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Note 2 - Discontinued Operations | 9 Months Ended
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Sep. 30, 2019
Notes to Financial Statements |
Disposal Groups, Including Discontinued Operations, Disclosure [Text Block] | Note 2 – Discontinued Operations In July 2019 management and the Board engaged in a review of CTI Balloons and CTI Europe and determined that they are not accretive to the Company overall, add complexity to the Company’s structure and utilize resources. Therefore, as of July 19, 2019, the board authorized management to divest of CTI Balloons and CTI Europe. These actions are being taken to focus our resources and efforts on our core business activities, particularly foil balloons and ancillary products based in North America. The Company determined that these entities met the held-for-sale and discontinued operations accounting criteria. Accordingly, the Company has reported the results of these operations as discontinued operations in the Consolidated Statements of Comprehensive Income and presented the related assets and liabilities as held-for-sale in the Consolidated Balance Sheets. These changes have been applied for all periods presented. The Company divested its CTI Balloons (United Kingdom) subsidiary in the fourth quarter 2019 and expects to divest CTI Europe (Germany) in the first half of 2020. In connection with management’s intentions to simplify these operations and organizational structure, we identified write-offs of $88,000 and $1.7 million for the three and nine months ended September 30, 2019, respectively, related to CTI Balloons and CTI Europe. The charges for the three months ended September 30, 2019 were comprised of the following: $78,000 inventory and other assets and $10,000 allowance for doubtful accounts. The charges for the nine months ended September 30, 2019 were comprised of the following: $1.3M inventory, $76,000 allowance for doubtful accounts; and $280,000 for other assets. Additionally, it recognized an impairment charge of $1.0 million, including $167,000 of previously unrecognized currency translation adjustment losses because the Company is completely exiting its operations in Germany and the UK once the divestitures occur. CTI Balloons recorded losses from discontinued operations, net of taxes of ( $433,000 ) and ( $996,000 ) for the three and nine months ended September 30, 2019, respectively (including an estimated loss on sale of $321,000 ). The losses, net of tax were ( $8,000 ) and ( $59,000 ) for the three and nine months ended September 30, 2018, respectively. CTI Europe recorded losses from discontinued operations, net of taxes of ( $566,000 ) and ( $1,735,000 ) for the three and nine months ended September 30, 2019, respectively (including an estimated loss on sale of $283,000 ). The income, net of taxes were $32,000 and $96,000 for the three and nine months ended September 30, 2018, respectively. Summarized Discontinued Operations Financial Information The following table summarizes the major line items for the International operations that are included in the income from discontinued operations, net of tax line item in the Consolidated Statements of Income for the three months ending
|  | 09/30/19 |  |  | 09/30/18 |
Income Statement |  |  |  |  |  |  |  |
Net Sales |  | $ | 1,177,953 |  |  | $ | 1,397,033 |
Cost of Sales |  |  | 1,163,985 |  |  |  | 1,041,266 |
Gross Margin |  |  | 13,968 |  |  |  | 355,767 |
Impairment of Long-Lived Assets |  |  |  |  |  |  |  |
SG&A |  |  | 373,625 |  |  |  | 330,898 |
Operating Income |  |  | (359,657) |  |  |  | 24,869 |
Other Expense (income) |  |  | 35,111 |  |  |  | (8,038 | )
pretax loss from discontinued operations |  |  | (394,768 | ) |  |  | 32,907 |
Loss from classification to held for sale |  |  | 604,483 |  |  |  | - |
Income Tax Expense |  |  | - |  |  |  | 9,214 |
(Loss)Income prior to non-controlling interest |  |  | (999,251 | ) |  |  | 23,693 |
Non-controlling Interest share of profit/loss |  |  | (271,807 | ) |  |  | 15,411 |
