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Note 14 - Recent Accounting and Reporting Developments | 9 Months Ended
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Sep. 30, 2018
Notes to Financial Statements |
New Accounting Pronouncements and Changes in Accounting Principles [Text Block] |
14 . | 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 replaces 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 September 30, 2018 |  |  | Nine Months Ended September 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 |  | $ | 52,455 |  |  | $ | (477 | ) |  | $ | 51,978 |  |  | $ | 114,605 |  |  | $ | 743 |  |  | $ | 115,348 |
Cost of sales |  |  | 47,252 |  |  |  | (288 | ) |  |  | 46,964 |  |  |  | 109,292 |  |  |  | (156 | ) |  |  | 109,136 |
Operating income (loss) |  |  | 2,497 |  |  |  | (189 | ) |  |  | 2,308 |  |  |  | (5,672 | ) |  |  | 899 |  |  |  | (4,773 | )
Income tax benefit |  |  | (3,456 | ) |  |  | (59 | ) |  |  | (3,515 | ) |  |  | (3,836 | ) |  |  | 3 |  |  |  | (3,833 | )
Net income |  |  | 27,801 |  |  |  | (130 | ) |  |  | 27,671 |  |  |  | 20,164 |  |  |  | 896 |  |  |  | 21,060 |
|  | September 30, 2018 |  |
|  | As Reported |  |  | Adjustments |  |  | Balance Without Adjustment for Adoption of Topic 606 |  |
Condensed Consolidated Balance Sheet |  |  |  |  |  |  |  |  |  |  |  |  |
Assets: |  |  |  |  |  |  |  |  |  |  |  |  |
Trade and other receivables, net |  | $ | 33,955 |  |  | $ | 463 |  |  | $ | 34,418 |  |
Costs and estimated earnings in excess of billings on uncompleted contracts |  |  | - |  |  |  | 66,200 |  |  |  | 66,200 |  |
Contract assets |  |  | 64,130 |  |  |  | (64,130 | ) |  |  | - |  |
Liabilities: |  |  |  |  |  |  |  |  |  |  |  |  |
Accrued liabilities |  | $ | 6,063 |  |  | $ | 627 |  |  | $ | 6,690 |  |
Billings in excess of costs and estimated earnings on uncompleted contracts |  |  | - |  |  |  | 677 |  |  |  | 677 |  |
Contract liabilities |  |  | 802 |  |  |  | (802 | ) |  |  | - |  |
Deferred income taxes |  |  | 67 |  |  |  | 260 |  |  |  | 327 |  |
Stockholders' equity: |  |  |  |  |  |  |  |  |  |  |  |  |
Retained earnings |  | $ | 101,046 |  |  | $ | 1,771 |  |  | $ | 102,817 |  |
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 6, “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 approximately $0 and $0.2 million for the three and nine months ended September 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 Condensed Consolidated Financial Statements. In August 2018, the FASB issued Accounting Standards Update No. 2018 - 13, “Fair Value Measurement (Topic 820 ): Disclosure Framework—Changes to the Disclosure Requirements for Fair Value Measurement” (“ASU 2018 - 13” ), which modifies the disclosure requirements for fair value measurements by removing, modifying or adding certain disclosures. ASU 2018 - 13 is effective for the Company beginning January 1, 2020, with early adoption permitted for the removed and modified disclosures and delayed adoption until the effective date permitted for the additional disclosures. The removed and modified disclosures will be adopted on a retrospective basis and the new disclosures will be adopted on a prospective basis. The Company does not expect a material impact to its financial position, results of operations or cash flows from adoption of this guidance. In August 2018, the FASB issued Accounting Standards Update No. 2018 - 14, “Compensation—Retirement Benefits—Defined Benefit Plans—General (Topic 715 - 20 ): Disclosure Framework—Changes to the Disclosure Requirements for Defined Benefit Plans” (“ASU 2018 - 14” ), which modifies the disclosure requirements for employers that sponsor defined benefit pension or other postretirement plans by removing and adding certain disclosures for these plans. The eliminated disclosures include the amounts in accumulated other comprehensive income expected to be recognized in net periodic benefit costs over the next fiscal year and the amount and timing of plan assets expected to be returned to the employer. The new disclosures include an explanation of significant gains and losses related to changes in benefit obligations. ASU 2018 - 14 is effective for the Company beginning January 1, 2021, with early adoption permitted, and will be adopted on a retrospective basis. The Company does not expect a material impact to its financial position, results of operations or cash flows from adoption of this guidance.

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