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Document And Entity Information
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Document And Entity Information (USD $)
12 Months Ended
Dec. 31, 2013
Mar. 01, 2014
Jun. 30, 2013
Document And Entity Information [Abstract]      
Document Type 10-K    
Amendment Flag false    
Document Period End Date Dec. 31, 2013    
Document Fiscal Period Focus FY    
Document Fiscal Year Focus 2013    
Entity Registrant Name COMMUNICATIONS SYSTEMS INC    
Entity Central Index Key 0000022701    
Current Fiscal Year End Date --12-31    
Entity Filer Category Accelerated Filer    
Entity Common Stock, Shares Outstanding   8,556,473  
Entity Current Reporting Status Yes    
Entity Voluntary Filers No    
Entity Well-known Seasoned Issuer No    
Entity Public Float     $ 74,909,000

Consolidated Balance Sheets
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Consolidated Balance Sheets (USD $)
Dec. 31, 2013
Dec. 31, 2012
CURRENT ASSETS:    
Cash and cash equivalents $ 20,059,120 $ 17,869,712
Investments 5,742,314 12,701,538
Trade accounts receivable, less allowance for doubtful accounts of $69,000 and $69,000, respectively 22,902,323 14,683,227
Inventories 29,111,656 33,752,710
Prepaid income taxes 1,381,502 2,113,926
Other current assets 716,784 783,352
Deferred income taxes 3,758,750 4,013,628
TOTAL CURRENT ASSETS 83,672,449 85,918,093
PROPERTY, PLANT AND EQUIPMENT, net 14,941,492 14,474,913
OTHER ASSETS:    
Investments 3,920,978 5,376,397
Goodwill    5,956,934
Funded pension assets 305,028  
Other assets 692,794 808,308
TOTAL OTHER ASSETS 4,918,800 12,141,639
TOTAL ASSETS 103,532,741 112,534,645
CURRENT LIABILITIES:    
Current portion of long-term debt 489,706 457,464
Accounts payable 4,894,869 9,237,233
Accrued compensation and benefits 3,927,728 3,044,864
Accrued consideration 558,801 770,041
Other accrued liabilities 1,765,428 1,670,009
Dividends payable 1,436,318 61,833
TOTAL CURRENT LIABILITIES 13,072,850 15,241,444
LONG TERM LIABILITIES:    
Long-term compensation plans   350,457
Uncertain tax positions 400,846 320,426
Deferred income taxes 809,179 1,381,785
Pension liabilities   127,611
Long term debt - mortgage payable 627,823 1,117,529
TOTAL LONG-TERM LIABILITIES 1,837,848 3,297,808
COMMITMENTS AND CONTINGENCIES (Footnote 8)      
STOCKHOLDERS' EQUITY    
Preferred stock, par value $1.00 per share; 3,000,000 shares authorized; none issued      
Common stock, par value $.05 per share; 30,000,000 shares authorized; 8,553,320 and 8,474,896 shares issued and outstanding, respectively 427,666 423,745
Additional paid-in capital 37,110,671 36,404,518
Retained earnings 51,323,718 57,755,178
Accumulated other comprehensive loss (240,012) (588,048)
TOTAL STOCKHOLDERS' EQUITY 88,622,043 93,995,393
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 103,532,741 $ 112,534,645

Consolidated Balance Sheets (Parenthetical)
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Consolidated Balance Sheets (Parenthetical) (USD $)
Dec. 31, 2013
Dec. 31, 2012
Consolidated Balance Sheets [Abstract]    
Trade accounts receivable, allowance for doubtful accounts $ 69,000 $ 69,000
Preferred stock, par value $ 1.00 $ 1.00
Preferred stock, shares authorized 3,000,000 3,000,000
Preferred stock, shares issued 0 0
Common stock, par value $ 0.05 $ 0.05
Common stock, shares authorized 30,000,000 30,000,000
Common stock, shares issued 8,553,320 8,474,896
Common stock, shares outstanding 8,553,320 8,474,896

