NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
(1) Basis of Presentation
The accompanying unaudited interim consolidated financial statements of Insteel Industries, Inc. (“we,” “us,” “our,” “the Company” or “Insteel”) have been prepared pursuant to the rules and regulations of the United States (“U.S.”) Securities and Exchange Commission (“SEC”) for quarterly reports on Form 10-Q. Certain information and note disclosures normally included in the audited financial statements prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) have been condensed or omitted pursuant to such rules and regulations, although we believe that the disclosures made are adequate to make the information not misleading. The October 1, 2016 consolidated balance sheet was derived from the audited consolidated financial statements at that date, but does not include all of the information and footnotes required by GAAP for complete financial statements. These financial statements should therefore be read in conjunction with the consolidated financial statements and notes for the fiscal year ended October 1, 2016 included in our Annual Report on Form 10-K filed with the SEC.
The accompanying unaudited interim consolidated financial statements reflect all adjustments of a normal recurring nature that we consider necessary for a fair presentation of results for these interim periods. The results of operations for the three-month period ended December 31, 2016 are not necessarily indicative of the results that may be expected for the fiscal year ending September 30, 2017 or future periods.
We have
evaluated subsequent events through the time of filing this Quarterly Report on Form 10-Q and concluded that there are no significant events that occurred subsequent to the balance sheet date but prior to the filing of this report that would have a material impact on the consolidated financial statements
.
(2) Recent Accounting Pronouncements
In August 2016, the Financial Accounting Standards Board (“
FASB”) issued Accounting Standards Update (“ASU”) No. 2016-15 “Statement of Cash Flows Topic 230: Classification of Certain Cash Receipts and Cash Payments.” ASU No. 2016-15 addresses how certain cash receipts and cash payments are presented and classified in the statement of cash flows with the objective of reducing existing differences in the presentation of these items. The amendments in ASU No. 2016-15 are to be adopted retrospectively and will become effective for us in the first quarter of fiscal 2019. The adoption of this update is not expected to have a material impact on our consolidated financial statements.
In March 2016, the FASB issued ASU No. 2016-09 “Compensation – Stock Compensation Topic 718: Improvements to Employee Share-Based Payment Accounting,” which is intended to simplify the accounting for share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities and classification on the statement of cash flows. ASU No. 2016-09 will become effective for us in the first quarter of fiscal 2018. We are evaluating the future effects of the adoption of this update on our consolidated financial statements.
In February 2016, the FASB issued ASU No. 2016-02 “Leases,” which will replace the guidance in Accounting Standards Codification (“ASC”) Topic 840. ASU No. 2016-02 was issued to increase transparency and comparability among organizations by recognizing all lease transactions (with terms in excess of 12 months) on the balance sheet as a lease liability and a right-of-use asset. ASU No. 2016-02 will become effective for us in the first quarter of fiscal 2020. We are evaluating the potential effects of the adoption of this update on our consolidated financial statements.
In July 2015, the FASB issued ASU No. 2015-11 “Simplifying the Measurement of Inventory,” which requires that an entity measure inventory at the lower of cost and net realizable value. Net realizable value is the estimated selling price in the ordinary course of business less reasonably predictable costs of completion, disposal and transportation. ASU No. 2015-11 will become effective for us in the first quarter of fiscal 2018. We do not expect the adoption of this update will have a material effect on our consolidated financial statements.
In May 2014, the FASB issued ASU No. 2014-09 “Revenue from Contracts with Customers,” which will supersede nearly all existing revenue recognition guidance under GAAP. ASU No. 2014-09 provides that an entity recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. This update also requires additional disclosure about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments and changes in judgments, and assets recognized from costs incurred to obtain or fulfill a contract. ASU No. 2014-09 allows for either full retrospective or modified retrospective adoption and will become effective for us in the first quarter of fiscal 2019. We are continuing to evaluate the potential effects of the adoption of this update on our consolidated financial statements and have not yet selected a transition method.
