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Note 13 - Recent Accounting and Reporting Developments
 6 Months Ended
Jun. 30, 2018
Notes to Financial Statements  
New Accounting Pronouncements and Changes in Accounting Principles [Text Block]
13
.
Recent Accounting and Reporting Developments
 
There have been
no
developments to recently issued accounting standards, including the expected dates of adoption and estimated effects on the Company’s Condensed Consolidated Financial Statements and disclosures in Notes to Condensed Consolidated Financial Statements, from those disclosed in the Company’s
2017
Form 
10
-K, except for the following:
 
Accounting Changes
 
In
May 2014,
the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update
No.
 
2014
-
09,
“Revenue from Contracts with Customers (Topic 
606
)” (“ASU 
2014
-
09”
) which will replace most existing revenue recognition guidance in accordance with U.S. GAAP. The core principle of ASU 
2014
-
09
is that an entity should recognize revenue for the transfer of goods or services equal to the amount that it expects to be entitled to receive for those goods or services. ASU 
2014
-
09
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. During
2016
and
2017,
the FASB issued several ASUs that clarify the implementation guidance for ASU 
2014
-
09
but do
not
change the core principle of the guidance.
 
The Company adopted Accounting Standards Codification (“ASC”) Topic 
606,
“Revenue from Contracts with Customers,” (“Topic 
606”
) on
January 
1,
2018
using the modified retrospective method applied to those contracts that were
not
completed as of that date. The Company recorded the cumulative effect of initially applying the new revenue standard as an adjustment to the opening balance of retained earnings. Under the modified retrospective method, periods prior to the adoption date were
not
adjusted and continue to be reported in accordance with accounting standards in effect for those periods.
 
The cumulative effect of adopting Topic
606
was a decrease to Retained earnings due to a change in the timing of revenue recognition on certain costs under the new revenue standard, as well as, to a lesser extent, a change in the costs included in the provisions for losses on uncompleted contracts. Additionally, Costs and estimated earnings in excess of billings on uncompleted contracts and certain amounts of Trade and other receivables, net were reclassified to establish the opening balance of Contract assets and Billings in excess of costs and estimated earnings on uncompleted contracts were reclassified to establish the opening balance of Contract liabilities. The cumulative effect of the changes made to the Company’s Condensed Consolidated Balance Sheet as of
January 
1,
2018
for the adoption of Topic 
606
was as follows (in thousands):
 
   
December 31,
2017
   
Effects of
Adoption of
Topic 606
   
January 1,
2018
 
Condensed Consolidated Balance Sheet
 
 
 
 
  
 
 
 
  
 
 
 
Assets:
                        
Trade and other receivables, net
   $
28,990
     $
(420
 )   $
28,570
  
Costs and estimated earnings in excess of billings on uncompleted contracts
    
44,502
      
(44,502
 )    
-
  
Contract assets
    
-
      
42,945
      
42,945
  
                         
Liabilities:
                        
Accrued liabilities
   $
6,563
     $
(783
 )   $
5,780
  
Billings in excess of costs and estimated earnings on uncompleted contracts
    
2,599
      
(2,599
 )    
-
  
Contract liabilities
    
-
      
2,537
      
2,537
  
Deferred income taxes
    
941
      
(257
 )    
684
  
                         
Stockholders' equity:
                        
Retained earnings
   $
81,757
     $
(875
 )   $
80,882
  
 
The impact of Topic 
606
on the Company’s Condensed Consolidated Statement of Operations and on the Condensed Consolidated Balance Sheet was as follows (in thousands):
 
   
Three Months Ended June 30, 2018
    
Six Months Ended June 30, 2018
  
   
As Reported
   
Adjustments
   
Balance
Without Adjustment
for Adoption
of Topic 606
   
As Reported
   
Adjustments
   
Balance
Without Adjustment
for Adoption
of Topic 606
 
Condensed Consolidated Statement of Operations
   
 
 
 
  
 
 
 
  
 
 
 
  
 
 
 
  
 
 
 
Net sales
   $
28,785
     $
385
     $
29,170
     $
62,150
     $
1,220
     $
63,370
  
Cost of sales
    
30,023
      
145
      
30,168
      
62,040
      
132
      
62,172
  
Operating loss
    
(5,827
 )    
240
      
(5,587
 )    
(8,169
 )    
1,088
      
(7,081
 )
Income tax benefit
    
(108
 )    
(51
 )    
(159
 )    
(380
 )    
62
      
(318
 )
Net loss
    
(5,686
 )    
291
      
(5,395
 )    
(7,637
 )    
1,026
      
(6,611
 )
 
   
June 30, 2018
  
   
As Reported
   
Adjustments
   
Balance
Without
Adjustment for Adoption of
Topic 606
 
Condensed Consolidated Balance Sheet
 
 
 
 
  
 
 
 
  
 
 
 
Assets:
                        
Trade and other receivables, net
   $
16,334
     $
225
     $
16,559
  
Costs and estimated earnings in excess of billings on uncompleted contracts
    
-
      
47,187
      
47,187
  
Contract assets
    
44,320
      
(44,320
 )    
-
  
                         
Liabilities:
                        
Accrued liabilities
   $
5,013
     $
915
     $
5,928
  
Billings in excess of costs and estimated earnings on uncompleted contracts
    
-
      
142
      
142
  
Contract liabilities
    
184
      
(184
 )    
-
  
Deferred income taxes
    
233
      
318
      
551
  
                         
Stockholders' equity:
                        
Retained earnings
   $
73,245
     $
1,901
     $
75,146
  
 
In
January 2016,
the FASB issued Accounting Standards Update
No.
 