Consolidated Statements Of (Loss) Income And Comprehensive (Loss) Income
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Consolidated Statements Of (Loss) Income And Comprehensive (Loss) Income (USD $)
12 Months Ended
Dec. 31, 2013
Dec. 31, 2012
Dec. 31, 2011
Consolidated Statements Of (Loss) Income And Comprehensive (Loss) Income [Abstract]      
Sales $ 131,319,510 $ 104,249,654 $ 143,775,051
Costs and expenses:      
Cost of sales 86,420,982 62,752,763 84,879,924
Selling, general and administrative expenses 36,742,869 38,100,773 40,108,221
Impairment loss 5,849,853   1,271,986
Restructuring expense 1,149,439    
Total costs and expenses 130,163,143 100,853,536 126,260,131
Operating income 1,156,367 3,396,118 17,514,920
Other income and (expenses):      
Investment and other income 125,985 75,187 313,544
(Loss)/gain on sale of assets (73,126) 62,630 (27,081)
Interest and other expense (106,101) (136,255) (181,393)
Other income (loss), net (53,242) 1,562 105,070
Income from operations before income taxes 1,103,125 3,397,680 17,619,990
Income tax expense 2,061,013 1,159,566 7,822,124
Net (loss) income (957,888) 2,238,114 9,797,866
Other comprehensive income (loss), net of tax:      
Additional minimum pension liability adjustments 37,000 1,311,000 (525,000)
Unrealized (losses)/gains on available-for-sale securities (21,964) 26,223 (16,691)
Foreign currency translation adjustment 333,000 (2,032,877) 934,934
Total other comprehensive (loss) income 348,036 (695,654) 393,243
Comprehensive (loss) income $ (609,852) $ 1,542,460 $ 10,191,109
Basic net (loss) income per share: $ (0.11) $ 0.26 $ 1.16
Diluted net (loss) income per share: $ (0.11) $ 0.26 $ 1.15
Weighted Average Basic Shares Outstanding 8,531,073 8,508,497 8,448,612
Weighted Average Dilutive Shares Outstanding 8,531,073 8,518,613 8,495,873

Consolidated Statements Of Changes In Stockholders' Equity
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Consolidated Statements Of Changes In Stockholders' Equity (USD $)
Common Stock [Member]
Additional Paid-In Capital [Member]
Retained Earnings [Member]
Accumulated Other Comprehensive Loss [Member]
Total
BALANCE at Dec. 31, 2010 $ 421,144 $ 34,491,370 $ 56,769,816 $ (285,637) $ 91,396,693
BALANCE, Shares at Dec. 31, 2010 8,422,890        
Net income (loss)     9,797,866   9,797,866
Issuance of common stock under Employee Stock Purchase Plan 515 151,761     152,276
Issuance of common stock under Employee Stock Purchase Plan, Shares 10,308        
Issuance of common stock to Employee Stock Ownership Plan 1,125 314,902     316,027
Issuance of common stock to Employee Stock Ownership Plan, Shares 22,493        
Issuance of common stock under Employee Stock Option Plan 450 72,450     72,900
Issuance of common stock under Employee Stock Option Plan, Shares 9,000        
Issuance of common stock under Executive Stock Plan 105 31,974     32,079
Issuance of common stock under Executive Stock Plan, Shares 2,083        
Tax benefit from non-qualified stock options   21,920     21,920
Share-based compensation   448,896     448,896
Shareholder dividends     (5,101,340)   (5,101,340)
Other comprehensive income (loss)       393,243 393,243
BALANCE at Dec. 31, 2011 423,339 35,533,273 61,466,342 107,606 97,530,560
BALANCE, Shares at Dec. 31, 2011 8,466,774        
Net income (loss)     2,238,114   2,238,114
Issuance of common stock under Employee Stock Purchase Plan 692 171,078     171,770
Issuance of common stock under Employee Stock Purchase Plan, Shares 13,849        
Issuance of common stock to Employee Stock Ownership Plan 1,807 506,391     508,198
Issuance of common stock to Employee Stock Ownership Plan, Shares 36,145        
Issuance of common stock under Non-Employee Stock Option Plan 600 84,983     85,583
Issuance of common stock under Non-Employee Stock Option Plan, Shares 12,000        
Issuance of common stock under Executive Stock Plan 808 39,503     40,311
Issuance of common stock under Executive Stock Plan, Shares 16,156        
Tax benefit from non-qualified stock options   67,835     67,835
Share-based compensation   302,964     302,964
Purchase of common stock (3,501) (301,509) (452,941)   (757,951)
Purchase of common stock, Shares (70,028)        
Shareholder dividends     (5,496,336)   (5,496,336)
Other comprehensive income (loss)       (695,654) (695,654)
BALANCE at Dec. 31, 2012 423,745 36,404,518 57,755,178 (588,048) 93,995,393
BALANCE, Shares at Dec. 31, 2012 8,474,896        
Net income (loss)     (957,888)   (957,888)
Issuance of common stock under Employee Stock Purchase Plan 849 172,354     173,203
Issuance of common stock under Employee Stock Purchase Plan, Shares 16,977        
Issuance of common stock to Employee Stock Ownership Plan 2,230 461,589     463,819
Issuance of common stock to Employee Stock Ownership Plan, Shares 44,598        
Issuance of common stock under Non-Employee Stock Option Plan 750 109,500     110,250
Issuance of common stock under Non-Employee Stock Option Plan, Shares 15,000        
Issuance of common stock under Executive Stock Plan 92 27,312     27,404
Issuance of common stock under Executive Stock Plan, Shares 1,849        
Tax benefit from non-qualified stock options   16,284     16,284
Share-based compensation   (80,886)     (80,886)
Shareholder dividends     (5,473,572)   (5,473,572)
Other comprehensive income (loss)       348,036 348,036
BALANCE at Dec. 31, 2013 $ 427,666 $ 37,110,671 $ 51,323,718 $ (240,012) $ 88,622,043
BALANCE, Shares at Dec. 31, 2013 8,553,320        