(3) Restructuring Charges
On August 15, 2014, we purchased substantially all of the assets associated with the prestressed concrete strand (“PC strand”) business of American Spring Wire Corporation (“ASW”) for a final adjusted purchase price of $33.5 million, net of post-closing adjustments of $480,000 (the “ASW Acquisition”). ASW manufactured PC strand at facilities located in Houston, Texas and Newnan, Georgia.
Subsequent to the ASW Acquisition, in fiscal 2014, we incurred employee separation costs for staffing reductions associated with the acquisition. In February 2015, we elected to consolidate our PC strand operations with the closure of the Newnan facility, which was completed in March 2015.
Following is a summary of the restructuring activities and associated costs that were incurred during the three-month periods ended December 31, 2016 and January 2, 2016:
|
|
|
|
|
|
Severance and
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equipment
|
|
|
Other Employee
|
|
|
Facility
|
|
|
Gain on Sale
|
|
|
|
|
|
(In thousands)
|
|
Relocation Costs
|
|
|
Separation Costs
|
|
|
Closure Costs
|
|
|
of Equipment
|
|
|
Total
|
|
2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liability as of October 1, 2016
|
|
$
|
31
|
|
|
$
|
239
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
270
|
|
Restructuring charges
|
|
|
48
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
48
|
|
Cash payments
|
|
|
(79
|
)
|
|
|
(74
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
(153
|
)
|
Liability as of December 31, 2016
|
|
$
|
-
|
|
|
$
|
165
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
165
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liability as of October 3, 2015
|
|
$
|
-
|
|
|
$
|
735
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
735
|
|
Restructuring charges (recoveries)
|
|
|
75
|
|
|
|
-
|
|
|
|
30
|
|
|
|
(180
|
)
|
|
|
(75
|
)
|
Cash receipts (payments)
|
|
|
(75
|
)
|
|
|
(72
|
)
|
|
|
(30
|
)
|
|
|
180
|
|
|
|
3
|
|
Liability as of January 2, 2016
|
|
$
|
-
|
|
|
$
|
663
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
663
|
|
As of December 31, 2016, we recorded restructuring liabilities amounting to $0.2 million in accrued expenses on our consolidated balance sheet. As of October 1, 2016, we recorded restructuring liabilities amounting to $0.3 million on our consolidated balance sheet, including $0.1 million in accounts payable and $0.2 million in accrued expenses. We do not currently expect to incur any significant restructuring charges during the remainder of fiscal 2017.
(4) Fair Value Measurements
Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The authoritative guidance for fair value measurements establishes a three-level fair value hierarchy that encourages an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The three levels of inputs used to measure fair value are as follows:
Level 1 - Quoted prices in active markets for identical assets or liabilities.
Level 2 - Observable inputs other than quoted prices included in Level 1, such as quoted prices for similar assets and liabilities in active markets.
Level 3 - Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities, including certain pricing models, discounted cash flow methodologies and similar techniques that use significant unobservable inputs.
As of December 31, 2016 and October 1, 2016, we held financial assets that are required to be measured at fair value on a recurring basis, which are summarized below:
(In thousands)
|
|
Total
|
|
|
Quoted Prices in
Active Markets
(Level 1)
|
|
|
Observable Inputs (Level 2)
|
|
As of December 31, 2016:
|
|
|
|
|
|
|
|
|
|
|
|
|
Current assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash equivalents
|
|
$
|
58,643
|
|
|
$
|
58,643
|
|
|
$
|
-
|
|
Other assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash surrender value of life insurance policies
|
|
|
8,203
|
|
|
|
-
|
|
|
|
8,203
|
|
Total
|
|
$
|
66,846
|
|
|
$
|
58,643
|
|
|
$
|
8,203
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As of October 1, 2016:
|
|
|
|
|
|
|
|
|
|
|
|
|
Current assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash equivalents
|
|
$
|
58,846
|
|
|
$
|
58,846
|
|
|
$
|
-
|
|
Other assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash surrender value of life insurance policies
|
|
|
7,909
|
|
|
|
-
|
|
|
|
7,909
|
|
Total
|
|
$
|
66,755
|
|
|
$
|
58,846
|
|
|
$
|
7,909
|
|
Cash equivalents, which include all highly liquid investments with original maturities of three months or less, are classified as Level 1 of the fair value hierarchy. The carrying amount of our cash equivalents, which consist of investments in money market funds, approximates fair value due to their short maturities. Cash surrender value of life insurance policies are classified as Level 2. The fair value of the life insurance policies was determined by the underwriting insurance company’s valuation models and represents the guaranteed value we would receive upon surrender of these policies as of the reporting date.
