Shareholders' Equity

12 Months Ended

Dec. 31, 2014

Equity [Abstract]

Shareholders' Equity

7. Shareholders’ Equity

	Common Stock															Accumulated
	Number				Capital in											Other			Total
	of shares				excess of		Retained						Treasury			Comprehensive			Shareholders’
	issued		Amount		par value		earnings			ESOT			Stock			Loss			Equity
	($000’s omitted except for share data)
Balance December 31, 2012		2,614,506	$	523	$	13,987	$	11,771		$	(1,165	)	$	(1,765	)	$	(85	)	$	23,266
Net income		-		-		-		975			-			-			-			975
Retirement benefits adjustment		-		-		-		-			-			-			59			59
Compensation expense		-		-		-		-			100			-			-			100
Purchase of treasury shares		-		-		-		-			-			(607	)		-			(607	)
Stock based compensation		-		-		16		-			-			239			-			255
Cash dividend		-		-		-		(406	)		-			-			-			(406	)
Exercise of stock options, net of income tax benefit		-		-		21		(38	)		-			109			-			92
Balance December 31, 2013		2,614,506	$	523	$	14,024	$	12,302		$	(1,065	)	$	(2,024	)	$	(26	)	$	23,734
Net loss		-		-		-		(3,126	)		-			-			-			(3,126	)
Retirement benefits adjustment		-		-		-		-			-			-			12			12
Compensation expense		-		-		-		-			101			-			-			101
Purchase of treasury shares		-		-		-		-			-			(202	)		-			(202	)
Stock based compensation		-		-		44		-			-			317			-			361
Balance December 31, 2014		2,614,506	$	523	$	14,068	$	9,176		$	(964	)	$	(1,909	)	$	(14	)	$	20,880

The Company’s Board of Directors authorized the purchase of up to 450,000 shares of its common stock in the open market or in privately negotiated transactions. During the year ended, December 31, 2014, 8,687 (71,458 – 2013) shares were repurchased for $62,000 ($607,000 – 2013) and added to treasury stock. As of December 31, 2014, the Company has purchased 331,970 shares and there remain 118,030 shares available to purchase under this program.

On April 18, 2013, the Company issued 165,000 shares of restricted stock to Executive Officers of the Company under the Company’s 2012 Long-Term Incentive Plan that was approved by the shareholders at the 2012 Annual Meeting of Shareholders. This plan authorizes the issuance of up to 300,000 shares. The restricted share awards vest over four year periods between January 2014 and January 2017; however, have voting rights and accrue dividends prior to vesting. The aggregate amount of expense to the Company, measured based on grant date fair value is expected to be $1,336,500 and will be recognized over the four year requisite service period. During the year ended December 31, 2014, there was $361,000 of compensation expense related to the restricted share awards, $255,000 of compensation expense was recognized in the comparable period ended December 31, 2013.

On January 1, 2014, 41,250 shares of restricted stock vested of which 17,345 shares were withheld, repurchased and added to treasury by the Company for approximately $140,000 to satisfy statutory minimum withholding tax requirements for those participants who elected this option as permitted under the Company’s 2012 Long-Term Incentive Plan.

Other Comprehensive Loss

The only component of accumulated other comprehensive loss included in equity at December 31, 2014 is approximately $22,000 ($40,000 – 2013) of unrecognized actuarial losses and net transition obligations for post retirement, health and life insurance benefits (see Note 5, Employee Benefit Plans). These amounts are shown net of income tax benefit of $7,400 at December 31, 2014 ($14,000 – 2013).  The current year impact of accumulated other comprehensive loss for the year ended December 31, 2014 is approximately $12,000 ($59,000 - 2013), net of income taxes of approximately $14,000 ($26,000 - 2013).

Earnings Per Share

Basic earnings per share is computed by dividing net earnings by the weighted average number of shares outstanding during the period. Diluted earnings per share is computed by dividing net earnings by the weighted average number of shares outstanding during the period plus the number of shares of common stock that would be issued assuming all contingently issuable shares having a dilutive effect on the earnings per share that were outstanding for the period. Incremental shares from assumed conversions are calculated as the number of shares that would be issued, net of the number of shares that could be purchased in the marketplace with the cash received upon stock option exercise.