Consolidated Statements Of Cash Flows
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Consolidated Statements Of Cash Flows (USD $)
12 Months Ended
Dec. 31, 2013
Dec. 31, 2012
Dec. 31, 2011
CASH FLOWS FROM OPERATING ACTIVITIES:      
Net (loss) income $ (957,888) $ 2,238,114 $ 9,797,866
Adjustments to reconcile net income to net cash provided by operating activities:      
Depreciation and amortization 2,184,830 2,133,511 2,100,735
Share-based compensation (80,886) 302,964 448,896
Deferred taxes (317,727) (631,626) 1,695,595
Impairment loss 5,849,853   1,271,986
Change in fair value of acquisition-related contingent consideration (43,898) 85,501  
Loss/(gain) on sale of assets 73,126 (62,630) 27,081
Excess tax benefit from share based payments (16,284) (67,835) (21,920)
Changes in assets and liabilities:      
Trade receivables (8,207,253) (189,775) 3,273,730
Inventories 4,647,916 (7,705,772) (602,414)
Prepaid income taxes 732,618 1,776,601 (3,600,652)
Other assets 89,533 252,378 (78,349)
Accounts payable (4,342,626) 4,819,481 (1,025,703)
Accrued compensation and benefits 994,012 (2,250,647) 751,925
Other accrued liabilities 71,293 (680,171) 395,133
Income taxes payable 96,704 (15,168) (335,374)
Other   195,244 (32,022)
Net cash provided by operating activities 773,323 200,170 14,066,513
CASH FLOWS FROM INVESTING ACTIVITIES:      
Capital expenditures (2,699,347) (2,607,958) (2,755,991)
Purchases of investments (4,401,321) (15,010,778) (20,884,014)
Acquisition of business     (3,138,367)
Proceeds from the sale of fixed assets 82,078 198,109 22,555
Proceeds from the sale of investments 12,794,000 20,456,039 23,635,385
Net cash provided by (used in) investing activities 5,775,410 3,035,412 (3,120,432)
CASH FLOWS FROM FINANCING ACTIVITIES:      
Cash dividends paid (4,099,087) (6,734,466) (5,064,811)
Mortgage principal payments (457,464) (427,345) (399,209)
Proceeds from issuance of common stock 310,857 297,664 257,255
Excess tax benefit from stock based payments 16,284 67,835 21,920
Payment of contingent consideration related to acquisition (161,060) (370,096)  
Purchase of common stock   (757,951)  
Net cash used in financing activities (4,390,470) (7,924,359) (5,184,845)
EFFECT OF FOREIGN EXCHANGE RATE CHANGES ON CASH 31,145 42,779 (33,084)
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 2,189,408 (4,645,998) 5,728,152
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR 17,869,712 22,515,710 16,787,558
CASH AND CASH EQUIVALENTS AT END OF YEAR 20,059,120 17,869,712 22,515,710
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:      
Income taxes paid 1,556,590 87,343 10,037,938
Interest paid 106,101 138,477 165,514
Dividends declared not paid 1,436,318   1,270,016
Acquisition costs in accrued liabilities     $ 1,002,623