As of December 31, 2016 and October 1, 2016, we had no nonfinancial assets that were required to be measured at fair value on a nonrecurring basis. The carrying amounts of accounts receivable, accounts payable and accrued expenses approximate fair value due to the short-term maturities of these financial instruments.
(5) Intangible Assets
The primary components of our intangible assets and the related accumulated amortization are as follows:
(In thousands)
|
|
Gross Amount
|
|
|
Accumulated Amortization
|
|
|
Net Book Value
|
|
As of December 31, 2016:
|
|
|
|
|
|
|
|
|
|
|
|
|
Customer relationships
|
|
$
|
6,500
|
|
|
$
|
(775
|
)
|
|
$
|
5,725
|
|
Developed technology and know-how
|
|
|
1,800
|
|
|
|
(214
|
)
|
|
|
1,586
|
|
Non-competition agreements
|
|
|
3,577
|
|
|
|
(2,114
|
)
|
|
|
1,463
|
|
|
|
$
|
11,877
|
|
|
$
|
(3,103
|
)
|
|
$
|
8,774
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As of October 1, 2016:
|
|
|
|
|
|
|
|
|
|
|
|
|
Customer relationships
|
|
$
|
6,500
|
|
|
$
|
(693
|
)
|
|
$
|
5,807
|
|
Developed technology and know-how
|
|
|
1,800
|
|
|
|
(192
|
)
|
|
|
1,608
|
|
Non-competition agreements
|
|
|
3,577
|
|
|
|
(1,929
|
)
|
|
|
1,648
|
|
|
|
$
|
11,877
|
|
|
$
|
(2,814
|
)
|
|
$
|
9,063
|
|
Amortization expense for intangibles was $289,000 for the three-month periods ended December 31, 2016 and January 2, 2016.
(6) Stock-Based Compensation
Under our equity incentive plans, employees and directors may be granted stock options, restricted stock, restricted stock units and performance awards. Effective February 17, 2015, our shareholders approved the 2015 Equity Incentive Plan of Insteel Industries, Inc. (the “2015 Plan”), which authorizes up to 900,000 shares of our common stock for future grants under the plan. The 2015 Plan, which expires on February 17, 2025, replaces the 2005 Equity Incentive Plan of Insteel Industries, Inc., which expired on February 15, 2015. As of December 31, 2016, there were 558,000 shares of our common stock available for future grants under the 2015 Plan, which is our only active equity incentive plan.
Stock
o
ption
awards
.
Under our equity incentive plans, employees and directors may be granted options to purchase shares of common stock at the fair market value on the date of the grant. Options granted under these plans generally vest over three years and expire ten years from the date of the grant. Compensation expense associated with stock options is as follows:
|
|
Three Months Ended
|
|
|
|
December 31,
|
|
|
January 2,
|
|
(In thousands)
|
|
2016
|
|
|
2016
|
|
Compensation expense
|
|
$
|
96
|
|
|
$
|
83
|
|
As of December 31, 2016, there was $259,000 of unrecognized compensation cost related to unvested options which is expected to be recognized over a weighted average period of 1.44 years.
