11,784,000 | $ | 35,512,000 | |||||||||||
Share-based compensation expense | - | - | 146,000 | - | 146,000 | |||||||||||||||
Common Stock repurchased & retired | (109,763 | ) | (1,000 | ) | (128,000 | ) | - | (129,000 | ) | |||||||||||
Stock options exercised | 13,333 | - | 16,000 | - | 16,000 | |||||||||||||||
Net income | - | - | - | 192,000 | 192,000 | |||||||||||||||
Balance at June 30, 2011 | 22,327,855 | $ | 223,000 | $ | 23,538,000 | $ | 11,976,000 | $ | 35,737,000 |
Consolidated Statements of Cash Flows (Unaudited)
|
For the Six Months Ended
June 30,
|
||||||||
2011
|
2010
|
|||||||
Cash Flows From Operating Activities:
|
||||||||
Net income
|
$ | 192,000 | $ | 1,058,000 | ||||
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
|
||||||||
Share-based compensation expense
|
146,000 | 68,000 | ||||||
Proceeds from dividends from equity investments in unconsolidated affiliates
|
- | 77,000 | ||||||
Depreciation and amortization
|
449,000 | 426,000 | ||||||
Gain on sale of assets
|
(41,000 | ) | - | |||||
Equity in income of unconsolidated affiliates
|
(234,000 | ) | (172,000 | ) | ||||
Changes in assets and liabilities:
|
||||||||
Accounts receivable, net
|
(1,890,000 | ) | 2,143,000 | |||||
Inventories
|
2,017,000 | (4,768,000 | ) | |||||
Prepaid expenses and other current assets
|
160,000 | (668,000 | ) | |||||
Accounts payable and accrued liabilities
|
306,000 | (4,490,000 | ) | |||||
Net cash provided by (used in) operating activities
|
1,105,000 | (6,326,000 | ) | |||||
Cash Flows From Investing Activities:
|
||||||||
Purchase of property and equipment
|
(109,000 | ) | (462,000 | ) | ||||
Purchase of intangible assets
|
(3,000 | ) | (4,000 | ) | ||||
Proceeds from sale of Janesville
|
235,000 | - | ||||||
Net cash provided by (used in) investing activities
|
123,000 | (466,000 | ) | |||||
Cash Flows From Financing Activities:
|
||||||||
Payment for the repurchase of common stock
|
(129,000 | ) | - | |||||
Proceeds from the exercise of stock options
|
16,000 | 6,000 | ||||||
Net cash provided by (used in) financing activities
|
(113,000 | ) | 6,000 | |||||
Increase (decrease) in cash and cash equivalents during the period
|
1,115,000 | (6,786,000 | ) | |||||
Cash and cash equivalents, beginning of period
|
5,316,000 | 9,753,000 | ||||||
Cash and cash equivalents, end of period
|
$ | 6,431,000 | $ | 2,967,000 |
1.
|
The Company
|
2.
|
Basis of Presentation
|
3.
|
Stock Based Compensation
|
Options
|
Weighted-Average
Exercise Price
|
Weighted-Average
Remaining Contractual
Life (in years)
|
||||||||||
Options outstanding at December 31, 2010
|
2,542,000 | $ | 1.57 | 3.17 | ||||||||
Exercised
|
(13,000 | ) | $ | 1.23 | - | |||||||
Granted
|
- | - | - | |||||||||
Forfeited or expired
|
(18,000 | ) | $ | 1.53 | - | |||||||
Options outstanding at June 30, 2011
|
2,511,000 | $ | 1.58 | 2.64 | ||||||||
Options exercisable at June 30, 2011
|
1,377,000 | $ | 1.60 | 1.63 |
4.
|
New Accounting Standards
|
5.
|
Inventories
|
June 30,
2011
|
December 31,
2010
|
|||||||
Raw materials
|
$ | 9,488,000 | $ | 8,536,000 | ||||
Work in process
|
929,000 | 1,797,000 | ||||||
Finished goods
|
4,703,000 | 6,985,000 | ||||||
$ | 15,120,000 | $ | 17,318,000 |
6.
|
Equity Investments in and Advances to Unconsolidated Affiliates |
7.
|
Accrued Liabilities |
June 30,
2011
|
December 31,
2010
|
|||||||
Payroll
|
$ | 266,000 | $ | 115,000 | ||||
Commission and bonus accrual
|
90,000 | 48,000 | ||||||
Accrued professional fees
|
107,000 | 133,000 | ||||||
Accrued rebates and other
|
6,000 | - | ||||||
$ | 469,000 | $ | 296,000 |
8.