Summary Of Significant Accounting Policies
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Summary Of Significant Accounting Policies
12 Months Ended
Dec. 31, 2013
Summary Of Significant Accounting Policies [Abstract]  
Summary Of Significant Accounting Policies

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 

Description of business: Communications Systems, Inc. (herein collectively called “CSI,” “our” or the “Company”) is a Minnesota corporation organized in 1969 that operates directly and through its subsidiaries located in the United States, Costa Rica, the United Kingdom and China. CSI is principally engaged through its Suttle business unit in the manufacture and sale of modular connecting and wiring devices for voice and data communications, digital subscriber line filters, and structured wiring systems and through its Transition Networks business unit in the manufacture of media and rate conversion products for telecommunications networks. CSI also provides through its JDL Technologies business unit IT solutions including network design, computer infrastructure installations, IT service management, change management, network security and network operations services.

 

The Company classifies its businesses into three segments: Suttle, which manufactures U.S. standard modular connecting and wiring devices for voice and data communications; Transition Networks, which designs and markets media conversion products, ethernet switches, and other connectivity and data transmission products; and JDL Technologies, (JDL), which provides IT services;  non-allocated general and administrative expenses are separately accounted for as “Other” in the Company’s segment reporting. There are no material intersegment revenues.

 

Principles of consolidation: The consolidated financial statements include the accounts of the Company and its subsidiaries.  All material intercompany transactions and accounts have been eliminated.

 

Use of estimates: The presentation 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 assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. The Company uses estimates based on the best information available in recording transactions and balances resulting from operations.  Actual results could differ from those estimates.  The Company’s estimates consist principally of reserves for doubtful accounts, sales returns, warranty costs, asset impairment evaluations, accruals for compensation plans, self-insured medical and dental accruals, pension liabilities, lower of cost or market inventory adjustments, provisions for income taxes and deferred taxes and depreciable lives of fixed assets.

 

Cash equivalents: For purposes of the consolidated statements of cash flows, the Company considers all highly liquid investments with a maturity of three months or less at the time of purchase to be cash equivalents. As of December 31, 2013,  the Company had $20,059,000 in cash and cash equivalents. Of this amount, $5,752,000 was invested in short-term money market funds that are not considered to be bank deposits and are not insured or guaranteed by the federal deposit insurance company (FDIC) or other government agency. These money market funds seek to preserve the value of the investment at $1.00 per share; however, it is possible to lose money investing in these funds. The remainder is operating cash and certificates of deposit which are fully insured through the FDIC.

 

Investments:  Investments consist of certificates of deposit, commercial paper, and corporate notes and bonds that are traded on the open market and are classified as available-for-sale at December 31, 2013. Available-for-sale investments are reported at fair value with unrealized gains and losses excluded from operations and reported as a separate component of stockholders’ equity, net of tax  (see Accumulated Comprehensive income below).

 

Inventories: Inventories are stated at the lower of cost or market. Cost is determined by the first-in, first-out method. Provision to reduce inventories to the lower of cost or market is made based on a review of excess and obsolete inventories, estimates of future sales, examination of historical consumption rates and the related value of component parts.

 

Property, plant and equipment: Property, plant and equipment are recorded at cost.  Depreciation is computed using the straight-line method.  Depreciation included in cost of sales and selling, general and administrative expenses for continuing operations was $2,083,000, $2,030,000 and $2,058,000 for 2013,  2012 and 2011, respectively.  Maintenance and repairs are charged to operations and additions or improvements are capitalized.  Items of property sold, retired or otherwise disposed of are removed from the asset and accumulated depreciation accounts and any gains or losses on disposal are reflected in operations.