2016
-
01,
“Financial Instruments—Overall (Subtopic 
825
-
10
): Recognition and Measurement of Financial Assets and Financial Liabilities” (“ASU 
2016
-
01”
). ASU 
2016
-
01
makes changes to the accounting for equity investments and financial liabilities accounted for under the fair value option, and changes presentation and disclosure requirements for financial instruments. In
February 2018,
the FASB issued Accounting Standards Update
No.
 
2018
-
03,
“Technical Corrections and Improvements to Financial Instruments—Overall (Subtopic 
825
-
10
): Recognition and Measurement of Financial Assets and Financial Liabilities” (“ASU 
2018
-
03”
). ASU 
2018
-
03
clarifies certain aspects of the guidance issued in ASU 
2016
-
01.
The Company adopted this guidance on
January 
1,
2018
and the impact was
not
material to the Company’s financial position, results of operations or cash flows. Additional information and disclosures required by this new standard are contained in Note 
5,
“Fair Value Measurements.”
 
In
August 2016,
the FASB issued Accounting Standards Update
No.
 
2016
-
15,
“Statement of Cash Flows (Topic 
230
): Classification of Certain Cash Receipts and Cash Payments” (“ASU 
2016
-
15”
). ASU 
2016
-
15
clarifies whether
eight
specifically identified cash flow issues, which previous U.S. GAAP did
not
address, should be categorized as operating, investing or financing activities in the statement of cash flows. The Company adopted this guidance on
January 
1,
2018
and the impact was
not
material to the Company’s financial position, results of operations or cash flows.
 
In
March 2017,
the FASB issued Accounting Standards Update
No.
 
2017
-
07,
“Compensation—Retirement Benefits (Topic 
715
): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost” (“ASU 
2017
-
07”
), which requires that the service cost component of net benefit cost be presented in the same income statement line as other employee compensation costs, while the other components of net benefit cost are to be presented outside income from operations. The Company adopted this guidance on a retrospective basis on
January 
1,
2018.
The non-service cost components of
$0.1
 million and
$0.2
 million for the
three
and
six
months ended
June 
30,
2017,
respectively, were reclassified from Cost of sales to Other income (expense), resulting in an increase to Gross profit and Operating income. There was
no
impact to Loss from continuing operations before income taxes or Net loss, so therefore
no
impact to Net loss per share.
 
Recent Accounting Standards
 
In
February 2016,
the FASB issued Accounting Standards Update
No.
 
2016
-
02,
“Leases (Topic 
842
)” (“ASU 
2016
-
02”
). ASU 
2016
-
02
makes changes to U.S. GAAP, requiring the recognition of lease assets and lease liabilities by lessees for those leases previously classified as operating leases. For operating leases, the lease asset and lease liability will be initially measured at the present value of the lease payments in the balance sheet. The cost of the lease is then allocated over the lease term generally on a straight-line basis. All cash payments will be classified within operating activities in the statement of cash flows. For financing leases, the lease asset and lease liability will be initially measured at the present value of the lease payments in the balance sheet. Interest on the lease liability will be recognized separately from amortization of the lease asset in the statement of comprehensive income. In the statement of cash flows, repayments of the principal portion of the lease liability will be classified within financing activities, and payments of interest on the lease liability and variable payments will be classified within operating activities. For leases with terms of
twelve
months or less, a lessee is permitted to make an accounting policy election by asset class
not
to recognize lease assets and lease liabilities. Lease expense for such leases will be generally recognized straight-line basis over the lease term. The accounting applied by a lessor is largely unchanged from previous U.S. GAAP. ASU
2016
-
02
provides for a transitional adoption, with lessees and lessors required to recognize and measure leases at the beginning of the earliest period presented using a modified retrospective approach. In
July 2018,
the FASB issued Accounting Standards Update
No.
 
2018
-
10,
“Codification Improvements to Topic 
842,
Leases,” which updates narrow aspects of the guidance in ASC Topic 
842,
“Leases” (“Topic 
842”
) and Accounting Standards Update
No.
2018
-
11,
"Leases (Topic
842
): Targeted Improvements," which provides an additional (and optional) transition method to apply the lease standard at the adoption date and recognize a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption. Topic 
842
requires qualitative disclosures along with specific quantitative disclosures and will be effective for the Company beginning
January 
1,
2019,
including interim periods in
2019.
Early adoption is permitted, however the Company does
not
anticipate early adoption. The Company continues to evaluate Topic 
842,
including the review and implementation of the necessary changes to existing processes and systems that will be required to implement this new standard. While the Company expects the adoption of Topic 
842
will materially increase its assets and liabilities on the Condensed Consolidated Balance Sheet, it currently does
not
expect Topic 
842
will have a material effect on its results of operations or cash flows.
 
In
July 2018,
the FASB issued Accounting Standards Update
No.
 
2018
-
09,
“Codification Improvements” (“ASU 
2018
-
09”
), which clarifies, corrects errors in or makes minor improvements to the ASC. The transition and effective date varies based on the facts and circumstances of each amendment included in ASU 
2018
-
09.
The Company is currently assessing the impact of ASU 
2018
-
09
on its Consolidated Financial Statements.