The following table summarizes stock option activity:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Contractual
|
|
|
Aggregate
|
|
|
|
Options
|
|
|
Exercise Price Per Share
|
|
|
Term - Weighted
|
|
|
Intrinsic
|
|
|
|
Outstanding
|
|
|
|
|
|
|
|
Weighted
|
|
|
Average
|
|
|
Value
|
|
|
|
(in thousands)
|
|
|
Range
|
|
|
Average
|
|
|
(in years)
|
|
|
(in thousands)
|
|
Outstanding at October 1, 2016
|
|
|
371
|
|
|
$9.16
|
-
|
$34.49
|
|
|
$
|
20.81
|
|
|
|
|
|
|
|
|
|
Exercised
|
|
|
(22
|
)
|
|
13.06
|
-
|
20.50
|
|
|
|
18.74
|
|
|
|
|
|
|
$
|
368
|
|
Outstanding at December 31, 2016
|
|
|
349
|
|
|
9.16
|
-
|
34.49
|
|
|
|
20.94
|
|
|
|
7.78
|
|
|
|
5,128
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Vested and anticipated to vest in the future at December 31, 2016
|
|
|
343
|
|
|
|
|
|
|
|
|
20.91
|
|
|
|
7.76
|
|
|
|
5,057
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Exercisable at December 31, 2016
|
|
|
120
|
|
|
|
|
|
|
|
|
15.98
|
|
|
|
6.19
|
|
|
|
2,369
|
|
Stock option exercises include “net exercises” for which the optionee received shares of common stock equal to the intrinsic value of the options (fair market value of common stock on the date of exercise less exercise price) reduced by any applicable withholding taxes.
Restricted stock uni
t
s.
Restricted stock units (“RSUs”) granted under our equity incentive plans are valued based upon the fair market value on the date of the grant and provide for a dividend equivalent payment which is included in compensation expense. The vesting period for RSUs is generally one year from the date of the grant for RSUs granted to directors and three years from the date of the grant for RSUs granted to employees. RSUs do not have voting rights. RSU compensation expense is as follows:
|
|
Three Months Ended
|
|
|
|
December 31,
|
|
|
January 2,
|
|
(In thousands)
|
|
2016
|
|
|
2016
|
|
Compensation expense
|
|
$
|
161
|
|
|
$
|
146
|
|
As of December 31, 2016, there was $442,000 of unrecognized compensation cost related to unvested RSUs which is expected to be recognized over a weighted average period of 1.79 years.
The following table summarizes RSU activity:
|
|
|
|
|
|
Weighted
|
|
|
|
Restricted
|
|
|
Average
|
|
|
|
Stock Units
|
|
|
Grant Date
|
|
(Unit amounts in thousands)
|
|
Outstanding
|
|
|
Fair Value
|
|
Balance, October 1, 2016
|
|
|
145
|
|
|
$
|
22.35
|
|
Released
|
|
|
(2
|
)
|
|
|
23.95
|
|
Balance, December 31, 2016
|
|
|
143
|
|
|
|
22.32
|
|
(7) Income Taxes
Effective income tax rate
.
Our effective income tax rate was 33.7% for the three-month period ended December 31, 2016 compared with 34.6% for the three-month period ended January 2, 2016. The effective income tax rates for both periods were based upon the estimated rate applicable for the entire fiscal year adjusted to reflect any significant items related specifically to interim periods.
Deferred income taxes.
In November 2015, the FASB issued ASU No. 2015-17 “Income Taxes (Topic 740) - Balance Sheet Classification of Deferred Taxes” to simplify the presentation of deferred income taxes. Under this update, all deferred tax assets and liabilities, along with any related valuation allowance, are required to be classified as noncurrent on the balance sheet. Effective January 2, 2016, we early adopted ASU No. 2015-17 on a prospective basis, which resulted in the reclassification of our current deferred tax asset as a non-current deferred tax liability on our consolidated balance sheet. No prior periods were retrospectively adjusted.
As of December 31, 2016, we recorded a deferred tax liability (net of valuation allowance) of $6.7 million in other liabilities on our consolidated balance sheet. We have $7.5 million of state net operating loss carryforwards (“NOLs”) that begin to expire in 2017, but principally expire between 2017 and 2031. We have also recorded $87,000 of gross deferred tax assets for various state tax credits that begin to expire in 2018, but principally expire between 2018 and 2020.
The realization of our deferred tax assets is entirely dependent upon our ability to generate future taxable income in applicable jurisdictions. GAAP requires that we periodically assess the need to establish a reserve against our deferred tax assets to the extent we no longer believe it is more likely than not that they will be fully realized. As of December 31, 2016 and October 1, 2016, we recorded a valuation allowance of $280,000 pertaining to various state NOLs and tax credits that were not expected to be utilized. The valuation allowance is subject to periodic review and adjustment based on changes in facts and circumstances and would be reduced should we utilize the state NOLs and tax credits against which an allowance had previously been provided or determine that such utilization was more likely than not.