 

Goodwill and Other Intangible Assets: Goodwill represents the amount by which the purchase prices (including liabilities assumed) of acquired businesses exceed the estimated fair value of the net tangible assets and separately identifiable assets of these businesses. Goodwill and intangible assets with indefinite useful lives are not amortized, but are tested at least annually for impairment. The Company reassesses the value of our reporting units and related goodwill balances at the end of each fiscal year and at other times if events have occurred or circumstances exist that indicate the carrying amount of goodwill may not be recoverable. Based on the step one and step two analysis, considering Transition Networks’ reduced earnings and cash flow forecasts, the Company determined that Transition Networks’ goodwill was fully impaired and recorded a goodwill impairment for this segment of $5,850,000 in the third quarter of 2013.

 

Recoverability of long-lived assets: The Company reviews its long-lived assets periodically to determine potential impairment by comparing the carrying value of the assets with expected net cash flows expected to be provided by operating activities of the business or related products.  If the sum of the expected future net cash flows is less than the carrying value, an impairment loss would be measured by comparing the amount by which the carrying value exceeds the fair value of the asset.

 

Warranty:  The Company reserves for the estimated cost of product warranties at the time revenue is recognized.  We estimate the costs of our warranty obligations based on our warranty policy or applicable contractual warranty, historical experience of known product failure rates, and use of materials and service delivery costs incurred in correcting product failures.  Management reviews the estimated warranty liability on a quarterly basis to determine its adequacy. 

 

The following table presents the changes in the Company’s warranty liability for the years ended December 31, 2013 and 2012, which relate to normal product warranties and a five-year obligation to provide for potential future liabilities for certain network equipment sales:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Year Ended December 31

 

 

 

2013

 

 

2012

Beginning balance

 

$

590,000 

 

$

634,000 

Amounts charged to expense

 

 

237,000 

 

 

217,000 

Actual warranty costs paid

 

 

(263,000)

 

 

(261,000)

Ending balance

 

$

564,000 

 

$

590,000 

 

Accumulated Other Comprehensive income: The components of accumulated other comprehensive income are as follows:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

December 31

 

 

 

2013

 

 

2012

Minimum pension liability

 

$

1,796,000 

 

$

1,759,000 

Unrealized gain on available-for-sale investments

 

 

2,000 

 

 

24,000 

Foreign currency translation

 

 

(2,038,000)

 

 

(2,371,000)

 

 

$

(240,000)

 

$

(588,000)

 

The functional currency of Austin Taylor and Patapsco is the British pound.  Assets and liabilities denominated in this foreign currency were translated into U.S. dollars at year-end exchange rates.  Revenue and expense transactions were translated using average exchange rates.  Suttle Costa Rica and Transition China use the U.S. dollar as their functional currency. 

 

Revenue recognition: The Company’s manufacturing operations (Suttle and Transition Networks) recognize revenue when the earnings process is complete, evidenced by persuasive evidence of an agreement, delivery has occurred or services have been rendered, the price is fixed or determinable, and collectability is reasonably assured.  Revenue is recognized for domestic and international sales at the shipping point or delivery to customers, based on the related shipping terms. Risk of loss transfers at the point of shipment or delivery to customers, and the Company has no further obligation after such time. Sales are made directly to customers and through distributors. Payment terms for distributors are consistent with the terms of the Company’s direct customers. The Company records a provision for sales returns, sales incentives and warranty costs at the time of the sale based on historical experience and current trends.


JDL generally records revenue on hardware, software and related equipment sales and installation contracts when the revenue recognition criteria are met and products are installed and accepted by the customer.  JDL records revenue on service contracts on a straight-line basis over the contract period, unless evidence suggests the revenue is earned in a different pattern. Each contract is individually reviewed to determine when the earnings process is complete.

 

Research and development: Research and development costs consist of outside testing services, equipment and supplies associated with enhancing existing products and developing new products.  Research and development costs are expensed when incurred and totaled $2,760,000 in 2013, $2,304,000 in 2012 and $2,045,000 in 2011.  