(Loss) Income attributable to CTI shareholders |  | $ | (727,444 | ) |  | $ | 8,282 |
The following table summarizes the major line items for the International operations that are included in the income from discontinued operations, net of tax line item in the Consolidated Statements of Income for the nine months ending
|  |  | 09/30/19 |  |  |  | 09/30/18 |
Income Statement |  |  |  |  |  |  |  |
Net Sales |  | $ | 4,152,390 |  |  | $ | 4,981,152 |
Cost of Sales |  |  | 4,881,526 |  |  |  | 3,860,225 |
Gross Margin |  |  | (729,136 | ) |  |  | 1,120,927 |
Impairment of Long-Lived Assets |  |  | (4,173 | ) |  |  |  |
SG&A |  |  | 1,342,360 |  |  |  | 1,103,266 |
Operating Income |  |  | (2,067,323 | ) |  |  | 17,662 |
Other Expense (income) |  |  | 58,990 |  |  |  | (34,219 | )
Pretax loss from discontinued operations |  |  | (2,126,313 | ) |  |  | 51,880 |
Loss from classification to held for sale |  |  | 604,483 |  |  |  | - |
Income Tax Expense |  |  | - |  |  |  | 14,526 |
Income (loss) prior to non-controlling interest |  |  | (2,730,796 | ) |  |  | 37,354 |
Non-controlling Interest share of (loss)/income |  |  | (837,136 | ) |  |  | 46,067 |
Income (loss) attributable to CTI shareholders |  | $ | (1,893,660 | ) |  | $ | (8,713 | )
The following table summarizes the carrying amounts of major classes of assets and liabilities of discontinued operations for each of the periods presented:
|  | 9/30/2019 |  |  | 12/31/2018 |
Balance Sheet |  |  |  |  |  |  |  |
Assets |  |  |  |  |  |  |  |
Current Assets |  |  |  |  |  |  |  |
Cash on hand and Banks |  | $ | 56,769 |  |  | $ | 169,912 |
Accounts Receivable |  |  | 687,607 |  |  |  | 584,827 |
Inventory |  |  | 453,395 |  |  |  | 2,618,854 |
Prepaid & Other |  |  | - |  |  |  | 125,726 |
TOTAL Current Assets |  |  | 1,197,771 |  |  |  | 3,499,319 |
NET Property, Plant, and Equipment |  |  | 105,594 |  |  |  | 94,069 |
Other Assets |  |  |  |  |  |  |  |
Operating lease right-of-use |  |  | 561,120 |  |  |  | - |
Other |  |  | 44,303 |  |  |  | 78,729 |
TOTAL Other Assets |  |  | 605,423 |  |  |  | 78,729 |
TOTAL Non-Current Assets |  |  | 711,017 |  |  |  | 172,798 |
Less Valuation Allowance on Held for Sale classification |  |  | (604,483) |  |  |  |  |
TOTAL Assets |  | $ | 1,304,305 |  |  | $ | 3,672,117 |
Liabilities |  |  |  |  |  |  |  |
Current Liabilities |  |  |  |  |  |  |  |
Trade Accounts Payable |  | $ | 435,785 |  |  | $ | 727,741 |
Operating Lease Liabilities - Current |  |  | 382,214 |  |  |  | - |
Other/Accrued Liabilities |  |  | 43,425 |  |  |  | 80,035 |
TOTAL Current Liabilities |  |  | 861,424 |  |  |  | 807,776 |
Non-Current Liabilities |  |  |  |  |  |  |  |
Operating Lease Liabilities - Non Current |  |  | 178,906 |  |  |  | - |
Other Non-Current |  |  | 31,287 |  |  |  | 31,874 |
TOTAL Non-Current Liabilities |  |  | 210,193 |  |  |  | 31,874 |
|  |  | - |  |  |  | - |
TOTAL Liabilities |  | $ | 1,071,617 |  |  | $ | 839,650 |
The cash flows related to discontinued operations have not been segregated and are included in the Consolidated Statements of Cash Flows. The following table summarizes depreciation from discontinued operations for each of the periods presented:
|  | Three Months Ended |  |  | Nine Months Ended |
|  | September 30, |  |  | September 30, |
|  | 2019 |  |  | 2018 |  |  | 2019 |  |  | 2018 |
Depreciation |  |  | 7,321 |  |  |  | 7,963 |  |  |  | 20,519 |  |  |  | 21,588 |

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- Definition The entire disclosure related to a disposal group. Includes, but is not limited to, a discontinued operation, disposal classified as held-for-sale or disposed of by means other than sale or disposal of an individually significant component. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 360 -URI http://asc.fasb.org/topic&trid=2155823 Reference 2: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 205 -SubTopic 20 -URI http://asc.fasb.org/subtopic&trid=2122178 + Details
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