Uncertainty in income taxes
.
As of December 31, 2016, we had no material, known tax exposures that require the establishment of contingency reserves for uncertain tax positions.
We file U.S. federal income tax returns as well as state and local income tax returns in various jurisdictions. Federal and various state tax returns filed subsequent to 2011 remain subject to examination.
(8) Employee Benefit Plans
Retirement plans.
We had one defined benefit pension plan, the Insteel Wire Products Company Retirement Income Plan for Hourly Employees, Wilmington, Delaware (the “Delaware Plan”). The Delaware Plan provided benefits for eligible employees based primarily upon years of service and compensation levels. The Delaware Plan was frozen effective September 30, 2008 whereby participants no longer earned additional benefits.
During the second quarter of fiscal 2016, we notified plan participants of our intent to terminate the Delaware Plan effective May 1, 2016. During September 2016, the Delaware Plan settled plan liabilities through either lump sum distributions to plan participants or annuity contracts purchased from a third-party insurance company that provided for the payment of vested benefits to those participants that did not elect the lump sum option. As of October 1, 2016, there were no remaining plan assets.
Net periodic pension cost for the Delaware Plan in the prior year included the following components:
|
|
Three Months Ended
|
|
|
|
January 2,
|
|
|
|
2016
|
|
Interest cost
|
|
$
|
37
|
|
Expected return on plan assets
|
|
|
(44
|
)
|
Recognized net actuarial loss
|
|
|
19
|
|
Net periodic pension cost
|
|
$
|
12
|
|
Supplemental employee retirement plan
.
We have Retirement Security Agreements (each, a “SERP”) with certain of our employees (each, a “Participant”). Under the SERPs, if the Participant remains in continuous service with us for a period of at least 30 years, we will pay them a supplemental retirement benefit for the 15-year period following their retirement equal to 50% of their highest average annual base salary for five consecutive years in the 10-year period preceding their retirement. If the Participant retires prior to the later of age 65 or the completion of 30 years of continuous service with us, but has completed at least 10 years of continuous service, the amount of their supplemental retirement benefit will be reduced by 1/360th for each month short of 30 years that they were employed by us.
Net periodic pension cost for the SERPs includes the following components:
|
|
Three Months Ended
|
|
|
|
December 31,
|
|
|
January 2,
|
|
(In thousands)
|
|
2016
|
|
|
2016
|
|
Service cost
|
|
$
|
86
|
|
|
$
|
66
|
|
Interest cost
|
|
|
85
|
|
|
|
81
|
|
Recognized net actuarial loss
|
|
|
43
|
|
|
|
21
|
|
Net periodic pension cost
|
|
$
|
214
|
|
|
$
|
168
|
|
(9) Long-Term Debt
Revolving Credit Facility.
We have a $100.0 million revolving credit facility (the “Credit Facility”) that is used to supplement our operating cash flow and fund our working capital, capital expenditure, general corporate and growth requirements. In May 2015, we amended the Credit Facility to, among other changes, extend its maturity date from June 2, 2016 to May 13, 2020. Advances under the Credit Facility are limited to the lesser of the revolving loan commitment amount (currently $100.0 million) or a borrowing base amount that is calculated based upon a percentage of eligible receivables and inventories. As of December 31, 2016, no borrowings were outstanding on the Credit Facility, $73.6 million of borrowing capacity was available and outstanding letters of credit totaled $1.8 million.
Interest rates on the Credit Facility are based upon (1) an index rate that is established at the highest of the prime rate, 0.50% plus the federal funds rate or the LIBOR rate plus the excess of the then-applicable margin for LIBOR loans over the then-applicable margin for index rate loans, or (2) at our election, a LIBOR rate, plus in either case, an applicable interest rate margin. The applicable interest rate margins are adjusted on a quarterly basis based upon the amount of excess availability on the Credit Facility within the range of 0.25% to 0.75% for index rate loans and 1.25% to 1.75% for LIBOR loans. In addition, the applicable interest rate margins would be increased by 2.00% upon the occurrence of certain events of default provided for under the terms of the Credit Facility. Based on our excess availability as of December 31, 2016, the applicable interest rate margins on the Credit Facility were 0.25% for index rate loans and 1.25% for LIBOR loans.