 

Net income per share: Basic net income per common share is based on the weighted average number of common shares outstanding during each year. Diluted net income per common share adjusts for the dilutive effect of potential common shares outstanding.  The Company’s only potential common shares outstanding are stock options and unvested shares, which resulted in a dilutive effect of 10,116 shares and 47,261 shares in 2012 and 2011, respectively.  Due to the net loss in 2013, there was no dilutive impact from stock options or unvested shares.  The Company calculates the dilutive effect of outstanding options and unvested shares using the treasury stock method. The number of shares not included in the computation of diluted earnings per share because the options’ exercise price was greater than the average market price of common stock during the year for 2013,  2012, and 2011 was 0,  80,290 and 0, respectively.

 

Share based compensation: The Company accounts for share based compensation awards on a fair value basis. The estimated grant date fair value of each stock-based award is recognized in income over the requisite service period (generally the vesting period). The estimated fair value of each option is calculated using the Black-Scholes option-pricing model.   


Cash Equivalents And Investments
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Cash Equivalents And Investments
12 Months Ended
Dec. 31, 2013
Cash Equivalents And Investments [Abstract]  
Cash Equivalents And Investments

NOTE 2 –CASH EQUIVALENTS AND INVESTMENTS

 

The following tables show the Company’s cash equivalents and available-for-sale securities’ adjusted cost, gross unrealized gains, gross unrealized losses and fair value by significant investment category recorded as cash equivalents or short and long term investments as of December 31, 2013 and December 31, 2012:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

December 31, 2013

 

Amortized Cost

 

Gross Unrealized Gains

 

Gross Unrealized Losses

 

Fair Value

 

Cash Equivalents

 

Short-Term Investments

 

Long-Term Investments

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash equivalents:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Money Market funds

$

5,751,965 

 

$

 -

 

$

 -

 

$

5,751,965 

 

$

5,751,965 

 

$

 

 

$

 

Subtotal

 

5,751,965 

 

 

 -

 

 

 -

 

 

5,751,965 

 

 

5,751,965 

 

 

 -

 

 

 -

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Investments:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Certificates of deposit

 

4,024,031 

 

 

687 

 

 

(4,992)

 

 

4,019,726 

 

 

239,904 

 

 

2,582,502 

 

 

1,197,320 

Corporate Notes/Bonds

 

5,861,162 

 

 

22,830 

 

 

(522)

 

 

5,883,470 

 

 

 -

 

 

3,159,812 

 

 

2,723,658 

Subtotal

 

9,885,193 

 

 

23,517 

 

 

(5,514)

 

 

9,903,196 

 

 

239,904 

 

 

5,742,314 

 

 

3,920,978 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total

$

15,637,158 

 

$

23,517 

 

$

(5,514)

 

$

15,655,161 

 

$

5,991,869 

 

$

5,742,314 

 

$

3,920,978 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

December 31, 2012

 

Amortized Cost

 

Gross Unrealized Gains

 

Gross Unrealized Losses

 

Fair Value

 

Cash Equivalents

 

Short-Term Investments

 

Long-Term Investments

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash equivalents:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Money Market funds

$

5,497,788 

 

$

 -

 

$

 -

 

$

5,497,788 

 

$

5,497,788 

 

$

 

 

$

 

Subtotal

 

5,497,788 

 

 

 -

 

 

 -

 

 

5,497,788 

 

 

5,497,788 

 

 

 -

 

 

 -

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Investments:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Certificates of deposit

 

8,157,749 

 

 

3,727 

 

 

(1,945)

 

 

8,159,531 

 

 

 -

 

 

7,258,768 

 

 

900,763 

Corporate Notes/Bonds

 

8,241,327 

 

 

35,364 

 

 

(914)

 

 

8,275,777 

 

 

 -

 

 

3,800,143 

 

 

4,475,634 

Commercial Paper

 

1,638,892 

 

 

3,735 

 

 

 -

 

 

1,642,627 

 

 

 -

 

 

1,642,627 

 

 

 -

Subtotal

 

18,037,968 

 

 

42,826 

 

 

(2,859)

 

 

18,077,935 

 

 

 -

 

 

12,701,538 

 

 

5,376,397 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total

$

23,535,756 

 

$

42,826 

 

$

(2,859)

 

$

23,575,723 

 

$

5,497,788 

 

$

12,701,538 

 

$

5,376,397 

 

 

The Company tests for other than temporary losses on a quarterly basis and has considered the unrealized losses indicated above to be temporary in nature. The Company intends to hold the investments until it can recover the full principal amount and has the ability to do so based on other sources of liquidity. The Company expects such recoveries to occur prior to the contractual maturities.  All unrealized losses as of December 31, 2013 were in a continuous unrealized loss position for less than twelve months and are not deemed to be other than temporarily impaired as of December 31, 2013.