|
Basic and Diluted Net Income Per Share |
For the Three Months Ended June 30,
|
For the Six Months Ended
June 30,
|
|||||||||||||||
2011
|
2010
|
2011
|
2010
|
|||||||||||||
Net income (Numerator)
|
$ | 304,000 | $ | 372,000 | $ | 192,000 | $ | 1,058,000 | ||||||||
Shares (Denominator):
|
||||||||||||||||
Basic weighted average shares outstanding
|
22,427,403 | 22,424,285 | 22,431,009 | 22,423,788 | ||||||||||||
Add: Dilutive effect of outstanding stock options
|
- | 444,752 | - | 595,592 | ||||||||||||
Diluted weighted average shares outstanding
|
22,427,403 | 22,869,037 | 22,431,009 | 23,019,380 | ||||||||||||
Net income per share:
|
||||||||||||||||
Basic
|
$ | 0.01 | $ | 0.02 | $ | 0.01 | $ | 0.05 | ||||||||
Diluted
|
$ | 0.01 | $ | 0.02 | $ | 0.01 | $ | 0.05 |
9.
|
Activity of Business Segments |
For the Three Months Ended
June 30,
|
For the Six Months Ended
June 30,
|
|||||||||||||||
2011
|
2010
|
2011
|
2010
|
|||||||||||||
Disposable Protective Apparel
|
$ | 2,871,000 | $ | 4,845,000 | $ | 5,778,000 | $ | 9,929,000 | ||||||||
Building Supply
|
6,356,000 | 4,863,000 | 11,103,000 | 9,585,000 | ||||||||||||
Infection Control
|
1,051,000 | 1,513,000 | 2,342,000 | 3,336,000 | ||||||||||||
Total consolidated net sales
|
$ | 10,278,000 | $ | 11,221,000 | $ | 19,223,000 | $ | 22,850,000 |
For the Three Months Ended
June 30,
|
For the Six Months Ended
June 30,
|
|||||||||||||||
2011
|
2010
|
2011
|
2010
|
|||||||||||||
Disposable Protective Apparel
|
$ | 302,000 | $ | 933,000 | $ | 598,000 | $ | 2,134,000 | ||||||||
Building Supply
|
1,095,000 | 746,000 | 1,382,000 | 1,408,000 | ||||||||||||
Infection Control
|
328,000 | 319,000 | 691,000 | 840,000 | ||||||||||||
Total segment income
|
1,725,000 | 1,998,000 | 2,671,000 | 4,382,000 | ||||||||||||
Unallocated corporate overhead expenses
|
(1,240,000 | ) | (1,409,000 | ) | (2,364,000 | ) | (2,713,000 | ) | ||||||||
Provision for income taxes
|
(181,000 | ) | (217,000 | ) | (115,000 | ) | (611,000 | ) | ||||||||
Total consolidated net income
|
$ | 304,000 | $ | 372,000 | $ | 192,000 | $ | 1,058,000 |
June 30,
2011
|
December 31,
2010
|
|||||||
Disposable Protective Apparel
|
$ | 728,000 | $ | 816,000 | ||||
Building Supply
|
2,173,000 | 2,277,000 | ||||||
Infection Control
|
1,038,000 | 1,173,000 | ||||||
Total segment assets
|
3,939,000 | 4,266,000 | ||||||
Unallocated corporate assets
|
92,000 | 115,000 | ||||||
Total consolidated assets
|
$ | 4,031,000 | $ | 4,381,000 | ||||
For the Three Months Ended June 30,
|
For the Six Months Ended June 30,
|
|||||||||||||||
2011
|
2010
|
2011
|
2010
|
|||||||||||||
Net sales
|
100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | ||||||||
Gross profit
|
37.7 | % | 37.6 | % | 37.2 | % | 40.3 | % | ||||||||
Selling, general and administrative expenses
|
32.1 | % | 31.4 | % | 34.7 | % | 32.0 | % | ||||||||
Income from operations
|
3.6 | % | 4.3 | % | 0.0 | % | 6.5 | % | ||||||||
Income before provision for income taxes
|
4.7 | % | 5.2 | % | 1.6 | % | 7.3 | % | ||||||||
Net income
|
3.0 | % | 3.3 | % | 1.0 | % | 4.6 | % |
Period
|
Total Number of Shares Purchased
|
Weighted Average Price Paid per Share
|
Total Number of Shares Purchased as Part of Publicly Announced Plan (1)
|
Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plan (1)
|
||||||||||||
April 1-30, 2011
|
- | - | - | $ | 2,862,000 | |||||||||||
May 1-31, 2011
|
- | - | - | $ | 2,862,000 | |||||||||||
June 1-30, 2011
|
109,763 | $ | 1.16 | 109,763 | $ | 2,734,000 | ||||||||||
Total
|
109,763 | $ | 1.16 | 109,763 | $ | 2,734,000 |
3.1.1
|
Certificate of Incorporation of Alpha Pro Tech, Ltd., incorporated by reference to Exhibit 3(f) to Form 10-K for the year ended December 31, 1994, filed on March 31, 1995 (File No. 000-19893).