Our ability to borrow available amounts under the Credit Facility will be restricted or eliminated in the event of certain covenant breaches, events of default or if we are unable to make certain representations and warranties provided for under the terms of the Credit Facility. We are required to maintain a fixed charge coverage ratio of not less than 1.10 at the end of each fiscal quarter for the twelve-month period then ended when the amount of liquidity on the Credit Facility is less than $12.5 million. In addition, the terms of the Credit Facility restrict our ability to, among other things: engage in certain business combinations or divestitures; make investments in or loans to third parties, unless certain conditions are met with respect to such investments or loans; pay cash dividends or repurchase shares of our stock subject to certain minimum borrowing availability requirements; incur or assume indebtedness; issue securities; enter into certain transactions with our affiliates; or permit liens to encumber our property and assets. The terms of the Credit Facility also provide that an event of default will occur upon the occurrence of, among other things: defaults or breaches under the loan documents, subject in certain cases to cure periods; defaults or breaches by us or any of our subsidiaries under any agreement resulting in the acceleration of amounts above certain thresholds or payment defaults above certain thresholds; certain events of bankruptcy or insolvency; certain entries of judgment against us or any of our subsidiaries, which are not covered by insurance; or a change of control. As of December 31, 2016, we were in compliance with all of the financial and negative covenants under the Credit Facility and there have not been any events of default.
Amortization of capitalized financing costs associated with the Credit Facility was $16,000 for the three-month periods ended December 31, 2016 and January 2, 2016. Accumulated amortization of capitalized financing costs was $4.5 million as of December 31, 2016 and October 1, 2016.
(
10
)
Earnings
Per Share
The computation of basic and diluted earnings per share attributable to common shareholders is as follows:
|
|
Three Months Ended
|
|
|
|
December 31,
|
|
|
January 2,
|
|
(In thousands, except per share amounts)
|
|
2016
|
|
|
2016
|
|
Net earnings available to common shareholders
|
|
$
|
4,460
|
|
|
$
|
6,708
|
|
|
|
|
|
|
|
|
|
|
Basic weighted average shares outstanding
|
|
|
18,980
|
|
|
|
18,525
|
|
Dilutive effect of stock-based compensation
|
|
|
229
|
|
|
|
358
|
|
Diluted weighted average shares outstanding
|
|
|
19,209
|
|
|
|
18,883
|
|
|
|
|
|
|
|
|
|
|
Net earnings per share:
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
0.23
|
|
|
$
|
0.36
|
|
Diluted
|
|
$
|
0.23
|
|
|
$
|
0.36
|
|
Options representing 42,000 and 86,000 shares for the three-month periods ended December 31, 2016 and January 2, 2016, respectively, were antidilutive and not included in the diluted earnings per share calculation.
(
11
) Share Repurchases
On November 18, 2008, our Board of Directors approved a share repurchase authorization to buy back up to $25.0 million of our outstanding common stock (the “Authorization”). Under the Authorization, repurchases may be made from time to time in the open market or in privately negotiated transactions subject to market conditions, applicable legal requirements and other factors. We are not obligated to acquire any particular amount of common stock and the program may be commenced or suspended at any time at our discretion without prior notice. The Authorization continues in effect until terminated by the Board of Directors. As of December 31, 2016, there was $24.8 million remaining available for future share repurchases under this authorization. No repurchases of common stock were made during the three-month periods ended December 31, 2016 and January 2, 2016.