	Year Ended
	December 31,
	2014			2013
	($000’s omitted except per share data)
Net (loss) income	$	(3,126	)	$	975
Weighted average common shares outstanding (basic)		2,267			2,266
Incremental shares from assumed conversions of stock options		-			1
Weighted average common shares outstanding (diluted)		2,267			2,267
Basic
Net (loss) income per share	$	(1.38	)	$	0.43
Diluted
Net (loss) income per share	$	(1.38	)	$	0.43

Share Based Payments

Under the Servotronics, Inc. 2001 Long-Term Stock Incentive Plan authorized by the Board of Directors and the Shareholders, the Company has granted options to certain Directors, Officers and employees. No options were granted under this plan since 2005. Options granted under this plan have durations of ten years and all outstanding options are currently exercisable.

A summary of the status of options granted under all employee plans is presented below:

					Weighted
			Weighted		Average		Aggregate
			Average		Remaining		Intrinsic
	Options		Exercise		Contractual		Value
	Outstanding		Price ($)		Life		($)
Outstanding and exercisable as of December 31, 2012		21,000		4.70		3.00		65,100
Granted in 2013		-		-
Expired in 2013		5,000		4.70
Exercised in 2013		15,000		4.70
Outstanding and exercisable as of December 31, 2013		1,000		4.70		2.00		3,400
Outstanding and exercisable as of December 31, 2014		1,000		4.70		1.00		1,790

The aggregate intrinsic value in the preceding table represents the total pretax intrinsic value based on the closing stock price of $6.49 at December 31, 2014.

The Company’s 2012 Long-Term Incentive Plan was approved by the shareholders at the 2012 Annual Meeting of Shareholders. This plan authorizes the issuance of up to 300,000 shares. On April 18, 2013, the Company issued 165,000 shares of restricted stock to Executive Officers of the Company. The restricted share awards vest over four year periods between January 2014 and January 2017; however, the restricted shares have voting rights and accrue dividends prior to vesting. The aggregate amount of expense to the Company, measured based on grant date fair value is expected to be $1,336,500 and will be recognized over the four year requisite service period. During the year ended December 31, 2014, there was $361,000 of compensation expense related to the restricted share awards, $255,000 of compensation expense was recognized in the comparable period ended December 31, 2013. As of December 31, 2014, there is approximately $720,000 of unrecognized compensation related to the unvested restricted shares which is expected to be recognized over the next 2.3 years.

A summary of the status of restricted share awards granted under all employee plans is presented below:

			Weighted Average
	Shares		Grant Date Fair Value
Restricted Share Activity:
Unvested at December 31, 2013		165,000	$	8.10
Granted in 2014		-
Forfeited in 2014		-
Vested in 2014		41,250
Unvested at December 31, 2014		123,750	$	8.10

Shareholders’ Rights Plan

During 2012, the Company’s Board of Directors adopted a shareholders’ rights plan (the “Rights Plan”) and simultaneously declared a dividend distribution of one right for each outstanding share of the Company’s common stock outstanding at October 15, 2012. The Rights Plan replaced a previous shareholders rights plan that was adopted in 2002 and expired on August 28, 2012. The rights do not become exercisable until the earlier of (i) the date of the Company’s public announcement that a person or affiliated group other than Dr. Nicholas D. Trbovich, Kenneth D. Trbovich or the ESOP trust (an “Acquiring Person”) has acquired, or obtained the right to acquire, beneficial ownership of 25% or more of the Company’s common stock (excluding shares held by the ESOP trust) or (ii) ten business days following the commencement of a tender offer that would result in a person or affiliated group becoming an Acquiring Person.

The exercise price of a right has been established at $32.00. Once exercisable, each right would entitle the holder to purchase one one-hundredth of a share of Series A Junior Participating Preferred Stock. In the event that any person becomes an Acquiring Person, each right would entitle any holder other than the Acquiring Person to purchase common stock or other securities of the Company having a value equal to three times the exercise price. The Board of Directors has the discretion in such event to exchange two shares of common stock or two one-hundredths of a share of preferred stock for each right held by any holder other than the Acquiring Person.