|
3.1.2
|
Certificate of Amendment of Certificate of Incorporation of Alpha Pro Tech, Ltd., incorporated by reference to Exhibit 3(j) to Form 10-K for the year ended December 31, 1994, filed on March 31, 1995 (File No. 000-19893).
|
3.1.3
|
Certificate of Ownership and Merger (BFD Industries, Inc. into Alpha Pro Tech, Ltd.), incorporated by reference to Exhibit 3(l) to Form 10-K for the year ended December 31, 1994, filed on March 31, 1995 (File No. 000-19893).
|
3.2
|
Bylaws of Alpha Pro Tech, Ltd., incorporated by reference to Exhibit 3(g) to Form 10-K for the year ended December 31, 1994, filed on March 31, 1995 (File No. 000-19893).
|
31.1
|
Certification Pursuant to Rule 13a-14(a) and Rule 15d-14(a) of the Exchange Act, signed by Chief Executive Officer and Director (filed herewith).
|
31.2
|
Certification Pursuant to Rule 13a-14(a) and Rule 15d-14(a) of the Exchange Act, signed by Chief Financial Officer (filed herewith).
|
32.1
|
Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, signed by Chief Executive Officer and Director (filed herewith).
|
32.2
|
Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, signed by Chief Financial Officer (filed herewith).
|
ALPHA PRO TECH, LTD. | |||
Date: August 5, 2011
|
By:
|
/s/ Sheldon Hoffman | |
Sheldon Hoffman | |||
Chief Executive Officer and Director | |||
Date: August 5, 2011
|
By:
|
/s/ Lloyd Hoffman | |
Lloyd Hoffman | |||
Chief Financial Officer | |||
1.
|
I have reviewed this quarterly report on Form 10-Q of Alpha Pro Tech, Ltd.;
|
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 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-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, including its consolidated subsidiaries, 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 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 the 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: August 5, 2011
|
By:
|
/s/ Sheldon Hoffman | |
Sheldon Hoffman
|
|||
Chief Executive Officer and Director | |||
1.
|
I have reviewed this quarterly report on Form 10-Q of Alpha Pro Tech, Ltd.;
|
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 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-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, including its consolidated subsidiaries, 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 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 the 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: August 5, 2011
|
By:
|
/s/ Lloyd Hoffman | |
Lloyd Hoffman
|
|||
Chief Financial Officer
|
|||
DATE: August 5, 2011
|
By:
|
/s/ Sheldon Hoffman | |
Sheldon Hoffman
|
|||
Chief Executive Officer and Director | |||
DATE: August 5, 2011
|
By:
|
/s/ Lloyd Hoffman | |
Lloyd Hoffman | |||
Chief Financial Officer | |||
Consolidated Balance Sheets (Unaudited) (Parentheticals) (USD $)
|
Jun. 30, 2011
|
Dec. 31, 2010
|
|||
---|---|---|---|---|---|
Allowance for doubtful accounts (in Dollars) | $ 62,000 | $ 77,000 | [1] | ||
Common stock, par value (in Dollars per share) | $ 0.01 | $ 0.01 | [1] | ||
Common stock, shares authorized | 50,000,000 | 50,000,000 | [1] | ||
Common stock, shares issued | 22,327,855 | 22,424,285 | [1] | ||
Common stock, shares outstanding | 22,327,855 | 22,424,285 | [1] | ||
|
Consolidated Income Statements (Unaudited) (USD $)
|
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2011
|
Jun. 30, 2010
|
Jun. 30, 2011
|
Jun. 30, 2010
|
|
Net sales | $ 10,278,000 | $ 11,221,000 | $ 19,223,000 | $ 22,850,000 |
Cost of goods sold | 6,407,000 | 7,000,000 | 12,079,000 | 13,640,000 |
Gross profit | 3,871,000 | 4,221,000 | 7,144,000 | 9,210,000 |
Expenses: | Â | Â | Â | Â |
Selling, general and administrative | 3,296,000 | 3,518,000 | 6,678,000 | 7,302,000 |
Depreciation and amortization | 206,000 | 218,000 | 449,000 | 426,000 |
Income from operations | 369,000 | 485,000 | 17,000 | 1,482,000 |
Other income: | Â | Â | Â | Â |
Equity in income of unconsolidated affiliates | 107,000 | 99,000 | 234,000 | 172,000 |
Net gain on sales of assets | Â | Â | 41,000 | Â |
Interest, net | 9,000 | 5,000 | 15,000 | 15,000 |
Income before provision for income taxes | 485,000 | 589,000 | 307,000 | 1,669,000 |
Provision for income taxes | 181,000 | 217,000 | 115,000 | 611,000 |
Net income | $ 304,000 | $ 372,000 | $ 192,000 | $ 1,058,000 |
Basic net income per share (in Dollars per share) | $ 0.01 | $ 0.02 | $ 0.01 | $ 0.05 |
Diluted net income per share (in Dollars per share) | $ 0.01 | $ 0.02 | $ 0.01 | $ 0.05 |
Basic weighted average shares outstanding (in Shares) | 22,427,403 | 22,424,285 | 22,431,009 | 22,423,788 |
Diluted weighted average shares outstanding (in Shares) | 22,427,403 | 22,869,037 | 22,431,009 | 23,019,380 |
Document And Entity Information
|
6 Months Ended | |
---|---|---|
Jun. 30, 2011
|
Jul. 29, 2011
|
|
Document and Entity Information [Abstract] | Â | Â |
Entity Registrant Name | ALPHA PRO TECH LTD | Â |
Document Type | 10-Q | Â |
Current Fiscal Year End Date | --12-31 | Â |
Entity Common Stock, Shares Outstanding | Â | 22,437,616 |
Amendment Flag | false | Â |
Entity Central Index Key | 0000884269 | Â |
Entity Current Reporting Status | Yes | Â |
Entity Voluntary Filers | No | Â |
Entity Filer Category | Smaller Reporting Company | Â |
Entity Well-known Seasoned Issuer | No | Â |
Document Period End Date | Jun. 30, 2011 | |
Document Fiscal Year Focus | 2011 | Â |
Document Fiscal Period Focus | Q2 | Â |
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Note 6 - Equity Investments in and Advances to Unconsolidated Affiliates
|
3 Months Ended | ||
---|---|---|---|
Jun. 30, 2011
|
|||
Equity Method Investments Disclosure [Text Block] |
In
2005, Alpha ProTech Engineered Products, Inc. (a subsidiary
of Alpha Pro Tech, Ltd.) entered into a joint venture with a
manufacturer in India for the production of building
products. Under the terms of the joint venture
agreement, a private company, Harmony Plastics Private
Limited (“Harmony”), was created with ownership
interests of 41.66% by Alpha ProTech Engineered Products,
Inc. and 58.34% by Maple Industries and
Associates. Alpha ProTech Engineered Products,
Inc. contributed $508,000 for share capital, and Maple
Industries and Associates contributed $708,000.
This
joint venture positions Alpha ProTech Engineered Products,
Inc. to respond to current and expected increased product
demand for housewrap and synthetic roof underlayment and
provides future capacity for sales of specialty roofing
component products and custom products for industrial
applications requiring high quality extrusion coated
fabrics. In addition, the joint venture now
supplies products for the Disposable Protective Apparel
segment.
The
capital from the initial funding, along with a bank loan,
which is guaranteed exclusively by the individual
shareholders of Maple Industries and Associates and
collateralized by the assets of Harmony, were utilized to
purchase an existing 33,000 square foot manufacturing
facility in India. This facility includes
manufacturing equipment necessary to produce coated material
and to sew proprietary disposable protective
apparel. This facility was expanded by a 38,500
square foot addition in mid-2010, bringing it to a total of
71,500 square feet. Also in 2005, Harmony built a
60,000 square foot facility in India for the manufacturing of
housewrap and synthetic roof underlayment. Two
additions have been made to this building: one was a 20,000
square foot addition in late 2009 and the other was a 22,000
square foot addition in mid-2010, for a total of 102,000
square feet. During the latter part of 2010,
Harmony also added a new 16,000 square foot facility in India
that sews proprietary disposable protective apparel. All
additions have been financed by Harmony with no guarantees
from Alpha Pro Tech.
The
Company is subject to the provisions of FASB ASC 810, Consolidation
(“ASC 810”), which defines the criteria by which
the Company determines the proper accounting for its
investments in related entities. Specifically, ASC
810 requires the Company to assess whether or not related
entities are variable interest entities (“VIEs”),
as defined. For those related entities that
qualify as VIEs, ASC 810 requires the Company to determine
whether or not the Company is the primary beneficiary of the
VIE, and, if so, to consolidate the VIE.
The
Company has determined that Harmony is not a VIE and is,
therefore, considered to be an unconsolidated
affiliate.
The
Company records its investment in Harmony as “Equity
investments in and advances to unconsolidated
affiliates” on the accompanying Consolidated Balance
Sheets. The Company records its equity interest in
Harmony’s results of operations as “Equity in
income of unconsolidated affiliates” on the
accompanying Consolidated Income Statements.
The
Company reviews annually its investment in Harmony for
impairment in accordance with FASB ASC 323, Investments
– Equity Method and Joint Ventures (“ASC
323”). ASC 323 requires recognition of a loss when the
decline in an investment is
other-than-temporary. In determining whether the
decline is other-than-temporary, the Company considers the
nature of the industry in which Harmony operates, its
historical performance, its performance in relation to its
peers and the current economic environment.
Alpha
ProTech Engineered Products, Inc. initially invested
$1,450,000 in the joint venture: $508,000 for share capital
and $942,000 as a long term advance for
materials. Fifty percent of the $942,000 long term
advance for materials is to be repaid over a six year term
that commenced in July 2006, and the balance is to be paid in
the seventh year. As of June 30, 2011, Harmony has
repaid a total of $525,000, leaving a balance of
$417,000. Interest of 3.5% is to be paid annually
on this advance, and the Company had an interest receivable
of $7,000 as of June 30, 2011 related to the
agreement.
For
the three months ended June 30, 2011 and 2010, Alpha Pro Tech
purchased $3,108,000 and $3,801,000 of inventory,
respectively, from Harmony. For the six months
ended June 30, 2011 and 2010, the Company purchased
$5,902,000 and $6,507,000 of inventory, respectively, from
Harmony.
For
the three months ended June 30, 2011 and 2010, the Company
recorded equity in income of unconsolidated affiliates of
$107,000 and $99,000, respectively. For the six
months ended June 30, 2011 and 2010, the Company recorded
equity in income of unconsolidated affiliates of $234,000 and
$172,000, respectively. As of June 30, 2011, the
Company’s investment in Harmony was $2,175,000, which
consists of its original $1,450,000 investment and cumulative
equity in income of unconsolidated affiliates of $1,327,000,
less $525,000 in repayments of the advance and payment of
$77,000 in dividends.
|
Note 2 - Basis of Presentation
|
3 Months Ended | ||
---|---|---|---|
Jun. 30, 2011
|
|||
Basis of Presentation and Significant Accounting Policies [Text Block] |
The
interim financial information included herein is unaudited;
however, the information reflects all adjustments (consisting
of normal recurring adjustments) that are, in the opinion of
management, necessary for the fair presentation of the
consolidated financial position, results of operations and
cash flows for the interim periods. These condensed
consolidated financial statements have been prepared in
accordance with the rules and regulations of the Securities
and Exchange Commission (the “SEC”) and,
therefore, omit certain information and footnote disclosures
necessary to present the statements in accordance with U.S.
Generally Accepted Accounting Principles
(“GAAP”). The condensed consolidated
financial statements should be read in conjunction with any
of the Company’s current year filings on Form 8-K filed
with the SEC, current year filing on Form 10-Q, as well as
the consolidated financial statements for the year ended
December 31, 2010, which are included in the Company’s
Annual Report on Form 10-K (the “2010 10-K”),
which was filed with the SEC on March 16, 2011. The results
of operations for the three and six months ended June 30,
2011 are not necessarily indicative of the results to be
expected for the full year. The consolidated balance sheet at
December 31, 2010 was extracted from the audited consolidated
financial statements contained in the 2010 10-K and does not
include all disclosures required by GAAP for annual
consolidated financial statements.
|
Note 8 - Basic and Diluted Net Income Per Share
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3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2011
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Earnings Per Share [Text Block] |
The
following table provides a reconciliation of both net income
and the number of shares used in the computation of
“basic” earnings per share (“EPS”),
which utilizes the weighted average number of shares
outstanding without regard to potential shares, and
“diluted” EPS, which includes all such dilutive
shares for the three and six months ended June 30, 2011 and
2010, respectively:
|
Note 9 - Activity of Business Segments
|
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2011
|
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Segment Reporting Disclosure [Text Block] |
The
Company operates in three business segments:
Disposable
Protective Apparel: consisting of a complete line of
disposable protective clothing, such as shoecovers (including
the Aqua Trak® and spunbond shoecovers), bouffant caps,
coveralls, frocks, lab coats, gowns and hoods for the
pharmaceutical, cleanroom, industrial and medical
markets.
Building
Supply: consisting of a line of construction supply
weatherization products. The construction supply
weatherization products consist of housewrap and synthetic
roof underlayment. The Company’s equity in
income of unconsolidated affiliates (Harmony) is included in
the total segment income for Building Supply in the table
below.
Infection
Control: consisting of a line of face masks and eye
shields principally for the medical, dental and industrial
markets. It previously included a line of medical
bed pads and pet beds that was sold during the first quarter
of 2011.
Segment
data excludes charges allocated to head office and corporate
sales/marketing departments and income taxes. The
Company evaluates the performance of its segments and
allocates resources to them based primarily on net
sales.
The
following table shows consolidated net sales for each segment
for the three and six months ended June 30, 2011 and 2010,
respectively:
The
following table shows the reconciliation of total segment
income to total consolidated net income for the three and six
months ended June 30, 2011 and 2010, respectively:
The
following table shows the consolidated net property,
equipment, goodwill and intangible assets by segment:
On
February 8, 2011, the Company entered into an asset
purchase agreement to sell its line of pet beds and on
March 30, 2011, entered into a second asset purchase
agreement, with the same principal purchaser, to sell its
line of medical bed pads. As consideration for
the acquired assets, the Company received $235,000, which
was comprised of $181,000 of inventory sold at cost, plus
an additional $54,000 in compensation for non-inventory
assets and goodwill. The net gain on the sale of
these assets was $41,000. Both of the transactions were
executed in the three months ended March 31, 2011.
|
Note 7 - Accrued Liabilities
|
3 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2011
|
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Accounts Payable, Accrued Liabilities, and Other Liabilities Disclosure, Current [Text Block] |
Accrued
liabilities consisted of the following:
The
Company’s Chief Executive Officer and President are
each entitled to a bonus equal to 5% of the pre-tax profits
of the Company, excluding bonus expense. Executive
bonuses of $34,000 were accrued for the six months ended June
30, 2011. The Chief Executive Officer and
President voluntarily decided to forgo their bonuses for
2010. Therefore, no executive bonuses were accrued
for the year ended December 31, 2010.
|
Note 3 - Stock Based Compensation
|
3 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2011
|
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Disclosure of Compensation Related Costs, Share-based Payments [Text Block] |
The
Company maintains a stock option plan under which the Company
may grant incentive stock options and non-qualified stock
options to key employees and non-employee
directors. Stock options have been granted with
exercise prices at or above the current market price of the
underlying shares of common stock on the date of
grant. Options vest and expire according to terms
established at the grant date.
The
Company adopted the Financial Accounting Standards Board
(“FASB”) Accounting Standards Codification (the
“FASB ASC”, the “ASC” or the
“Codification”) 718, Stock
Compensation (“ASC 718”), effective
January 1, 2006, using the modified prospective application
method. ASC 718 requires companies to record
compensation expense for the value of all outstanding and
unvested share-based payments, including employee stock
options and similar awards. During the first six
months of 2011, there were no stock options granted under the
stock option plan. During the first six months of
2010, there were no stock options granted under the stock
option plan. The Company recognized $146,000 and
$68,000 in share-based compensation expense in its
consolidated financial statements for the six months ended
June 30, 2011 and 2010, respectively, related to previously
issued options.
Stock
options to purchase 2,511,000 and 1,567,000 shares of common
stock were outstanding at June 30, 2011 and 2010,
respectively. As of June 30, 2011, no incremental
shares were included in the computation of diluted earnings
per share because the exercise prices of these stock options
were greater than the average share price of the
Company’s common stock for the six months ended at June
30, 2011 and, therefore, there was no dilutive effect. As of
June 30, 2010, 444,752 incremental shares were included in
the computation of diluted earnings per share because the
exercise prices of those stock options were less than the
average share price of the Company’s common stock for
the quarter and, therefore, the effect was dilutive. The
remaining 1,122,248 were not included in the computation of
the diluted earnings per share because the exercise prices of
these stock options were greater than the average share price
of the Company’s common stock for the six months ended
June 30, 2010 and, therefore, there was no dilutive
effect.
The
Company used the Black-Scholes-Merton option pricing model to
value the options. Prior to 2008, the Company used
the simplified method as discussed in the SEC’s Staff
Accounting Bulletin No. 107, Share-Based
Payment, for estimating the expected life of the
options. For options granted during a quarter or
fiscal period, the Company uses historical data to estimate
the expected life of the options. The risk-free
interest rate for periods within the contractual life of the
award is based on the U.S. Treasury yield curve in effect at
the time of grant. The expected volatility is based on
historical volatility of the expected life in
years. The Company uses an estimated dividend
payout ratio of zero, as the Company has not paid dividends
in the past and, at this time, does not expect to do so in
the future.
The
following table summarizes stock option activity during the
six months ended June 30, 2011:
As
of June 30, 2011, $487,000 of total unrecognized compensation
cost related to stock options is expected to be recognized
over a weighted average period of 2.07 years.
|
Note 4 - New Accounting Standards
|
3 Months Ended | ||
---|---|---|---|
Jun. 30, 2011
|
|||
Description of New Accounting Pronouncements Not yet Adopted [Text Block] |
In
December 2009, the FASB issued Accounting Standards Update
No. 2009-17 (“ASU No. 2009-17”), Consolidations
(Topic 810): Improvements to Financial Reporting by
Enterprises Involved with Variable Interest
Entities. The amendments in ASU No. 2009-17
replace the quantitative-based risks and rewards calculation
for determining which reporting entity, if any, has a
controlling financial interest in a variable interest entity
with an approach focused on identifying which reporting
entity has the power to direct the activities of a variable
interest entity that most significantly impact the
entity’s economic performance and (1) the obligation to
absorb losses of the entity or (2) the right to receive
benefits from the entity. An approach that is
expected to be primarily qualitative will be more effective
for identifying which reporting entity has a controlling
financial interest in a variable interest
entity. The amendments in ASU No. 2009-17 also
require additional disclosures about a reporting
entity’s involvement in variable interest entities,
which will enhance the information provided to users of
financial statements. The application of ASU No.
2009-17 did not have a significant impact on the consolidated
earnings nor the consolidated financial position for the
periods presented.
In
January 2010, the FASB issued Accounting Standards Update No.
2010-06 (“ASU No. 2010-06”), Improving
Disclosures About Fair Value Measurements. The
amendments in ASU No. 2010-06 require separate disclosure of
the amounts of significant transfers in and out of Level 1
and Level 2 fair value measurements and reasons for the
transfers and separate presentation of information about
purchases, sales, issuances, and settlements in the
reconciliation for Level 3 fair value measurements.
Additionally, ASU No. 2010-06 clarifies existing disclosures
regarding level of disaggregation and inputs and valuation
techniques. The new disclosures and clarifications of
existing disclosures under ASU No. 2010-06 are effective for
interim and annual reporting periods beginning after December
15, 2009, except for the disclosures about purchases, sales,
issuances, and settlements in the roll forward of activity in
Level 3 fair value measurements. Those disclosures are
effective for fiscal years ending after December 15, 2010 and
for interim periods within those fiscal years. The adoption
of the disclosure requirements did not have a significant
impact on the Company’s consolidated earnings nor the
consolidated financial position for the periods
presented.
In
April 2010, the FASB issued Accounting Standards Update No.
2010-13 (“ASU No. 2010-13”), Compensation
(Topic 718): Effect of
Denominating the Exercise Price of a Share-Based Payment
Award in the Currency of the Market in Which the Underlying
Equity Security Trades – a consensus of the FASB
Emerging Issues Task Force. The amendments
in ASU No. 2010-13 address the classification of a
share-based payment award with an exercise price denominated
in the currency of a market in which the underlying equity
security trades. Topic 718 is amended to clarify
that a share-based payment award with an exercise price
denominated in the currency of a market in which a
substantial portion of the entity's equity securities trades
shall not be considered to contain a market, performance, or
service condition. Therefore, such an award is not
to be classified as a liability if it otherwise qualifies as
equity classification. The application of ASU No.
2010-13 did not have a significant impact on the consolidated
earnings nor the consolidated financial position for the
periods presented.
In
December 2010, the FASB issued Accounting Standards Update
No. 2010-28 (“ASU No. 2010-28), Intangibles—Goodwill
and Other (Topic 350): When to Perform Step 2 of the Goodwill
Impairment Test for Reporting Units with Zero or Negative
Carrying Amounts, which modifies Step 1 of the
goodwill impairment test for reporting units with zero or
negative carrying amounts. For those reporting units, an
entity is required to perform Step 2 of the goodwill
impairment test if it is more likely than not that a goodwill
impairment exists. In determining whether it is more likely
than not that a goodwill impairment exists, an entity should
consider whether there are any adverse qualitative factors
indicating that an impairment may exist. The amendments in
ASU No. 2010-28 are effective for fiscal years beginning
after December 15, 2010 and for interim periods within those
fiscal years. As a result of the adoption of the amendments,
any resulting goodwill impairment should be recorded as a
cumulative-effect adjustment to beginning retained earnings
in the period of adoption. Any goodwill impairments occurring
after the initial adoption of the amendments should be
included in earnings. Adoption of this guidance
did not have a significant impact on the consolidated
earnings nor the consolidated financial position of the
Company.
We
periodically review new accounting standards that are
issued. Although some of these accounting
standards may be applicable to us, we have not identified any
other new standards that we believe merit further discussion,
and we expect that none would have a significant impact on
our consolidated financial statements.
|
Note 5 - Inventories
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3 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2011
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Inventory Disclosure [Text Block] |
Inventories
consist of the following:
|
Consolidated Statements of Shareholders’ Equity (Unaudited) (USD $)
|
Total
|
Common Stock [Member]
|
Additional Paid-in Capital [Member]
|
Retained Earnings [Member]
|
|||
---|---|---|---|---|---|---|---|
Balance at December 31, 2010 at Dec. 31, 2010 | $ 35,512,000 | [1] | $ 224,000 | $ 23,504,000 | $ 11,784,000 | ||
Balance at December 31, 2010 (in Shares) at Dec. 31, 2010 | 22,424,285 | [1] | 22,424,285 | Â | Â | ||
Share-based compensation expense | 146,000 | Â | 146,000 | Â | |||
Common Stock repurchased & retired | (129,000) | (1,000) | (128,000) | Â | |||
Common Stock repurchased & retired (in Shares) | Â | (109,763) | Â | Â | |||
Stock options exercised | 16,000 | Â | 16,000 | Â | |||
Stock options exercised (in Shares) | Â | 13,333 | Â | Â | |||
Net income | 192,000 | Â | Â | 192,000 | |||
Balance at June 30, 2011 at Jun. 30, 2011 | $ 35,737,000 | $ 223,000 | $ 23,538,000 | $ 11,976,000 | |||
Balance at June 30, 2011 (in Shares) at Jun. 30, 2011 | 22,327,855 | 22,327,855 | Â | Â | |||
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Note 1 - The Company
|
3 Months Ended | ||
---|---|---|---|
Jun. 30, 2011
|
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Nature of Operations [Text Block] |
Alpha
Pro Tech, Ltd. (“Alpha Pro Tech” or the
“Company”) is in the business of protecting
people, products and environments. The Company
accomplishes this by developing, manufacturing and marketing
a line of disposable protective apparel for the cleanroom,
industrial and pharmaceutical markets, a line of building
supply products for the new home and re-roofing markets and a
line of infection control products for the medical and dental
markets.
The
Disposable Protective Apparel segment consists of a complete
line of shoecovers, bouffant caps, coveralls, gowns, frocks
and lab coats.
The
Building Supply segment consists of construction
weatherization products, such as housewrap and synthetic roof
underlayment.
The
Infection Control segment consists of a line of face masks
and eye shields. It previously included a line of
medical bed pads and pet beds that was sold during the first
quarter of 2011.
The
Company’s products are sold both under the "Alpha Pro
Tech" brand name, as well as under private label, and are
predominantly sold in the United States of America
(“U.S.”).
|
Consolidated Balance Sheets (Unaudited) (USD $)
|
Jun. 30, 2011
|
Dec. 31, 2010
|
|||
---|---|---|---|---|---|
Current assets: | Â | Â | |||
Cash and cash equivalents | $ 6,431,000 | $ 5,316,000 | [1] | ||
Accounts receivable, net of allowance for doubtful accounts of $62,000 at June 30, 2011 and $77,000 at December 31, 2010 | 5,706,000 | 3,816,000 | [1] | ||
Inventories | 15,120,000 | 17,318,000 | [1] | ||
Prepaid expenses and other current assets | 3,559,000 | 3,719,000 | [1] | ||
Deferred income taxes | 443,000 | 443,000 | [1] | ||
Total current assets | 31,259,000 | 30,612,000 | [1] | ||
Property and equipment, net | 3,832,000 | 4,162,000 | [1] | ||
Goodwill | 55,000 | 55,000 | [1] | ||
Intangible assets, net | 144,000 | 164,000 | [1] | ||
Equity investments in and advances to unconsolidated affiliates | 2,175,000 | 1,941,000 | [1] | ||
Total assets | 37,465,000 | 36,934,000 | [1] | ||
Current liabilities: | Â | Â | |||
Accounts payable | 620,000 | 487,000 | [1] | ||
Accrued liabilities | 469,000 | 296,000 | [1] | ||
Total current liabilities | 1,089,000 | 783,000 | [1] | ||
Deferred income taxes | 639,000 | 639,000 | [1] | ||
Total liabilities | 1,728,000 | 1,422,000 | [1] | ||
Shareholders’ equity: |  |  | |||
Common stock, $0.01 par value, 50,000,000 shares authorized, 22,327,855 and 22,424,285 issued and outstanding at June 30, 2011 and December 31, 2010, respectively | 223,000 | 224,000 | [1] | ||
Additional paid-in capital | 23,538,000 | 23,504,000 | [1] | ||
Retained earnings | 11,976,000 | 11,784,000 | [1] | ||
Total shareholders’ equity | 35,737,000 | 35,512,000 | [1] | ||
Total liabilities and shareholders’ equity | $ 37,465,000 | $ 36,934,000 | [1] | ||
|