The following table summarizes the estimated fair value of our investments, designated as available-for-sale and classified by the contractual maturity date of the securities as of December 31, 2013:  

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Amortized Cost

 

Estimated Market Value

 

 

 

 

 

Due within one year

 

$  

5,730,052 

 

$

5,982,218 

Due after one year through five years

 

 

3,915,131 

 

 

3,920,978 

 

 

9,645,183 

 

$

9,903,196 

 

The Company did not recognize any gross realized gains and gross realized losses were immaterial during the years ending December 31, 2013 and 2012, respectively. If the Company had realized gains or losses, they would be included within investment and other income in the accompanying consolidated results of operations.


Inventories
v0.0.0.0
Inventories
12 Months Ended
Dec. 31, 2013
Inventories [Abstract]  
Inventories

NOTE 3 - INVENTORIES

 

Inventories consist of:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

December 31

 

 

2013

 

2012

Finished goods

 

$         

18,733,636 

 

$

21,252,143 

Raw and processed materials

 

 

10,378,020 

 

 

12,500,567 

 

 

$

29,111,656 

 

$

33,752,710 

 


Property, Plant And Equipment
v0.0.0.0
Property, Plant And Equipment
12 Months Ended
Dec. 31, 2013
Property, Plant And Equipment [Abstract]  
Property, Plant And Equipment

NOTE 4 - PROPERTY, PLANT AND EQUIPMENT

 

Property, plant and equipment and the estimated useful lives are as follows:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Estimated

 

December 31

 

useful life

 

2013

 

2012

Land

 

 

 

 

 

$

3,116,177 

 

$

3,135,351 

Buildings and improvements

7-40 years

 

 

8,527,594 

 

 

8,858,976 

Machinery and equipment

3-15 years

 

 

25,408,221 

 

 

23,247,888 

Furniture and fixtures

5-10 years

 

 

4,041,884 

 

 

3,644,306 

Construction in progress

 

 

 

 

 

 

617,708 

 

 

1,546,732 

 

 

 

 

 

 

 

41,711,584 

 

 

40,433,253 

Less accumulated depreciation

 

 

 

 

 

 

(26,770,092)

 

 

(25,958,340)

 

 

 

 

 

 

$

14,941,492 

 

$

14,474,913 

 


Acquisition
v0.0.0.0
Acquisition
12 Months Ended
Dec. 31, 2013
Acquisition [Abstract]  
Acquisition

NOTE 5 – ACQUISITION

 

On July 27, 2011, the Company acquired Patapsco Designs Limited of the UK (“Patapsco”). The purchase price totals $5,094,000, with cash acquired totaling $862,000.  The purchase price included initial consideration of $3,271,000, deferred consideration of $466,000 to be paid out no later than 18 months from the acquisition date, $656,000 in working capital adjustments, and $701,000 in contingent consideration.  The Company agreed to pay consideration up to $818,000 contingent upon the Patapsco business meeting gross margin and other non-financial targets, with the consideration to be paid out no later than two and a half years from the acquisition date.  Although the maximum contingent consideration was $818,000, the Company had recognized $701,000 as the estimated fair value of the contingent consideration at the date of acquisition.  This contingent consideration was calculated based on the exchange rate at the date of acquisition and actual payments may differ based on fluctuations in the exchange rate between the dollar and the pound. At December 31,  2013, the Company has estimated liabilities of $559,000 related to outstanding consideration payments.