(12
)
Other Financial Data
Balance sheet information:
|
|
December 31,
|
|
|
October 1,
|
|
(In thousands)
|
|
2016
|
|
|
2016
|
|
Accounts receivable, net:
|
|
|
|
|
|
|
|
|
Accounts receivable
|
|
$
|
44,445
|
|
|
$
|
47,680
|
|
Less allowance for doubtful accounts
|
|
|
(290
|
)
|
|
|
(291
|
)
|
Total
|
|
$
|
44,155
|
|
|
$
|
47,389
|
|
|
|
|
|
|
|
|
|
|
Inventories:
|
|
|
|
|
|
|
|
|
Raw materials
|
|
$
|
37,021
|
|
|
$
|
45,032
|
|
Work in process
|
|
|
2,828
|
|
|
|
2,788
|
|
Finished goods
|
|
|
21,741
|
|
|
|
23,366
|
|
Total
|
|
$
|
61,590
|
|
|
$
|
71,186
|
|
|
|
|
|
|
|
|
|
|
Other current assets:
|
|
|
|
|
|
|
|
|
Prepaid insurance
|
|
$
|
2,260
|
|
|
$
|
1,805
|
|
Other
|
|
|
998
|
|
|
|
1,234
|
|
Total
|
|
$
|
3,258
|
|
|
$
|
3,039
|
|
|
|
|
|
|
|
|
|
|
Other assets:
|
|
|
|
|
|
|
|
|
Cash surrender value of life insurance policies
|
|
$
|
8,203
|
|
|
$
|
7,909
|
|
Capitalized financing costs, net
|
|
|
154
|
|
|
|
170
|
|
Other
|
|
|
106
|
|
|
|
105
|
|
Total
|
|
$
|
8,463
|
|
|
$
|
8,184
|
|
|
|
|
|
|
|
|
|
|
Property, plant and equipment, net:
|
|
|
|
|
|
|
|
|
Land and land improvements
|
|
$
|
9,715
|
|
|
$
|
9,619
|
|
Buildings
|
|
|
43,739
|
|
|
|
43,739
|
|
Machinery and equipment
|
|
|
143,947
|
|
|
|
143,789
|
|
Construction in progress
|
|
|
16,272
|
|
|
|
11,318
|
|
|
|
|
213,673
|
|
|
|
208,465
|
|
Less accumulated depreciation
|
|
|
(121,341
|
)
|
|
|
(120,272
|
)
|
Total
|
|
$
|
92,332
|
|
|
$
|
88,193
|
|
|
|
|
|
|
|
|
|
|
Accrued expenses:
|
|
|
|
|
|
|
|
|
Salaries, wages and related expenses
|
|
$
|
2,583
|
|
|
$
|
6,619
|
|
Customer rebates
|
|
|
1,804
|
|
|
|
1,296
|
|
Property taxes
|
|
|
1,266
|
|
|
|
1,328
|
|
Sales allowance reserves
|
|
|
1,104
|
|
|
|
577
|
|
Income taxes
|
|
|
731
|
|
|
|
-
|
|
Restructuring liabilities
|
|
|
165
|
|
|
|
239
|
|
Workers' compensation
|
|
|
124
|
|
|
|
127
|
|
Other
|
|
|
617
|
|
|
|
838
|
|
Total
|
|
$
|
8,394
|
|
|
$
|
11,024
|
|
|
|
|
|
|
|
|
|
|
Other liabilities:
|
|
|
|
|
|
|
|
|
Deferred compensation
|
|
$
|
9,223
|
|
|
$
|
9,071
|
|
Deferred income taxes
|
|
|
6,659
|
|
|
|
5,472
|
|
Other
|
|
|
6
|
|
|
|
-
|
|
Total
|
|
$
|
15,888
|
|
|
$
|
14,543
|
|
(13) Business Segment Information
Our operations are entirely focused on the manufacture and marketing of steel wire reinforcing products for concrete construction applications. Our concrete reinforcing products consist of two product lines: PC strand and welded wire reinforcement. Based on the criteria specified in ASC Topic 280,
Segment Reporting
, we have one reportable segment.
(14) Contingencies
Legal proceedings
.
We are involved in lawsuits, claims, investigations and proceedings, including commercial, environmental and employment matters, which arise in the ordinary course of business. We do not expect that the ultimate costs to resolve these matters will have a material adverse effect on our financial position, results of operations or cash flows.