Goodwill And Other Intangible Assets
v0.0.0.0
Goodwill And Other Intangible Assets
12 Months Ended
Dec. 31, 2013
Goodwill And Other Intangible Assets [Abstract]  
Goodwill And Other Intangible Assets

NOTE 6 – GOODWILL AND OTHER INTANGIBLE ASSETS

The changes in the carrying amount of goodwill for the years ended December 31, 2013 and 2012 by segment are as follows:

 

 

 

 

 

 

 

 

 

 

Suttle

Transition Networks

Total

 

 

 

 

 

 

 

 

January 1, 2012

 

$

 -

$

5,990,571 

$

5,990,571 

 

 

 

 

 

 

 

 

Foreign currency translation

 

 

 -

 

(33,637)

 

(33,637)

 

 

 

 

 

 

 

 -

December 31, 2012

 

$

 -

 

5,956,934 

 

5,956,934 

 

 

 

 

 

 

 

 

January 1, 2013

 

$

 -

$

5,956,934 

$

5,956,934 

 

 

 

 

 

 

 

 

Impairment loss

 

 

 -

 

(5,849,853)

 

(5,849,853)

Foreign currency translation

 

 

 -

 

(107,081)

 

(107,081)

 

 

 

 

 

 

 

 

December 31, 2013

 

$

 -

$

 -

$

 -

 

 

 

 

 

 

 

 

Gross goodwill

 

 

1,271,986 

$

5,849,853 

$

7,121,839 

Accumulated impairment loss

 

 

(1,271,986)

 

(5,849,853)

 

(7,121,839)

Balance at December 31, 2013

 

$

 -

$

 -

$

 -

 

During the quarter ended September 30, 2013, due to the loss of key personnel and the continued decline in year-over-year revenues due primarily to continued slowdown in domestic government spending as well as a decline in sales of its legacy products, management concluded that these events and circumstances were indicators to require us to perform an interim goodwill impairment analysis of our Transition Networks reporting unit. This analysis included the determination of the reporting unit’s fair value primarily using discounted cash flows modeling. Based on the step one and step two analysis, considering Transition Networks’ reduced earnings and cash flow forecasts, the Company determined that Transition Networks’ goodwill was fully impaired and recorded a goodwill impairment for this segment of $5,850,000.  This analysis was the result of a level 3 fair value measurement.

 

The Company’s identifiable intangible assets with finite lives are being amortized over their estimated useful lives and are included within other assets in the consolidated balance sheets and were as follows:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

December 31, 2013

 

 

Gross Carrying Amount

Accumulated Amortization

Foreign Currency Translation

Net

 

 

 

 

 

 

Trademarks

 

81,785 
(17,262)
(10,545)
53,978 

Customer relationships

 

490,707 
(72,500)
(43,105)
375,102 

Technology

 

228,996 
(67,667)
(42,066)
119,263 

 

 

801,488 
(157,429)
(95,716)
548,343 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

December 31, 2012

 

 

Gross Carrying Amount

Accumulated Amortization

Foreign Currency Translation

Net

 

 

 

 

 

 

Trademarks

 

81,785 
(16,346)
(1,018)
64,421 

Customer relationships

 

490,707 
(68,652)
(6,108)
415,947 

Technology

 

228,996 
(64,075)
(2,850)
162,071 

 

 

801,488 
(149,073)
(9,976)
642,439 

 

 

 

 

 

 

 

Amortization expense on these identifiable intangible assets was $102,000 and $103,000 in 2013 and 2012, respectively. The amortization expense is included in selling, general and administrative expenses.


Employment Retirement Benefits
v0.0.0.0
Employment Retirement Benefits
12 Months Ended
Dec. 31, 2013
Employee Retirement Benefits [Abstract]  
Employee Retirement Benefits

NOTE 7 - EMPLOYEE RETIREMENT BENEFITS

 

The Company has an Employee Savings Plan (401(k)) and matches a percentage of employee contributions up to six percent of compensation.  Contributions to the plan in 2013,  2012 and 2011 were $457,000, $471,000, and $479,000, respectively.

 

The Company’s U.K.-based subsidiary Austin Taylor maintains defined benefit pension plans that cover approximately two active employees.  The Company does not provide any other post-retirement benefits to its employees.  The following table summarizes the balance sheet impact, including benefit obligations, assets and funded status of Austin Taylor’s pension plans at December 31, 2013 and 2012:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2013

 

 

2012

Change in benefit obligation: