x | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES |
EXCHANGE ACT OF 1934 |
¨ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES |
EXCHANGE ACT OF 1934 |
Massachusetts | 04-2441294 |
(State of incorporation) | (I.R.S. Employer Identification No.) |
Title of Each Class | Name of Exchange on Which Registered |
Common Stock, par value $0.01 per share | NASDAQ Global Market |
Large accelerated filer ¨ | Accelerated filer ¨ |
Non-accelerated filer x | Smaller Reporting Company x |
Emerging Growth Company ¨ |
Page | ||
Note: Items 1B, 6 and 7A are not required for Smaller Reporting Companies and therefore are not furnished. | ||
• | The HPP segment revenue comes from four distinct product lines: (i) a cyber security product named ARIA™ Software-Defined Security ("SDS"), which is offered to commercial, original equipment manufacturers ("OEM") and government customers; (ii) the Myricom® ARC Series of 10G Ethernet adapters for both the commercial and government customers; (iii) the Myricom nVoy Series of appliances for OEMs and end-user customers; and (iv) the Multicomputer product portfolio of computing systems for digital signal processing ("DSP") applications within the defense markets. |
• | The ARIA SDS solution is a new portfolio of software products (an orchestrator, light-weight instances, and hosted applications) that protect an organization’s critical high-value data, such as personally identifiable information ("PII"), from breaches. Revenue from ARIA will come from the sale of the platform components, hosted software |
• | We anticipate that ARIA will be of value to regulated industries, such as financial services or healthcare, due to the rise of data privacy regulations enforced by federal, state, and industry entities. We also believe the patent-pending ARIA SDS solution will be attractive to value-added service providers and OEMs that pursue differentiated security services for their customers. While initial offerings of ARIA applications are planned for revenue shipment in fiscal year 2019, the number of applications will continue to be expanded over time. |
• | The Myricom ARC Series of 10G network adapters are optimized for and sold into markets that require high bandwidth and low latency: (i) packet capture, (ii) financial transactions, and (iii) the storage interconnect market. Our primary customers for packet capture include government agencies that need to capture, inject, and analyze network traffic at line rate, and OEMs selling into vendors of computer security appliances. Financial institutions, such as banks, and brokerage firms use Myricom adapters to decrease transaction times. Our storage interconnect customers, primarily in the film industry, use our adapters for video capture and film editing. |
• | The Myricom nVoy Series of appliances (Packet Recorder and Packet Broker) can be deployed as part of an organization’s data security structure as a new component to complement existing systems, and provides data breach verification and notification as well as compliance reporting. The primary customers will be OEMs and value- added services providers that are looking to expand their product and services offerings of industry regulation compliance and breach response solutions. |
• | Multicomputer products for DSP applications are utilized by domestic and foreign government entities for existing programs. In 2016, the Company decided not to participate in the next generation of defense programs. Revenue flows come from servicing the existing product line for a modest number of existing high-value customers. Therefore, the revenue from these products, as a percentage of overall Company revenue, is expected to decline over time. |
• | The TS segment consists of our wholly-owned Modcomp subsidiary, which operates in the United States and the United Kingdom. |
• | The TS segment generates product revenues by reselling third-party computer hardware and software as a value added reseller ("VAR"). The TS segment generates service revenues by the delivery of integration services for complex IT environments, including advanced security; unified communications and collaboration; wireless and mobility; data center solutions; and network solutions as well as managed IT services ("MSP") that primarily serve the small and mid-sized business market ("SMB"). |
• | Third party products and professional services are marketed and sold through the Company's direct sales force into a variety of vertical markets, including; automotive; defense; health care; education; federal, state and local government; and maritime. |
• | CSPi sold all of the outstanding stock of Modcomp GmbH to Reply AG on July 31, 2018 for total cash consideration of $14.4 million. CSP recognized a one-time gain of $16.8 million. The Company determined the German subsidiary met the criteria for discontinued operations under ASC 205. The Consolidated Balance Sheets and Consolidated Statements of Operations reflect the results of Modcomp GmbH classified as discontinued operations at and as of September 30, 2018 and 2017. See Note 2 to the consolidated financial statements for additional information. |
Segment | 2018 | % | 2017 | % | ||||||||||
(Dollar amounts in thousands) | ||||||||||||||
HPP | $ | 10,479 | 14 | % | $ | 13,844 | 16 | % | ||||||
TS | 62,437 | 86 | % | 74,648 | 84 | % | ||||||||
Total Sales | $ | 72,916 | 100 | % | $ | 88,492 | 100 | % |
• | Implementation, integration, migration, configuration, installation services and project management. |
• | Hyper-Converged Infrastructure ("HCI") - We assist our clients with designing and implementing HCI solutions from multiple vendors including DellEMC, Nutanix, HPE and Cisco. HCI is a software-centric architecture that tightly integrates compute, storage and virtualization resources in a single system. The benefits of an HCI solution are improved performance, scalability and flexibility all in a reduced footprint. |
• | Virtualization - We help our customers implement virtualization solutions using products from companies such as VMWare and Citrix that allow one computer to do the job of multiple computers by sharing resources of a single computer across multiple environments. Virtualization eliminates physical and geographical limitations and enables users to host multiple operating systems and applications on fewer servers. Benefits include energy cost savings, lower capital expenditure requirements, high availability of resources, better desktop management, increased security and improved disaster recovery. |
• | Enterprise security intrusion prevention, network access control and unified threat management. Using third-party products from companies like Palo Alto, Aruba Networks, Juniper Networks, Fortinet, Checkpoint and Cisco Systems, our services are designed to ensure data security and integrity through the establishment of virtual private networks, firewalls and other technologies. |
• | IT security compliance services. We provide services for IT security compliance with personal privacy laws such as the Payment Card Industry Data Security Standard ("PCI DSS"), the Health Insurance Portability and Accountability Act of 1996 ("HIPAA"), and internal control regulations under the Sarbanes-Oxley Act ("SOX"). |
• | Unified communications, wireless and routing and switching solutions using Cisco Systems and Aruba Networks products and services. |
• | Custom software applications and solutions development and support. We develop custom applications to customer specifications using industry standard platforms such as Microsoft.Net, SharePoint and OnBase. We are a Microsoft Gold Partner. |
• | Managed IT services that include monitoring, reporting and management of alerts for the resolution and preventive general IT and IT security support tasks. |
• | Maintenance and technical support for third-party products including hardware and software, operating system and user support. |
• | Proactive monitoring and remote management of IT Infrastructure that includes network (both wired and wireless), data center (which includes compute, storage and virtualization), desktops, unified communications platforms and security. |
• | Managed Collaboration solutions (voice and video), resale of Cisco Webex Teams under annuity program. |
• | Managed Security (firewall, endpoint protection, malware, anti-virus and SIEM). |
• | Managed BackUp and Replication. |
• | Cloud services that include Microsoft Office 365, Azure, Greencloud and Amazon Web Services. |
Item 1A. | Risk Factors |
• | cancel multi-year contracts and related orders if funds for contract performance for any subsequent year become unavailable; |
• | claim rights in systems and software developed by us; |
• | suspend or debar us from doing business with the federal government or with a governmental agency; |
• | impose fines and penalties and subject us to criminal prosecution; and |
• | control or prohibit the export of our data and technology. |
• | delays in completion of internal product development projects; |
• | delays in shipping hardware and software; |
• | delays in acceptance testing by customers; |
• | a change in the mix of products sold to our served markets; |
• | changes in customer order patterns; |
• | production delays due to quality problems with outsourced components; |
• | inability to scale quick reaction capability products due to low product volume; |
• | shortages and costs of components; |
• | the timing of product line transitions; |
• | declines in quarterly revenues from previous generations of products following announcement of replacement products containing more advanced technology; |
• | inability to realize the expected benefits from acquisitions and restructurings, or delays in realizing such benefits; |
• | potential asset impairment, including goodwill and intangibles, or restructuring charges; and |
• | changes in estimates of completion on fixed price service engagements. |
• | sales in relatively large dollar amounts to a relatively small number of customers; |
• | competitive pricing programs and volume discounts; |
• | loss of customers; |
• | market acceptance of our products; |
• | product obsolescence; |
• | general economic conditions; |
• | change in the mix of products sold; |
• | whether or not we are able to secure design wins for significant customer systems; |
• | timing of significant orders; |
• | delays in completion of internal product development projects or introduction of new products; |
• | delays in shipping our products; |
• | delays in acceptance testing by customers; |
• | production delays due to quality programs with outsourced components; |
• | shortages of components; |
• | timing of product line transitions; |
• | uncertainty and timing of funding of governmental programs, including defense; |
• | declines of revenues from previous generations of products following announcement of replacement products containing more advanced technology; and |
• | fixed nature of our expenditures on personnel, facilities and marketing programs. |
• | loss of a major customer; |
• | loss of a major supplier; |
• | the addition or departure of key personnel; |
• | variations in our quarterly operating results; |
• | announcements by us or our competitors of significant contracts, new products or product enhancements; |
• | acquisitions, distribution partnerships, joint ventures or capital commitments; |
• | regulatory changes; |
• | sales of our common stock or other securities in the future; |
• | changes in market valuations of technology companies; and |
• | fluctuations in stock market prices and volumes. |
Item 2. | Properties |
Location | Principal Use | Owned or Leased | Approximate Floor Area | |||
HPP Segment Properties: | ||||||
CSP Inc. | Corporate Headquarters | Leased | 13,515 S.F. | |||
175 Cabot Street, Suite 210 | Manufacturing, Sales, | |||||
Lowell, MA 01854 | Marketing and | |||||
Administration | ||||||
TS Segment Properties: | ||||||
Modcomp, Inc. | Division Headquarters | Leased | 11,815 S.F. | |||
1182 East Newport Center Drive | Sales, Marketing and | |||||
Deerfield Beach, FL 33442 | Administration | |||||
Modcomp, Ltd. | Sales, Marketing and | Leased | 2,490 S.F. | |||
12a Oaklands Business Park, Fishponds Road | Administration | |||||
Wokingham Berkshire | ||||||
United Kingdom | ||||||
2018 | 2017 | ||||||||||||||
Fiscal Year: | High | Low | High | Low | |||||||||||
1st Quarter | $ | 17.00 | $ | 10.60 | $ | 11.95 | $ | 7.89 | |||||||
2nd Quarter | $ | 18.89 | $ | 10.41 | $ | 11.35 | $ | 8.25 | |||||||
3rd Quarter | $ | 12.18 | $ | 8.75 | $ | 11.23 | $ | 10.00 | |||||||
4th Quarter | $ | 14.87 | $ | 9.71 | $ | 11.20 | $ | 9.61 |
Fiscal Year | Date Declared | Record Date | Date Paid | Amount Paid Per Share | ||||
2017 | 1/12/2017 | 1/27/2017 | 2/8/2017 | $0.11 | ||||
2017 | 2/23/2017 | 3/3/2017 | 3/17/2017 | $0.11 | ||||
2017 | 5/24/2017 | 6/1/2017 | 6/15/2017 | $0.11 | ||||
2017 | 8/14/2017 | 8/21/2017 | 9/5/2017 | $0.11 | ||||
2018 | 12/19/2017 | 12/29/2017 | 1/16/2018 | $0.11 | ||||
2018 | 2/12/2018 | 2/28/2018 | 3/16/2018 | $0.11 | ||||
2018 | 5/9/2018 | 5/31/2018 | 6/15/2018 | $0.11 | ||||
2018 | 8/13/2018 | 8/31/2018 | 9/14/2018 | $0.15 |
Item 7. | Management's Discussion and Analysis of Financial Condition and Results of Operations |
September 30, 2018 | % of sales | September 30, 2017 | % of sales | |||||||||||
(Dollar amounts in thousands) | ||||||||||||||
Sales | $ | 72,916 | 100 | % | $ | 88,492 | 100 | % | ||||||
Costs and expenses: | ||||||||||||||
Cost of sales | 54,517 | 75 | % | 67,069 | 76 | % | ||||||||
Engineering and development | 3,277 | 4 | % | 2,362 | 3 | % | ||||||||
Selling, general and administrative | 16,723 | 23 | % | 15,666 | 18 | % | ||||||||
Total costs and expenses | 74,517 | 102 | % | 85,097 | 96 | % | ||||||||
Operating income (loss) | (1,601 | ) | (2 | )% | 3,395 | 4 | % | |||||||
Other income, net | 495 | 1 | % | 10 | — | % | ||||||||
Income (loss) before income taxes | (1,106 | ) | (2 | )% | 3,405 | 4 | % | |||||||
Income tax expense | 882 | 1 | % | 1,162 | 1 | % | ||||||||
Net income (loss) from continuing operations | (1,988 | ) | (3 | )% | 2,243 | 3 | % | |||||||
Gain on sale of discontinued operations | 16,838 | 23 | % | — | — | % | ||||||||
Net income (loss) from discontinued operations | (410 | ) | (1 | )% | 263 | — | % | |||||||
Total income from discontinued operations | 16,428 | 22 | % | 263 | — | % | ||||||||
Net income | $ | 14,440 | 19 | % | $ | 2,506 | 3 | % |
(Dollar amounts in thousands) | Decrease | ||||||||||||||
2018 | 2017 | $ | % | ||||||||||||
Product | $ | 7,014 | $ | 7,608 | $ | (594 | ) | (8 | )% | ||||||
Services | 3,465 | 6,236 | (2,771 | ) | (44 | )% | |||||||||
Total | $ | 10,479 | $ | 13,844 | $ | (3,365 | ) | (24 | )% |
(Dollar amounts in thousands) | Increase (decrease) | ||||||||||||||
2018 | 2017 | $ | % | ||||||||||||
Product | $ | 52,647 | $ | 68,745 | $ | (16,098 | ) | (23 | )% | ||||||
Services | 9,790 | 5,903 | 3,887 | 66 | % | ||||||||||
Total | $ | 62,437 | $ | 74,648 | $ | (12,211 | ) | (16 | )% |
(Dollar amounts in thousands) | |||||||||||||||||||||
For the years ended September 30, | Decrease | ||||||||||||||||||||
2018 | % | 2017 | % | $ | % | ||||||||||||||||
Americas | $ | 60,458 | 83 | % | $ | 69,982 | 79 | % | $ | (9,524 | ) | (14 | )% | ||||||||
Europe | 10,325 | 14 | % | 14,507 | 16 | % | (4,182 | ) | (29 | )% | |||||||||||
Asia | 2,133 | 3 | % | 4,003 | 5 | % | (1,870 | ) | (47 | )% | |||||||||||
Totals | $ | 72,916 | 100 | % | $ | 88,492 | 100 | % | $ | (15,576 | ) | (18 | )% |
(Dollar amounts in thousands) | |||||||||||||||||||
2018 | 2017 | Increase (decrease) | |||||||||||||||||
GM$ | GM% | GM$ | GM% | GM$ | GM% | ||||||||||||||
HPP | $ | 6,137 | 59 | % | $ | 9,345 | 68 | % | $ | (3,208 | ) | (9 | )% | ||||||
TS | 12,262 | 20 | % | 12,078 | 16 | % | 184 | 4 | % | ||||||||||
Total | $ | 18,399 | 25 | % | $ | 21,423 | 24 | % | $ | (3,024 | ) | 1 | % |
(Dollar amounts in thousands) | |||||||||||||||||||
2018 | 2017 | Decrease | |||||||||||||||||
GM$ | GM% | GM$ | GM% | GM$ | GM% | ||||||||||||||
Product | $ | 2,775 | 40 | % | $ | 3,249 | 43 | % | $ | (474 | ) | (3 | )% | ||||||
Services | 3,362 | 97 | % | 6,096 | 98 | % | (2,734 | ) | (1 | )% | |||||||||
Total | $ | 6,137 | 59 | % | $ | 9,345 | 68 | % | $ | (3,208 | ) | (9 | )% |
(Dollar amounts in thousands) | |||||||||||||||||||
2018 | 2017 | Increase (decrease) | |||||||||||||||||
GM$ | GM% | GM$ | GM% | GM$ | GM% | ||||||||||||||
Product | $ | 6,886 | 13 | % | $ | 8,607 | 13 | % | $ | (1,721 | ) | — | % | ||||||
Services | 5,376 | 55 | % | 3,471 | 59 | % | 1,905 | (4 | )% | ||||||||||
Total | $ | 12,262 | 20 | % | $ | 12,078 | 16 | % | $ | 184 | 4 | % |
(Dollar amounts in thousands) | ||||||||||||||||||||
For the years ended September 30, | ||||||||||||||||||||
2018 | % of Total | 2017 | % of Total | $ Increase | % Increase | |||||||||||||||
By Operating Segment: | ||||||||||||||||||||
HPP | $ | 3,277 | 100 | % | $ | 2,362 | 100 | % | $ | 915 | 39 | % | ||||||||
TS | — | — | % | — | — | % | — | — | % | |||||||||||
Total | $ | 3,277 | 100 | % | $ | 2,362 | 100 | % | $ | 915 | 39 | % |
(Dollar amounts in thousands) | ||||||||||||||||||||
For the years ended September 30, | ||||||||||||||||||||
2018 | % of Total | 2017 | % of Total | $ Increase | % Increase | |||||||||||||||
By Operating Segment: | ||||||||||||||||||||
HPP | $ | 5,637 | 34 | % | $ | 5,516 | 35 | % | $ | 121 | 2 | % | ||||||||
TS | 11,086 | 66 | % | 10,150 | 65 | % | 936 | 9 | % | |||||||||||
Total | $ | 16,723 | 100 | % | $ | 15,666 | 100 | % | $ | 1,057 | 7 | % |
(Dollar amounts in thousands) | |||||||||||
For the years ended September 30, | |||||||||||
2018 | 2017 | Increase (decrease) | |||||||||
Interest expense | $ | (85 | ) | $ | (73 | ) | $ | (12 | ) | ||
Interest income | 20 | 11 | 9 | ||||||||
Foreign exchange gain (loss) | 263 | (42 | ) | 305 | |||||||
Other income, net | 297 | 114 | 183 | ||||||||
Total other income (expense), net | $ | 495 | $ | 10 | $ | 485 |
For the years ended | |||||||
September 30, 2018 | September 30, 2017 | ||||||
(Amounts in thousands) | |||||||
Revenues | $ | 18,365 | $ | 22,990 | |||
Income (loss) from discontinued operations, net of tax | $ | (410 | ) | $ | 263 |
Item 8. | Financial Statements and Supplementary Data |
Page | |
• | pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of a company; |
• | provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles and that receipts and expenditures of a company are being made only in accordance with authorizations of management and the board of directors of a company; and |
• | provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of a company's assets that could have a material effect on its financial statements. |
Item 10. | Directors, Executive Officers and Corporate Governance |
Item 11. | Executive Compensation |
Item 12. | Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters |
(a) (1)(2) | (b) | (c) | ||||||||
Plan Category | Number of securities to be issued upon exercise of outstanding options, warrants and rights | Weighted-average exercise price of outstanding stock options, warrants and rights | Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a))(3) | |||||||
Equity compensation plans approved by security holders | 157,852 | $ | 3.42 | 252,156 |
(1) | Includes 154,352 non-vested shares issued. |
(2) | Does not include purchase rights under the ESPP, as the purchase price and number of shares to be purchased under the ESPP are not determined until the end of the relevant purchase period. |
(3) | Includes 125,965 shares available for future issuance under the stock incentive and stock option plans and 126,191 under the ESPP. |
Item 13. | Certain Relationships and Related Transactions and Director Independence |
Item 14. | Principal Accountant Fees and Services |
Item 15. | Exhibits and Financial Statement Schedules |
Exhibit No. | Description | Filed with this Form 10-K | Incorporated by Reference | ||||||||
Form | Filing Date | Exhibit No. | |||||||||
3.1 | Articles of Organization and amendments thereto | 10-K | December 26, 2007 | 3.1 | |||||||
3.2 | By-laws, as amended December 13, 2012 | 10-K | December 20, 2012 | 3.1 | |||||||
10.1 | Form of Employee Invention and Non-Disclosure Agreement | 10-K | November 22, 1996 | 10.3 | |||||||
10.2 | CSPI Supplemental Retirement Income Plan | 10-K | December 29, 2008 | 10.2 | |||||||
10.3* | 2007 Stock Incentive Plan | DEF 14A | March 30, 2007 | B | |||||||
10.4* | 2014 Variable Compensation (Executive Bonus) and Base Programs dated November 12, 2013 | 10-K | December 23, 2014 | 10.10 | |||||||
10.5* | Death Benefit and Retirement Benefit Agreement between the Company and Victor Dellovo dated September 13, 2013 | 10-K | December 24, 2013 | 10.11 | |||||||
10.6* | Form of Change of Control Agreement with Gary W. Levine and William E. Bent Jr. each dated January 11, 2008 | 10-K | December 22, 2009 | 10.11 | |||||||
10.7* | 2014 Employee Stock Purchase Plan | DEF 14A | January 6, 2014 | A | |||||||
10.8* | 2015 Stock Incentive Plan | DEF 14A | January 5, 2015 | A | |||||||
10.9 | 2015 Lowell, MA Lease | 10-K | December 24, 2015 | 10.21 | |||||||
10.10 | 2015 Deerfield Beach, FL Lease | 10-K | December 24, 2015 | 10.20 | |||||||
10.11* | Executive Retention and Service Agreement with Victor Dellovo, dated September 4, 2012 | 10-Q | February 14, 2018 | 10.1 | |||||||
10.12* | Forms of Employee Restricted Stock Award Agreement | 10-Q | February 14, 2018 | 10.2 | |||||||
10.13 | Share Purchase and Assignment Agreement | 8-K | June 27, 2018 | 2.1 | |||||||
Subsidiaries | X | ||||||||||
Consent of RSM LLP, Independent Registered Public Accounting Firm | X | ||||||||||
Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 | X | ||||||||||
Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 | X | ||||||||||
Certification of Chief Executive Officer and Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 | X | ||||||||||
101.INS | XBRL Instance | ||||||||||
101.SCH | XBRL Taxonomy Schema | ||||||||||
101.CAL | XBRL Taxonomy Extension Calculation | ||||||||||
101.DEF | XBRL Taxonomy Extension Definition | ||||||||||
101.LAB | XBRL Taxonomy Extension Labels | ||||||||||
101.PRE | XBRL Taxonomy Extension Presentation |
* | Management contract or compensatory plan. |
Item 16. | Form 10-K Summary |
CSP INC. | |||
By: | /s/ Victor Dellovo | ||
Victor Dellovo Chief Executive Officer and President |
Name | Title | Date | ||
/s/ Victor Dellovo | Chief Executive Officer, President and Director | December 27, 2018 | ||
Victor Dellovo | ||||
/s/ Gary W. Levine | Chief Financial Officer (Principal Financial Officer) | December 27, 2018 | ||
Gary W. Levine | ||||
/s/ Mike Newbanks | Vice President of Finance (Chief Accounting Officer) | December 27, 2018 | ||
Mike Newbanks | ||||
/s/ C. Shelton James | Director | December 27, 2018 | ||
C. Shelton James | ||||
/s/ Raymond Charles Blackmon | Director | December 27, 2018 | ||
Raymond Charles Blackmon | ||||
/s/ Marilyn T. Smith | Director | December 27, 2018 | ||
Marilyn T. Smith | ||||
/s/ Izzy Azeri | Director | December 27, 2018 | ||
Izzy Azeri |
September 30, 2018 | September 30, 2017 | ||||||
ASSETS | |||||||
Current assets: | |||||||
Cash and cash equivalents | $ | 25,107 | $ | 10,421 | |||
Accounts receivable, net of allowances of $87 and $120 | 11,980 | 17,673 | |||||
Unbilled accounts receivable | 1,166 | 703 | |||||
Investment in lease, net-current portion | 246 | — | |||||
Inventories | 7,558 | 5,567 | |||||
Deferred costs | — | 19 | |||||
Refundable income taxes | 480 | — | |||||
Other current assets | 1,878 | 1,076 | |||||
Current assets of discontinued operations | — | 14,867 | |||||
Total current assets | 48,415 | 50,326 | |||||
Property, equipment and improvements, net | 847 | 919 | |||||
Other assets: | |||||||
Intangibles, net | 48 | 167 | |||||
Investment in lease, net-less current portion | 564 | — | |||||
Deferred income taxes | 1,895 | 1,963 | |||||
Cash surrender value of life insurance | 3,441 | 3,300 | |||||
Other assets | 65 | 65 | |||||
Noncurrent assets of discontinued operations | — | 2,188 | |||||
Total other assets | 6,013 | 7,683 | |||||
Total assets | $ | 55,275 | $ | 58,928 | |||
LIABILITIES AND SHAREHOLDERS’ EQUITY | |||||||
Current liabilities: | |||||||
Accounts payable and accrued expenses | $ | 12,524 | $ | 14,895 | |||
Deferred revenue | 1,197 | 938 | |||||
Pension and retirement plans | 340 | 325 | |||||
Income taxes payable | — | 138 | |||||
Current liabilities of discontinued operations | — | 9,727 | |||||
Total current liabilities | 14,061 | 26,023 | |||||
Pension and retirement plans | 6,168 | 6,653 | |||||
Income taxes payable non-current | 709 | — | |||||
Other long term liabilities | 535 | 29 | |||||
Noncurrent liabilities of discontinued operations | — | 5,222 | |||||
Total liabilities | 21,473 | 37,927 | |||||
Commitments and contingencies | |||||||
Shareholders’ equity: | |||||||
Common stock, $.01 par value per share; authorized, 7,500 shares; issued and outstanding 4,017 and 3,935 shares, respectively | 40 | 40 | |||||
Additional paid-in capital | 14,661 | 13,717 | |||||
Retained earnings | 29,926 | 17,407 | |||||
Accumulated other comprehensive loss | (10,825 | ) | (10,163 | ) | |||
Total shareholders’ equity | 33,802 | 21,001 | |||||
Total liabilities and shareholders’ equity | $ | 55,275 | $ | 58,928 |
For the years ended | |||||||
September 30, 2018 | September 30, 2017 | ||||||
Sales: | |||||||
Product | $ | 59,661 | $ | 76,353 | |||
Services | 13,255 | 12,139 | |||||
Total sales | 72,916 | 88,492 | |||||
Cost of sales: | |||||||
Product | 50,000 | 64,497 | |||||
Services | 4,517 | 2,572 | |||||
Total cost of sales | 54,517 | 67,069 | |||||
Gross profit | 18,399 | 21,423 | |||||
Operating expenses: | |||||||
Engineering and development | 3,277 | 2,362 | |||||
Selling, general and administrative | 16,723 | 15,666 | |||||
Total operating expenses | 20,000 | 18,028 | |||||
Operating income (loss) | (1,601 | ) | 3,395 | ||||
Other income (expense): | |||||||
Foreign exchange gain (loss) | 263 | (42 | ) | ||||
Other income, net | 232 | 52 | |||||
Total other income, net | 495 | 10 | |||||
Income (loss) before income taxes and discontinued operations | (1,106 | ) | 3,405 | ||||
Income tax expense | 882 | 1,162 | |||||
Net income (loss) from continuing operations | (1,988 | ) | 2,243 | ||||
Discontinued operations: | |||||||
Gain from sale of discontinued operations | 16,838 | — | |||||
Income (loss) from discontinued operations | (410 | ) | 263 | ||||
Net income from discontinued operations | 16,428 | 263 | |||||
Net income | $ | 14,440 | $ | 2,506 | |||
Net income attributable to common shareholders | $ | 13,842 | $ | 2,398 | |||
Net income (loss) per share from continuing operations - basic | $ | (0.52 | ) | $ | 0.57 | ||
Gain per share from sale of discontinued operations - basic | $ | 4.41 | $ | — | |||
Income (loss) per share of discontinued operations - basic | (0.11 | ) | 0.07 | ||||
Total income per share of discontinued operations - basic | $ | 4.30 | $ | 0.07 | |||
Net income per share – basic | $ | 3.62 | $ | 0.64 | |||
Weighted average shares outstanding – basic | 3,822 | 3,723 | |||||
Net income (loss) per share from continuing operations - diluted | $ | (0.52 | ) | $ | 0.56 | ||
Gain per share from sale of discontinued operations - diluted | $ | 4.32 | $ | — | |||
Income (loss) per share of discontinued operations - diluted | (0.11 | ) | 0.07 | ||||
Total income per share of discontinued operations - diluted | $ | 4.21 | $ | 0.07 | |||
Net income per share – diluted | $ | 3.55 | $ | 0.63 | |||
Weighted average shares outstanding – diluted | 3,901 | 3,817 |
For the years ended | ||||||||
September 30, 2018 | September 30, 2017 | |||||||
Net income | $ | 14,440 | $ | 2,506 | ||||
Other comprehensive income (loss): | ||||||||
Unrealized actuarial gain on minimum pension liability, net of tax effect | 470 | 2,175 | ||||||
Foreign currency translation loss | (1,132 | ) | (407 | ) | ||||
Other comprehensive gain (loss) | (662 | ) | 1,768 | |||||
Total comprehensive income | $ | 13,778 | $ | 4,274 |
Shares | Amount | Additional Paid-in Capital | Retained Earnings | Accumulated other comprehensive loss | Total Shareholders’ Equity | |||||||||||||||||
Balance as of September 30, 2016 | 3,821 | $ | 39 | $ | 12,924 | $ | 16,623 | $ | (11,931 | ) | $ | 17,655 | ||||||||||
Comprehensive income: | ||||||||||||||||||||||
Net income | — | — | — | 2,506 | — | 2,506 | ||||||||||||||||
Other comprehensive income | — | — | — | — | 1,768 | 1,768 | ||||||||||||||||
Stock-based compensation | — | — | 577 | — | — | 577 | ||||||||||||||||
Restricted stock issuance | 86 | 1 | — | — | — | 1 | ||||||||||||||||
Issuance of shares under employee stock purchase plan | 23 | — | 201 | — | — | 201 | ||||||||||||||||
Exercise of stock options | 5 | 15 | — | — | 15 | |||||||||||||||||
Cash dividends on common stock ($0.44 per share) | — | — | — | (1,722 | ) | — | (1,722 | ) | ||||||||||||||
Balance as of September 30, 2017 | 3,935 | 40 | 13,717 | 17,407 | (10,163 | ) | 21,001 | |||||||||||||||
Comprehensive income: | ||||||||||||||||||||||
Net income | — | — | — | 14,440 | — | 14,440 | ||||||||||||||||
Other comprehensive loss | — | — | — | — | (662 | ) | (662 | ) | ||||||||||||||
Stock-based compensation | — | — | 691 | — | — | 691 | ||||||||||||||||
Restricted stock issuance | 54 | — | — | — | — | — | ||||||||||||||||
Issuance of shares under employee stock purchase plan | 23 | — | 231 | — | — | 231 | ||||||||||||||||
Exercise of stock options | 5 | — | 22 | — | — | 22 | ||||||||||||||||
Cash dividends on common stock ($0.48 per share) | — | — | — | (1,921 | ) | — | (1,921 | ) | ||||||||||||||
Balance as of September 30, 2018 | 4,017 | $ | 40 | $ | 14,661 | $ | 29,926 | $ | (10,825 | ) | $ | 33,802 |
For the years ended | |||||||
September 30, 2018 | September 30, 2017 | ||||||
Cash flows from operating activities: | |||||||
Net income (loss) from continuing operations | $ | (1,988 | ) | $ | 2,243 | ||
Net income from discontinued operations | 16,428 | 263 | |||||
Net income | 14,440 | 2,506 | |||||
Adjustments to reconcile net income to net cash provided by operating activities: | |||||||
Depreciation | 506 | 365 | |||||
Amortization of intangibles | 119 | 120 | |||||
Loss on disposal of property, equipment and improvements | 4 | — | |||||
Gain on sale of discontinued operations | (16,838 | ) | — | ||||
Foreign exchange gain (loss) | (263 | ) | 42 | ||||
Non-cash changes in accounts receivable | (38 | ) | (31 | ) | |||
Non-cash changes in inventory | 555 | 294 | |||||
Stock-based compensation expense on stock options and restricted stock awards | 691 | 577 | |||||
Deferred income taxes | 173 | 24 | |||||
(Increase) decrease in cash surrender value of life insurance | 9 | (135 | ) | ||||
Changes in operating assets and liabilities: | |||||||
(Increase) decrease in accounts receivable | 5,191 | (3,705 | ) | ||||
(Increase) decrease in officer life insurance settlement receivable | (256 | ) | 413 | ||||
Increase in inventories | (2,562 | ) | (574 | ) | |||
(Increase) decrease in refundable income taxes | (654 | ) | 15 | ||||
Increase in other assets and deferred costs | (522 | ) | (223 | ) | |||
Increase in investment in lease | (810 | ) | — | ||||
Increase (decrease) in accounts payable and accrued expenses | (2,401 | ) | 5,208 | ||||
Increase (decrease) in deferred revenue | 262 | (27 | ) | ||||
Decrease in pension and retirement plans liability | (120 | ) | (82 | ) | |||
Increase in income taxes payable | 464 | 52 | |||||
Increase (decrease) in other long term liabilities | 576 | (193 | ) | ||||
Net cash provided by (used in) operating activities of continuing operations | (1,474 | ) | 4,646 | ||||
Net cash provided by (used in) operating activities of discontinued operations | 4,491 | (1,987 | ) | ||||
Net cash provided by operating activities | 3,017 | 2,659 | |||||
Cash flows from investing activities: | |||||||
Life insurance premiums paid | (150 | ) | (150 | ) | |||
Proceeds from sale of discontinued operations | 14,387 | — | |||||
Purchases of property, equipment and improvements | (438 | ) | (207 | ) | |||
Net cash provided by investing activities of continuing operations | 13,799 | (357 | ) | ||||
Net cash used in investing activities of discontinued operations | (154 | ) | (151 | ) | |||
Net cash provided by (used in) investing activities | 13,645 | (508 | ) | ||||
Cash flows from financing activities: | |||||||
Dividends paid | (1,921 | ) | (1,722 | ) | |||
Principal payments on capital leases | (70 | ) | — | ||||
Proceeds from issuance of shares under equity compensation plans | 253 | 216 | |||||
Net cash used in financing activities | (1,738 | ) | (1,506 | ) | |||
Effects of exchange rate on cash | (238 | ) | 137 | ||||
Net increase in cash and cash equivalents | 14,686 | 782 | |||||
Cash and cash equivalents beginning of period | 10,421 | 7,538 | |||||
Cash and cash equivalents, end of period | 25,107 | $ | 13,885 | ||||
Less: cash and cash equivalents of discontinued operations at end of period | — | 3,464 | |||||
Cash and cash equivalents of continuing operations at end of period | $ | 25,107 | $ | 10,421 | |||
Supplementary cash flow information: | |||||||
Cash paid for income taxes | $ | 900 | $ | 1,142 | |||
Cash paid for interest | $ | 73 | $ | 75 |
For the years ended | |||||||
September 30, 2018 | September 30, 2017 | ||||||
(Amounts in thousands except per share data) | |||||||
Net income (loss) from continuing operations | $ | (1,988 | ) | $ | 2,243 | ||
Gain from sale of discontinued operations | 16,838 | — | |||||
Income (loss) from discontinued operations | (410 | ) | 263 | ||||
Total income from discontinued operations | 16,428 | 263 | |||||
Net income (loss) | 14,440 | 2,506 | |||||
Less: Net income attributable to nonvested common stock | 598 | 108 | |||||
Net income attributable to common stockholders | $ | 13,842 | $ | 2,398 | |||
Weighted average total shares outstanding - basic | 3,987 | 3,890 | |||||
Less: weighted average non-vested shares outstanding | 165 | 167 | |||||
Weighted average number of common shares outstanding - basic | 3,822 | 3,723 | |||||
Potential common shares from non-vested stock awards and the assumed exercise of stock options | 79 | 94 | |||||
Weighted average common shares outstanding - diluted | 3,901 | 3,817 | |||||
Net income (loss) from continuing operations per share - basic | $ | (0.52 | ) | $ | 0.57 | ||
Net income from discontinued operations per share - basic | $ | 4.30 | $ | 0.07 | |||
Net income per share - basic | $ | 3.62 | $ | 0.64 | |||
Net income (loss) from continuing operations per share - diluted | $ | (0.52 | ) | $ | 0.56 | ||
Net income from discontinued operations per share - diluted | $ | 4.21 | $ | 0.07 | |||
Net income per share - diluted | $ | 3.55 | $ | 0.63 |
September 30, 2018 | September 30, 2017 | ||||||||
(Amounts in thousands) | |||||||||
Currents assets: | |||||||||
Cash and cash equivalents | $ | — | $ | 3,464 | |||||
Accounts receivable, net | — | 9,957 | |||||||
Unbilled accounts receivable | — | 69 | |||||||
Inventories, net | — | 404 | |||||||
Deferred costs | — | 910 | |||||||
Deferred income taxes | — | — | |||||||
Other current assets | — | 63 | |||||||
Property, equipment and improvements, net | — | — | |||||||
Total current assets of discontinued operations | $ | — | $ | 14,867 | |||||
Property, equipment and improvements, net | $ | — | $ | 589 | |||||
Deferred costs | — | 609 | |||||||
Deferred income taxes | — | 864 | |||||||
Other noncurrent assets, net | — | 126 | |||||||
Total noncurrent assets of discontinued operations | $ | — | $ | 2,188 | |||||
Current liabilities: | |||||||||
Accounts payable and accrued expenses | $ | — | $ | 3,950 | |||||
Deferred revenue | — | 5,264 | |||||||
Pension and retirement plans | — | 209 | |||||||
Other current liabilities | — | 304 | |||||||
Total current liabilities of discontinued operations | $ | — | $ | 9,727 | |||||
Pension and retirement plans | $ | — | $ | 5,165 | |||||
Other noncurrent liabilities | — | 57 | |||||||
Total noncurrent liabilities of discontinued operations | $ | — | $ | 5,222 |
For the years ended | ||||||||
September 30, 2018 | September 30, 2017 | |||||||
(Amounts in thousands) | ||||||||
Sales | $ | 18,365 | $ | 22,990 | ||||
Cost of sales | 15,843 | 18,923 | ||||||
Gross profit | 2,522 | 4,067 | ||||||
Selling, general and administrative expenses | 2,837 | 3,690 | ||||||
Operating income (loss) | (315 | ) | 377 | |||||
Other income (expenses), net | (95 | ) | 11 | |||||
Gain (loss) before income taxes | (410 | ) | 388 | |||||
Income tax expense | — | 125 | ||||||
Income (loss) from discontinued operations | (410 | ) | 263 | |||||
Gain from sale of discontinued operations | 16,838 | — | ||||||
Total income from discontinued operations | $ | 16,428 | $ | 263 |
September 30, 2018 | September 30, 2017 | ||||||
(Amounts in thousands) | |||||||
Raw materials | $ | 1,098 | $ | 1,334 | |||
Work-in-process | 226 | 260 | |||||
Finished goods | 6,234 | 3,973 | |||||
Total | $ | 7,558 | $ | 5,567 |
Effect of Foreign Currency Translation | Minimum Pension Liability | Accumulated Other Comprehensive Loss | ||||||||||
(Amounts in thousands) | ||||||||||||
Balance as of September 30, 2016 | $ | (2,807 | ) | $ | (9,124 | ) | $ | (11,931 | ) | |||
Change in period | (407 | ) | 1,944 | 1,537 | ||||||||
Tax effect of change in period | — | 231 | 231 | |||||||||
Balance as of September 30, 2017 | $ | (3,214 | ) | $ | (6,949 | ) | $ | (10,163 | ) | |||
Change in period | (1,132 | ) | 475 | (657 | ) | |||||||
Tax effect of change in period | — | (5 | ) | (5 | ) | |||||||
Balance as of September 30, 2018 | $ | (4,346 | ) | $ | (6,479 | ) | $ | (10,825 | ) |
5. | Income Taxes |
For the Years Ended September 30, | |||||||
2018 | 2017 | ||||||
(Amounts in thousands) | |||||||
Income before income tax: | |||||||
U.S. | $ | (1,077 | ) | $ | 3,383 | ||
Foreign | (29 | ) | 22 | ||||
$ | (1,106 | ) | $ | 3,405 | |||
Income tax expense: | |||||||
Current: | |||||||
Federal | $ | 771 | $ | 1,067 | |||
State | 47 | 119 | |||||
Foreign | — | — | |||||
818 | 1,186 | ||||||
Deferred: | |||||||
Federal | 259 | (86 | ) | ||||
State | (118 | ) | 37 | ||||
Foreign | (77 | ) | 25 | ||||
64 | (24 | ) | |||||
$ | 882 | $ | 1,162 |
For the Years Ended September 30, | |||||||||||||
2018 | 2017 | ||||||||||||
(Dollar amounts in thousands) | |||||||||||||
Computed “expected” tax expense (benefit) | $ | (269 | ) | 24.3 | % | $ | 1,158 | 34.0 | % | ||||
Increases (reductions) in taxes resulting from: | |||||||||||||
State income taxes, net of federal tax benefit | (107 | ) | 9.7 | % | 80 | 2.4 | % | ||||||
Foreign operations | (70 | ) | 6.3 | % | 18 | 0.5 | % | ||||||
Permanent differences | (14 | ) | 1.3 | % | (4 | ) | (0.1 | )% | |||||
Change in valuation allowance | 118 | (10.7 | )% | (37 | ) | (1.1 | )% | ||||||
Impact of 965 one-time transition tax | 771 | (69.7 | )% | — | — | % | |||||||
Federal tax rate change | 588 | (53.2 | )% | — | — | % | |||||||
Uncertain tax liability adjustment | 11 | (1.0 | )% | 8 | 0.2 | % | |||||||
Research & development credit | (125 | ) | 11.3 | % | (53 | ) | (1.6 | )% | |||||
Other items | (21 | ) | 2.0 | % | (8 | ) | (0.2 | )% | |||||
Income tax expense | $ | 882 | (79.7 | )% | $ | 1,162 | 34.1 | % |
September 30, 2018 | September 30, 2017 | ||||||
(Amounts in thousands) | |||||||
Deferred tax assets: | |||||||
Pension | $ | 1,390 | $ | 1,609 | |||
Intangibles | 104 | 219 | |||||
Other reserves and accruals | 451 | 630 | |||||
Inventory reserves and other | 502 | 563 | |||||
State credits, net of federal benefit | 380 | 318 | |||||
Federal and state net operating loss carryforwards | 626 | 52 | |||||
Foreign net operating loss carryforwards | 1,489 | 1,531 | |||||
Foreign exchange on intercompany loan | 7 | (77 | ) | ||||
Foreign tax credits | — | 7 | |||||
Depreciation and amortization | (396 | ) | (177 | ) | |||
Gross deferred tax assets | 4,553 | 4,675 | |||||
Less: valuation allowance | (2,658 | ) | (2,712 | ) | |||
Realizable deferred tax asset | 1,895 | 1,963 | |||||
Gross deferred tax liabilities | — | — | |||||
Net deferred tax assets | $ | 1,895 | $ | 1,963 |
For the Year Ended September 30, 2018 | For the Year Ended September 30, 2017 | ||||||
(Amounts in thousands) | |||||||
Balance, beginning of year | $ | 209 | $ | 202 | |||
Accrued penalties and interest | 11 | 7 | |||||
Balance, end of period | $ | 220 | $ | 209 |
September 30, 2018 | September 30, 2017 | ||||||
(Amounts in thousands) | |||||||
Leasehold improvements | $ | 224 | $ | 224 | |||
Equipment | 7,574 | 7,294 | |||||
Automobiles | 101 | 74 | |||||
7,899 | 7,592 | ||||||
Less accumulated depreciation and amortization | (7,052 | ) | (6,673 | ) | |||
Property, equipment and improvements, net | $ | 847 | $ | 919 |
September 30, 2018 | September 30, 2017 | ||||||||||||||||||||||||||
Weighted Average Remaining Amortization Period | Gross | Accumulated Amortization | Net | Weighted Average Remaining Amortization Period | Gross | Accumulated Amortization | Net | ||||||||||||||||||||
(Amounts in thousands) | |||||||||||||||||||||||||||
Customer list | 1 year | $ | 910 | $ | 864 | $ | 46 | 2 years | $ | 910 | $ | 773 | $ | 137 | |||||||||||||
Non-compete agreements | 0 years | 93 | 93 | — | 0 years | 93 | 93 | — | |||||||||||||||||||
Developed technology | 0 years | 30 | $ | 30 | $ | — | 0 years | 30 | 30 | — | |||||||||||||||||
Trade name | 0 years | 140 | $ | 138 | $ | 2 | 1 year | 140 | 110 | 30 | |||||||||||||||||
Total | $ | 1,173 | $ | 1,125 | $ | 48 | $ | 1,173 | $ | 1,006 | $ | 167 |
Fiscal year ending September 30: | (Amounts in thousands) | ||
2019 | 11 | ||
2020 | 9 | ||
2021 | 9 | ||
2022 | 9 | ||
2023 | 9 | ||
Thereafter | 1 | ||
Total | $ | 48 | |
September 30, | |||||||
2018 | 2017 | ||||||
(Amounts in thousands) | |||||||
Accounts payable | $ | 4,466 | $ | 8,120 | |||
Inventory line of credit | 3,247 | 3,110 | |||||
Commissions | 312 | 269 | |||||
Compensation and fringe benefits | 1,836 | 1,528 | |||||
Professional fees and shareholders' reporting costs | 308 | 491 | |||||
Taxes, other than income | 313 | 854 | |||||
Warranty | 108 | 121 | |||||
Other | 1,934 | 402 | |||||
$ | 12,524 | $ | 14,895 | ||||
2018 | 2017 | ||||||
Balance at the beginning of the period | $ | 121,450 | $ | 130,841 | |||
Accruals for warranties for products sold in the period | 26,539 | 75,816 | |||||
Fulfillment of warranty obligations | (40,451 | ) | (85,207 | ) | |||
Balance at the end of the period | $ | 107,538 | $ | 121,450 |
Years ended | |||||||
September 30, 2018 | September 30, 2017 | ||||||
(Amounts in thousands) | |||||||
Cost of sales | $ | 5 | $ | 6 | |||
Engineering and development | 32 | 24 | |||||
Selling, general and administrative | 654 | 547 | |||||
Total | $ | 691 | $ | 577 | |||
Number of Shares | Weighted average exercise price | Weighted Average Remaining Contractual Term | Aggregate Intrinsic Value (in thousands) | ||||||||||
Outstanding at September 30, 2016 | 23,626 | $ | 5.76 | — | — | ||||||||
Granted | — | — | — | — | |||||||||
Expired | (9,250 | ) | $ | 9.30 | — | — | |||||||
Forfeited | — | — | — | — | |||||||||
Exercised | (5,000 | ) | 2.99 | — | — | ||||||||
Outstanding at September 30, 2017 | 9,376 | $ | 4.49 | — | — | ||||||||
Granted | — | — | — | — | |||||||||
Expired | (1,250 | ) | $ | 6.82 | — | — | |||||||
Forfeited | — | — | — | — | |||||||||
Exercised | (4,626 | ) | 4.67 | — | — | ||||||||
Outstanding at September 30, 2018 | 3,500 | $ | 3.42 | 1.23 Years | $ | 34 | |||||||
Exercisable at September 30, 2018 | 3,500 | $ | 3.42 | 1.23 Years | $ | 34 | |||||||
Vested and expected to vest at September 30, 2018 | 3,500 | $ | 3.42 | 1.23 Years | $ | 34 |
Number of nonvested shares | Weighted Average grant date Fair Value | Weighted Average Remaining Contractual Term | Aggregate Intrinsic Value (in thousands) | ||||||||||
Nonvested shares outstanding at September 30, 2016 | 165,708 | $ | 6.38 | 2.20 Years | $ | 1,695 | |||||||
Activity in 2017: | |||||||||||||
Granted | 94,000 | $ | 10.18 | — | — | ||||||||
Vested | (71,587 | ) | $ | 6.59 | — | — | |||||||
Forfeited | (8,300 | ) | $ | 7.11 | — | — | |||||||
Nonvested shares outstanding at September 30, 2017 | 179,821 | $ | 8.64 | 2.23 Years | $ | 1,987 | |||||||
Activity in 2018: | |||||||||||||
Granted | 72,000 | $ | 11.83 | — | — | ||||||||
Vested | (80,969 | ) | $ | 8.18 | — | — | |||||||
Forfeited | (16,500 | ) | $ | 8.90 | — | — | |||||||
Nonvested shares outstanding at September 30, 2018 | 154,352 | $ | 10.34 | 2.11 Years | $ | 2,025 | |||||||
Vested at September 30, 2018 | 331,833 | $ | 6.50 | 0.24 Years | $ | 4,354 | |||||||
Vested and expected to vest at September 30, 2018 | 486,185 | $ | 7.72 | 0.83 Years | $ | 6,379 |
Domestic | International | ||||||||||
September 30, | September 30, | ||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||
Discount rate: | 4.00 | % | 3.75 | % | 2.90 | % | 2.80 | % | |||
Expected return on plan assets: | 3.80 | % | 3.70 | % | |||||||
Rate of compensation increase: | — | % | — | % |
Domestic | International | ||||||||||
September 30, | September 30, | ||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||
Discount rate: | 3.75 | % | 3.50 | % | 2.80 | % | 2.40 | % | |||
Expected return on plan assets: | 3.70 | % | 3.60 | % | |||||||
Rate of compensation increase: | — | % | — | % |
Years Ended September 30 | |||||||||||||||||||||||
2018 | 2017 | ||||||||||||||||||||||
Foreign | U.S. | Total | Foreign | U.S. | Total | ||||||||||||||||||
(amounts in thousands) | |||||||||||||||||||||||
Pension: | |||||||||||||||||||||||
Service cost | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | |||||||||||
Interest cost | 370 | 25 | 395 | 321 | 29 | 350 | |||||||||||||||||
Expected return on plan assets | (312 | ) | — | (312 | ) | (268 | ) | — | (268 | ) | |||||||||||||
Amortization of net (gain)/loss | 170 | (1 | ) | 169 | 205 | 4 | 209 | ||||||||||||||||
Net periodic benefit cost | $ | 228 | $ | 24 | $ | 252 | $ | 258 | $ | 33 | $ | 291 | |||||||||||
Post Retirement: | |||||||||||||||||||||||
Service cost | $ | — | $ | 40 | $ | 40 | $ | — | $ | 38 | $ | 38 | |||||||||||
Interest cost | — | 47 | 47 | — | 44 | 44 | |||||||||||||||||
Amortization of net (gain)/loss | — | (18 | ) | (18 | ) | — | 15 | 15 | |||||||||||||||
Net periodic benefit cost | $ | — | $ | 69 | $ | 69 | $ | — | $ | 97 | $ | 97 | |||||||||||
Pension: | |||||||||||||||||||||||
Decrease in minimum liability included in other comprehensive income (loss) | $ | (462 | ) | $ | (7 | ) | $ | (469 | ) | $ | (1,139 | ) | $ | (14 | ) | $ | (1,153 | ) | |||||
Post Retirement: | |||||||||||||||||||||||
Decrease in minimum liability included in other comprehensive income (loss) | — | (6 | ) | (6 | ) | — | (99 | ) | (99 | ) | |||||||||||||
Total: | |||||||||||||||||||||||
Decrease in minimum liability included in comprehensive income (loss) | $ | (462 | ) | $ | (13 | ) | $ | (475 | ) | $ | (1,139 | ) | $ | (113 | ) | $ | (1,252 | ) |
Years Ended September 30 | |||||||||||||||||||||||
2018 | 2017 | ||||||||||||||||||||||
Foreign | U.S. | Total | Foreign | U.S. | Total | ||||||||||||||||||
(Amounts in thousands) | |||||||||||||||||||||||
Pension: | |||||||||||||||||||||||
Change in projected benefit obligation (“PBO”) | |||||||||||||||||||||||
Balance beginning of year | $ | 13,285 | $ | 677 | $ | 13,962 | $ | 13,766 | $ | 829 | $ | 14,595 | |||||||||||
Service cost | — | — | — | — | — | — | |||||||||||||||||
Interest cost | 370 | 25 | 395 | 321 | 29 | 350 | |||||||||||||||||
Changes in actuarial assumptions | (165 | ) | (7 | ) | (172 | ) | (986 | ) | (9 | ) | (995 | ) | |||||||||||
Foreign exchange impact | (364 | ) | — | (364 | ) | 400 | — | 400 | |||||||||||||||
Benefits paid | (252 | ) | (110 | ) | (362 | ) | (216 | ) | (172 | ) | (388 | ) | |||||||||||
Projected benefit obligation at end of year | $ | 12,874 | $ | 585 | $ | 13,459 | $ | 13,285 | $ | 677 | $ | 13,962 | |||||||||||
Changes in fair value of plan assets: | |||||||||||||||||||||||
Fair value of plan assets at beginning of year | $ | 8,239 | $ | — | $ | 8,239 | $ | 7,629 | $ | — | $ | 7,629 | |||||||||||
Actual gain on plan assets | 291 | — | 291 | 368 | — | 368 | |||||||||||||||||
Company contributions | 227 | 110 | 337 | 190 | 172 | 362 | |||||||||||||||||
Foreign exchange impact | (235 | ) | — | (235 | ) | 268 | — | 268 | |||||||||||||||
Benefits paid | (252 | ) | (110 | ) | (362 | ) | (216 | ) | (172 | ) | (388 | ) | |||||||||||
Fair value of plan assets at end of year | $ | 8,270 | $ | — | $ | 8,270 | $ | 8,239 | — | $ | 8,239 | ||||||||||||
Funded status \ net amount recognized | $ | (4,604 | ) | $ | (585 | ) | $ | (5,189 | ) | $ | (5,046 | ) | $ | (677 | ) | $ | (5,723 | ) | |||||
Post Retirement: | |||||||||||||||||||||||
Change in projected benefit obligation (“PBO”): | |||||||||||||||||||||||
Balance beginning of year | $ | — | $ | 1,255 | $ | 1,255 | $ | — | $ | 1,257 | $ | 1,257 | |||||||||||
Service cost | — | 40 | 40 | — | 38 | 38 | |||||||||||||||||
Interest cost | — | 47 | 47 | — | 44 | 44 | |||||||||||||||||
Changes in actuarial assumptions | — | (24 | ) | (24 | ) | — | (84 | ) | (84 | ) | |||||||||||||
Projected benefit obligation at end of year | $ | — | $ | 1,318 | $ | 1,318 | $ | — | $ | 1,255 | $ | 1,255 | |||||||||||
Funded status \ net amount recognized | $ | — | $ | (1,318 | ) | $ | (1,318 | ) | $ | — | $ | (1,255 | ) | $ | (1,255 | ) |
Years Ended September 30 | |||||||||||||||||||||||
2018 | 2017 | ||||||||||||||||||||||
Foreign | U.S. | Total | Foreign | U.S. | Total | ||||||||||||||||||
(Amounts in thousands) | |||||||||||||||||||||||
Pension: | |||||||||||||||||||||||
Accrued benefit liability | $ | (4,603 | ) | $ | (585 | ) | $ | (5,188 | ) | $ | (5,046 | ) | $ | (677 | ) | $ | (5,723 | ) | |||||
Deferred tax | (1 | ) | 22 | 21 | — | 19 | 19 | ||||||||||||||||
Accumulated other comprehensive income | 5,251 | 13 | 5,264 | 5,713 | 18 | 5,731 | |||||||||||||||||
Net amount recognized | $ | 647 | $ | (550 | ) | $ | 97 | $ | 667 | $ | (640 | ) | $ | 27 | |||||||||
Post Retirement: | |||||||||||||||||||||||
Accrued benefit liability | $ | — | $ | (1,320 | ) | $ | (1,320 | ) | $ | — | $ | (1,255 | ) | $ | (1,255 | ) | |||||||
Deferred tax | — | 93 | 93 | — | 91 | 91 | |||||||||||||||||
Accumulated other comprehensive income (loss) | — | 34 | 34 | — | 38 | 38 | |||||||||||||||||
Net amount recognized | $ | — | $ | (1,193 | ) | $ | (1,193 | ) | $ | — | $ | (1,126 | ) | $ | (1,126 | ) | |||||||
Total pension and post retirement: | |||||||||||||||||||||||
Accrued benefit liability | $ | (4,603 | ) | $ | (1,905 | ) | $ | (6,508 | ) | $ | (5,046 | ) | $ | (1,932 | ) | $ | (6,978 | ) | |||||
Deferred tax | (1 | ) | 115 | 114 | — | 110 | 110 | ||||||||||||||||
Accumulated other comprehensive income | 5,251 | 47 | 5,298 | 5,713 | 56 | 5,769 | |||||||||||||||||
Net amount recognized | $ | 647 | $ | (1,743 | ) | $ | (1,096 | ) | $ | 667 | $ | (1,766 | ) | $ | (1,099 | ) | |||||||
Accumulated Benefit Obligation: | |||||||||||||||||||||||
Pension | $ | (12,874 | ) | $ | (585 | ) | $ | (13,459 | ) | $ | (13,285 | ) | $ | (677 | ) | $ | (13,962 | ) | |||||
Post Retirement | — | (1,320 | ) | (1,320 | ) | — | (1,255 | ) | (1,255 | ) | |||||||||||||
Total accumulated benefit obligation | $ | (12,874 | ) | $ | (1,905 | ) | $ | (14,779 | ) | $ | (13,285 | ) | $ | (1,932 | ) | $ | (15,217 | ) |
September 30, | |||||||
2018 | 2017 | ||||||
(Amounts in thousands) | |||||||
Current accrued benefit liability | $ | 340 | $ | 325 | |||
Non-current accrued benefit liability | 6,168 | 6,653 | |||||
Total accrued benefit liability | $ | 6,508 | $ | 6,978 |
Fiscal year ending September 30: | (Amounts in thousands) | |||
2019 | $ | 445 | ||
2020 | 457 | |||
2021 | 475 | |||
2022 | 505 | |||
2023 | 521 | |||
Thereafter | 3,311 |
Fair Values as of | |||||||||||||||||||||||||||||||
September 30, 2018 | September 30, 2017 | ||||||||||||||||||||||||||||||
Fair Value Measurements Using Inputs Considered as | Fair Value Measurements Using Inputs Considered as | ||||||||||||||||||||||||||||||
Asset Category | Total | Level 1 | Level 2 | Level 3 | Total | Level 1 | Level 2 | Level 3 | |||||||||||||||||||||||
(Thousands) | |||||||||||||||||||||||||||||||
Cash on deposit | $ | 36 | $ | 36 | $ | — | $ | — | $ | 62 | $ | 62 | $ | — | $ | — | |||||||||||||||
Pooled funds | 8,234 | 8,234 | — | — | 8,177 | 8,177 | — | — | |||||||||||||||||||||||
Total plan assets | $ | 8,270 | $ | 8,270 | $ | — | $ | — | $ | 8,239 | $ | 8,239 | $ | — | $ | — | |||||||||||||||
Fiscal year ending September 30: | (Amounts in thousands) | |||
2019 | $ | 437 | ||
2020 | 399 | |||
2021 | 93 | |||
$ | 929 |
Fiscal year ending September 30: | (Amounts in thousands) | |||
2019 | $ | 312 | ||
2020 | 312 | |||
2021 | 234 | |||
Minimum lease payments including interest | $ | 858 | ||
Amount representing interest | (60 | ) | ||
Minimum lease payments excluding interest | $ | 798 |
TS Segment | ||||||||||||||||||||
For the Years Ended September 30, | HPP Segment | United Kingdom | U.S. | Total | Consolidated Total | |||||||||||||||
(Amounts in thousands) | ||||||||||||||||||||
2018 | ||||||||||||||||||||
Sales: | ||||||||||||||||||||
Product | $ | 7,014 | $ | 7,501 | $ | 45,146 | $ | 52,647 | $ | 59,661 | ||||||||||
Service | 3,465 | 606 | 9,184 | 9,790 | 13,255 | |||||||||||||||
Total sales | 10,479 | 8,107 | 54,330 | 62,437 | 72,916 | |||||||||||||||
Profit (loss) from operations | (2,777 | ) | (475 | ) | 1,651 | 1,176 | (1,601 | ) | ||||||||||||
Assets | 14,869 | 13,854 | 26,552 | 40,406 | 55,275 | |||||||||||||||
Capital expenditures | 99 | 1 | 338 | 339 | 438 | |||||||||||||||
Depreciation and amortization | 243 | 7 | 375 | 382 | 625 | |||||||||||||||
2017 | ||||||||||||||||||||
Sales: | ||||||||||||||||||||
Product | $ | 7,608 | $ | 10,727 | $ | 58,018 | $ | 68,745 | $ | 76,353 | ||||||||||
Service | 6,236 | 763 | 5,140 | 5,903 | 12,139 | |||||||||||||||
Total sales | 13,844 | 11,490 | 63,158 | 74,648 | 88,492 | |||||||||||||||
Profit (loss) from operations | 1,467 | (30 | ) | 1,958 | 1,928 | 3,395 | ||||||||||||||
Assets from continuing operations | 17,782 | 6,879 | 17,212 | 24,091 | 41,873 | |||||||||||||||
Assets from discontinued operations | — | — | — | — | 17,055 | |||||||||||||||
Total assets | 17,782 | 6,879 | 17,212 | 24,091 | 58,928 | |||||||||||||||
Capital expenditures | 99 | — | 108 | 108 | 207 | |||||||||||||||
Depreciation and amortization | 224 | 9 | 252 | 261 | 485 |
2018 | Americas | Europe | Asia | Total | % of Total | |||||||||||||
(Amounts in thousands) | ||||||||||||||||||
HPP | $ | 8,424 | $ | 1,266 | $ | 789 | $ | 10,479 | 14 | % | ||||||||
TS | 52,034 | 9,059 | 1,344 | 62,437 | 86 | % | ||||||||||||
Total | $ | 60,458 | $ | 10,325 | $ | 2,133 | $ | 72,916 | 100 | % | ||||||||
% of Total | 83 | % | 14 | % | 2 | % | 100 | % | ||||||||||
2017 | ||||||||||||||||||
HPP | $ | 10,340 | $ | 1,437 | $ | 2,067 | $ | 13,844 | 16 | % | ||||||||
TS | 59,642 | 13,070 | 1,936 | 74,648 | 84 | % | ||||||||||||
Total | $ | 69,982 | $ | 14,507 | $ | 4,003 | $ | 88,492 | 100 | % | ||||||||
% of Total | 79 | % | 16 | % | 5 | % | 100 | % |
September 30, 2018 | September 30, 2017 | ||||||
(Amounts in thousands) | |||||||
North America | $ | 1,457 | $ | 1,078 | |||
Europe | 3 | 8 | |||||
Totals | $ | 1,460 | $ | 1,086 |
September 30, 2018 | September 30, 2017 | ||||||
(Amounts in thousands) | |||||||
North America | $ | 1,895 | $ | 1,963 | |||
Europe | — | — | |||||
Totals | $ | 1,895 | $ | 1,963 |
For the years ended | |||||||||||||
September 30, 2018 | September 30, 2017 | ||||||||||||
Amount | % of Revenues | Amount | % of Revenues | ||||||||||
(Amounts in millions) | |||||||||||||
Customer A | $ | 7.5 | 10 | % | $ | 22.1 | 25 | % |
Fiscal Year | Date Declared | Record Date | Date Paid | Amount Paid Per Share | ||||
2017 | 1/12/2017 | 1/27/2017 | 2/8/2017 | $0.11 | ||||
2017 | 2/23/2017 | 3/3/2017 | 3/17/2017 | $0.11 | ||||
2017 | 5/24/2017 | 6/1/2017 | 6/15/2017 | $0.11 | ||||
2017 | 8/14/2017 | 8/21/2017 | 9/5/2017 | $0.11 | ||||
2018 | 12/19/2017 | 12/29/2017 | 1/16/2018 | $0.11 | ||||
2018 | 2/12/2018 | 2/28/2018 | 3/16/2018 | $0.11 | ||||
2018 | 5/9/2018 | 5/31/2018 | 6/15/2018 | $0.11 | ||||
2018 | 8/13/2018 | 8/31/2018 | 9/14/2018 | $0.15 |
Fiscal year 2018 ending September 30: | (Amounts in thousands) | |||
Investment in lease, gross | $ | 1,038 | ||
Unearned income | (228 | ) | ||
Total investment in lease, net | $ | 810 | ||
Current portion | $ | 246 | ||
Noncurrent portion | $ | 564 |
Fiscal year ending September 30: | (Amounts in thousands) | |||
2019 | $ | 378 | ||
2020 | 378 | |||
2021 | 282 | |||
Minimum lease payments including interest | $ | 1,038 | ||
Amount representing interest | (228 | ) | ||
Minimum lease payments excluding interest | $ | 810 |
NAME OF SUBSIDIARY | STATE OR OTHER JURISDICTION OF INCORPORATION/ ORGANIZATION |
CSP Inc. Securities Corp. 175 Cabot Street, Suite 210 Lowell, MA 01854 | Massachusetts |
CSP Inc. Foreign Sales Corp., Ltd. 175 Cabot Street, Suite 210 Lowell, MA 01854 | U.S. Virgin Islands |
Modcomp, Inc (1). 1182 East Newport Center Drive Deerfield Beach, FL 33442 | Florida |
(1) | Modcomp has one subsidiaries operating in Europe |
December 27, 2018 |
/s/ Victor Dellovo |
Victor Dellovo |
Chief Executive Officer and |
President |
December 27, 2018 |
/s/Gary W. Levine |
Gary W. Levine |
Chief Financial Officer |
(1) | The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
(2) | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
December 27, 2018 | By: | /s/ Victor Dellovo | |
Victor Dellovo | |||
Chief Executive Officer and President | |||
December 27, 2018 | By: | /s/ Gary W. Levine | |
Gary W. Levine | |||
Chief Financial Officer |
Document And Entity Information - USD ($) |
12 Months Ended | ||
---|---|---|---|
Sep. 30, 2018 |
Dec. 21, 2018 |
Mar. 31, 2018 |
|
Document and Entity Information [Abstract] | |||
Entity Registrant Name | CSP INC /MA/ | ||
Document Type | 10-K | ||
Current Fiscal Year End Date | --09-30 | ||
Entity Common Stock, Shares Outstanding | 4,019,254 | ||
Entity Public Float | $ 38,586,781 | ||
Amendment Flag | false | ||
Entity Central Index Key | 0000356037 | ||
Entity Current Reporting Status | Yes | ||
Entity Voluntary Filers | No | ||
Entity Filer Category | Non-accelerated Filer | ||
Entity Well-known Seasoned Issuer | No | ||
Document Period End Date | Sep. 30, 2018 | ||
Document Fiscal Year Focus | 2018 | ||
Document Fiscal Period Focus | FY | ||
Smaller Reporting Company | true |
Consolidated Balance Sheets (Parentheticals) - USD ($) shares in Thousands, $ in Thousands |
Sep. 30, 2018 |
Sep. 30, 2017 |
---|---|---|
Statement of Financial Position [Abstract] | ||
Allowance for doubtful accounts | $ 87 | $ 120 |
Common stock par value (in Dollars per share) | $ 0.01 | $ 0.01 |
Common stock, shares authorized | 7,500 | 7,500 |
Common stock, shares issued | 4,017 | 3,935 |
Common stock, shares outstanding | 4,017 | 3,935 |
Consolidated Statements of Comprehensive Income - USD ($) $ in Thousands |
12 Months Ended | |
---|---|---|
Sep. 30, 2018 |
Sep. 30, 2017 |
|
Components of Accumulated Other Comprehensive Loss [Abstract] | ||
Net income | $ 14,440 | $ 2,506 |
Other comprehensive income (loss): | ||
Unrealized actuarial gain on minimum pension liability, net of tax effect | 470 | 2,175 |
Foreign currency translation loss | (1,132) | (407) |
Other comprehensive gain (loss) | (662) | 1,768 |
Total comprehensive income | $ 13,778 | $ 4,274 |
Consolidated Statement of Shareholders' Equity (Parentheticals) - $ / shares |
12 Months Ended | |||||||||
---|---|---|---|---|---|---|---|---|---|---|
Sep. 14, 2018 |
Jun. 15, 2018 |
Mar. 16, 2018 |
Jan. 16, 2018 |
Sep. 05, 2017 |
Jun. 15, 2017 |
Mar. 17, 2017 |
Feb. 08, 2017 |
Sep. 30, 2018 |
Sep. 30, 2017 |
|
Statement of Stockholders' Equity [Abstract] | ||||||||||
Amount Paid Per Share (in Dollars per share) | $ 0.15 | $ 0.11 | $ 0.11 | $ 0.11 | $ 0.11 | $ 0.11 | $ 0.11 | $ 0.11 | $ 0.48 | $ 0.44 |
Summary of Significant Accounting Policies |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Significant Accounting Policies | Summary of Significant Accounting Policies Principles of Consolidation The consolidated financial statements include the accounts of the Company and its subsidiaries. All significant inter-company accounts and transactions have been eliminated. Certain prior year amounts have been reclassified for consistency with the current period presentation. These reclassifications had no effect on the reported results of operations. Foreign Currency Translation The U.S. Dollar is the reporting currency for all periods presented. The financial information for entities outside the United States is measured using the local currency as the functional currency. Assets and liabilities of the Company's foreign operations are translated into U.S. dollars at the exchange rates in effect at the balance sheet date. Revenue and expenses are translated at average rates in effect during the period. The resulting translation adjustment is reflected as accumulated other comprehensive income (loss), a separate component of shareholders' equity on the consolidated balance sheets. The translation adjustment for intercompany foreign currency loans that are of a long-term-investment nature is also reflected as accumulated other comprehensive income (loss). Currency transaction gains and losses are recorded as other income (expense) in the consolidated statements of operations. Cash Equivalents For purposes of the consolidated statements of cash flows, highly liquid investments with original maturities of three months or less at the time of acquisition are considered cash equivalents. Fair Value of Financial Instruments Our financial instruments are limited to cash and cash equivalents, accounts receivable, carrying amounts of net investment in leases, pension plan assets, accounts payable and our inventory line of credit. Fair value of these financial instruments was not materially different from their carrying values at September 30, 2018, and 2017. Research and Development Expense For the years ended September 30, 2018 and 2017, our expenses for research and development were approximately $3.3 million and $2.4 million, respectively. Expenditures for research and development are expensed as they are incurred. Impairment of Long-Lived Assets The Company reviews its long-lived assets, including intangible assets subject to amortization, for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Management assesses the recoverability of the long-lived assets (other than goodwill) by comparing the estimated undiscounted cash flows associated with the related asset or group of assets against their respective carrying amounts. The amount of impairment, if any, is calculated based on the excess of the carrying amount over the fair value of those assets. Intangible assets that are not subject to amortization are also required to be tested annually, or more frequently if events or circumstances indicate that the asset may be impaired. We did not have intangible assets with indefinite lives at any time during the two years ended September 30, 2018. Intangible assets subject to amortization are amortized on a straight-line basis over their estimated useful lives, generally three to ten years, and are carried at net book value. The remaining useful lives of intangible assets are evaluated on an annual basis. Intangible assets subject to amortization are also tested for recoverability whenever events or changes in circumstances indicate that their carrying amount may not be recoverable. If the fair value of an intangible asset subject to amortization is determined to be less than its carrying value, then an impairment charge is recorded to write down that asset to its fair value. Investment in lease, net A lease receivable for equipment is recorded at lease inception, which includes future minimum lease payments at present value using the implicit interest rate, net of unearned interest income. Interest income is recognized on a monthly basis utilizing the effective-interest method. Interest income is recorded in revenue as equipment leasing is part of the Company's central operations. Inventories Inventories are stated at the lower of cost or net realizable value, with cost determined using the first-in, first-out method. The recoverability of inventories is based upon the types and levels of inventories held, forecasted demand, pricing, competition and changes in technology. We write down our inventory for estimated obsolescence or unmarketable inventory equal to the difference between the cost of inventory and the estimated market value based upon assumptions about future demand and market conditions. If actual market conditions are less favorable than those projected by management, additional inventory write-downs may be required. As of September 30, 2018, and September 30, 2017, the Company maintained inventory reserves of $3.3 million and $2.9 million, respectively. Property, Equipment and Improvements The components of property, equipment and improvements are stated at cost. The Company provides for depreciation by use of the straight-line method over the estimated useful lives of the related assets (three to seven years). Leasehold improvements are amortized by use of the straight-line method over the lesser of the estimated useful life of the asset or the lease term. Repairs and maintenance costs are expensed as incurred. Property, equipment and improvements are tested for recoverability whenever events or changes in circumstances indicate that its carrying amount may not be recoverable. If the fair value of property, equipment and improvements is determined to be less than their carrying value, then an impairment charge is recorded to write down that asset to its fair value. Trade Accounts Receivable and Allowance for Doubtful Accounts Trade accounts receivable are stated at amounts that have been billed to customers less an allowance for doubtful accounts. Allowances for doubtful accounts are recorded for the estimated losses resulting from the inability of our customers to make required payments. The estimates for the allowance for doubtful accounts are based on the length of time the receivables are past due, current business environment and our historical experience. If the financial condition of our customers were to deteriorate, resulting in impairment of their ability to make payments, additional allowances may be required. Accounts receivable are charged off against the reserve when management has determined they are uncollectible. Pension and Retirement Plans The funded status of pension and other postretirement benefit plans is recognized on the consolidated balance sheet. Gains and losses, prior service costs and credits and any remaining transition amounts that have not yet been recognized through pension expense will be recognized in accumulated other comprehensive income, net of tax, until they are amortized as a component of net periodic pension/postretirement benefits expense. Additionally, plan assets and obligations are measured as of our fiscal year-end balance sheet date (September 30). We have defined benefit and defined contribution plans in the United Kingdom (the “U.K.”) and in the U.S. In the U.K. the Company provides defined benefit pension plans for certain employees and former employees and defined contribution plans for the majority of the employees. The defined benefit plan in the U.K. is closed to newly hired employees and has been for the two years ended September 30, 2018. In the U.S., the Company also provides defined contribution plans that cover most employees and supplementary retirement plans to certain employees and former employees who are now retired. These supplementary retirement plans are also closed to newly hired employees and have been for the two years ended September 30, 2018. These supplementary plans are funded through whole life insurance policies. The Company expects to recover all insurance premiums paid under these policies in the future, through the cash surrender value of the policies and any death benefits or portions thereof to be paid upon the death of the participant. These whole life insurance policies are carried on the balance sheet at their cash surrender values as they are owned by the Company and not assets of the defined benefit plans. In the U.S., the Company also provides for officer death benefits and post-retirement health insurance benefits through supplemental post-retirement plans to certain officers. The Company also funds these supplemental plans' obligations through whole life insurance policies on the officers. Pension expense is based on an actuarial computation of current future benefits using estimates for expected return on assets, expected compensation increases and applicable discount rates. Management has reviewed the discount rates and rates of return with our consulting actuaries and investment advisor and concluded they were reasonable. A decrease in the expected return on pension assets would increase pension expense. Expected compensation increases are estimated based on historical and expected increases in the future. Increases in estimated compensation increases would result in higher pension expense while decreases would lower pension expense. Discount rates are selected based upon rates of return on high quality fixed income investments currently available and expected to be available during the period to maturity of the pension benefit. A decrease in the discount rate would result in greater pension expense while an increase in the discount rate would decrease pension expense. The Company funds its pension plans in amounts sufficient to meet the requirements set forth in applicable employee benefits laws and local tax laws. Liabilities for amounts in excess of these funding levels are accrued and reported in the consolidated balance sheets. Segment Information We have two operating segments; (i) High Performance Products ("HPP") and (ii) Technology Solutions ("TS"). In the HPP segment, we design, manufacture and deliver products and services to customers that require specialized cyber security services, networking and signal processing products. In the TS segment, we focus on value added reseller ("VAR") integrated solutions including third party hardware, software and technical computer-related consulting and managed services. The operations and assets of our HPP segment are located in the United States. The operations and assets of our TS segment are located in the United States and the United Kingdom. Revenue Recognition We derive revenue from the sale of integrated hardware and software, professional services, maintenance contracts, other services, and third party service contracts. Professional services generally include implementation, installation, and training services. Other services generally include revenue generated through our royalty and extended warranty contracts. We recognize revenue when persuasive evidence of an arrangement exists, delivery of the product or service has occurred, the fee is fixed and determinable and collectability is reasonably assured. We enter into multiple element arrangements as well as standalone sales of product, professional services, and other services. We recognize revenue from standalone product sales upon transfer of title, which is typically upon shipment, provided all other revenue recognition criteria have been met. Revenue generated from standalone professional services and extended warranty contracts is recognized as services are completed, provided all other revenue recognition criteria have been met. In some instances professional service contracts include a customer acceptance provision, in which case revenue is deferred until we have evidence of customer acceptance. We recognize revenue from usage based royalty contracts upon confirmation from the customer of shipment of the system produced pursuant to the royalty agreement. We recognize revenue from multiple element arrangements in accordance with ASC 605-25, Multiple Element Arrangements. We evaluate multiple element arrangements to determine if separate units of accounting exist, and if so, we allocate revenue to each element based upon the relative selling price of each element. ASC 605-25 establishes a hierarchy for determining the amount to allocate to each separate deliverable in an arrangement. We determine selling price using vendor specific objective evidence ("VSOE"), if it exists; or, if VSOE does not exist, third party evidence ("TPE") of fair value if applicable; otherwise, we use the best estimate of selling price ("BESP"). The objective of BESP is to determine the price at which the Company would transact if the element was sold on a standalone basis. Management’s determination of BESP involves several factors including budgeted profit margins, and cost to complete services. We recognize revenue from third party service contracts as either gross sales or net sales in accordance with ASC 605-45, Principal Agent Considerations, which requires us to determine if the Company is acting as a principal party to the transaction or simply acting as an agent or broker. Under ASC 605-45, the assumption of the risks and rewards under the arrangement are considered indicators of principal parties to the arrangement. We record revenue as gross when it is a principal party to the arrangement and net of cost when we are acting as a broker or agent. Under gross sales recognition, the entire selling price is recorded in revenue and our cost to the third-party service provider or vendor is recorded in cost of goods sold. Under net sales recognition, the cost to the third-party service provider or vendor is recorded as a reduction to revenue resulting in net sales equal to the gross profit on the transaction. The following policies are applicable to our major categories of segment revenue transactions: HPP Segment Revenue HPP segment revenue is derived from the sale of integrated hardware and software, maintenance, and other services through the Multicomputer and Myricom product lines. Multicomputer product revenue is generally recognized when product is shipped, provided that all revenue recognition criteria are met. Service revenue consists principally of royalty revenue, repair service revenue and warranty revenue. Revenue generated from extended warranty contracts is recognized as services are completed, provided all other revenue recognition criteria have been met. We recognize revenue from usage based royalty contracts upon confirmation from the customer of shipment of the system produced pursuant to the royalty agreement. In the years ended September 30, 2018 and 2017, respectively, $2.5 million and $5.4 million of royalty income is included in service revenues. Myricom revenue is derived from the sale of products, which are comprised of both hardware and embedded software which is essential to the products functionality, and post contract maintenance and support. Revenue on multiple element arrangements is recognized in accordance with ASC 605-25. We evaluate multiple element arrangements to determine if separate units of accounting exist, and if so, we allocate revenue to each element based upon the relative selling price of each element. We determine selling price using BESP. Management’s determination of BESP is based on several factors, including, but not limited to, internal costs and gross margin objectives. Accordingly, revenue for post contract maintenance and support is recognized over the implied maintenance period of either one or three years, and revenue for product sales is recognized upon delivery assuming all other revenue recognition criteria have been met. TS Segment Revenue TS Segment revenue is derived from the sale of hardware, financing of hardware and software, software, professional services, and third party service contracts. TS product revenue is generally recognized when product is shipped, provided that all revenue recognition criteria are met. Service revenue consists of professional services which generally include implementation, installation, and training services. Revenue generated from standalone professional services is recognized as services are completed, provided all other revenue recognition criteria has been met. Our standard sales agreements generally do not include customer acceptance provisions. However, in certain instances when arrangements include a customer acceptance provision or there is uncertainty about customer acceptance, revenue is deferred until we have evidence of customer acceptance. Revenue derived from the sale of products, which are comprised of both hardware and software, and professional services is recognized in accordance with ASC 605-25. We evaluate multiple element arrangements to determine if separate units of accounting exist, and if so, we allocate revenue to each element based upon the relative selling price of each element. We determine selling price using BESP. Management’s determination of BESP is based on several factors, including, but not limited to, internal costs and gross margin objectives. Accordingly, revenue for professional services is recognized as services are completed, and revenue for product sales is recognized upon delivery assuming all other revenue recognition criteria have been met. We recognize revenue from certain third party service contracts, which are evaluated to determine whether such service revenue should be recorded as gross sales or net sales in accordance ASC 605-45. We evaluate all third party service contracts to determine whether we act as a principal in the transaction and assume the risks and rewards of ownership or if we are simply acting as an agent or broker. Under gross sales recognition, the entire selling price is recorded in sales and our cost to the third-party service provider or vendor is recorded in cost of goods sold. Under net sales recognition, the cost to the third-party service provider or vendor is recorded as a reduction to sales resulting in net sales equal to the gross profit on the transaction and there are no costs of goods sold. We use the net sales recognition method for the third party service contracts that we sell when we are not the primary obligor on the contract. We use the gross sales recognition for the third party service contracts that we sell when we act as principal and are the primary obligor. Product Warranty Accrual Our product sales generally include a hardware warranty which ranges from 90-days to three-years. At time of product shipment, we accrue for the estimated cost to repair or replace potentially defective products. Estimated warranty costs are based upon prior actual warranty costs for substantially similar products. Engineering and Development Expenses Engineering and development expenses include payroll, employee benefits, stock-based compensation and other headcount-related expenses associated with product development. Engineering and development expenses also include third-party development and programming costs. We consider technological feasibility for our software products to be reached upon the release of the software, accordingly, no internal software development costs have been capitalized. Income Taxes We use the asset and liability method of accounting for income taxes whereby deferred tax assets and liabilities are recognized for the estimated future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates in effect for the year in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. We also reduce deferred tax assets by a valuation allowance if, based on the weight of available evidence, it is more likely than not that some portion or all of the recorded deferred tax assets will not be realized in future periods. This methodology requires estimates and judgments in the determination of the recoverability of deferred tax assets and in the calculation of certain tax liabilities. Valuation allowances are recorded against the gross deferred tax assets that management believes, after considering all available positive and negative objective evidence, historical and prospective, with greater weight given to historical evidence, that it is more likely than not that these assets will not be realized. In addition, we are required to recognize in the consolidated financial statements, those tax positions determined to be more-likely-than-not of being sustained upon examination, based on the technical merits of the positions as of the reporting date. If a tax position is not considered more-likely-than-not to be sustained based solely on its technical merits, no benefits of the position are recognized. In addition, the calculation of the Company's tax liabilities involves dealing with uncertainties in the application of complex tax regulations in a multitude of jurisdictions. The Company records liabilities for estimated tax obligations in the U.S. and other tax jurisdictions. These estimated tax liabilities include the provision for taxes that may become payable in the future. Earnings per Share of Common Stock Basic net income per common share is computed by dividing net income available to common shareholders by the weighted average number of common shares outstanding for the period. Diluted net income per common share reflects the maximum dilution that would have resulted from the assumed exercise and share repurchase related to dilutive stock options and is computed by dividing net income by the assumed weighted average number of common shares outstanding. We are required to present earnings per share ("EPS") utilizing the two class method because we had outstanding, non-vested share-based payment awards that contain non-forfeitable rights to dividends or dividend equivalents, which are considered participating securities. Basic and diluted earnings per share computations for the Company's reported net income attributable to common stockholders are as follows:
All anti-dilutive securities, including stock options, are excluded from the diluted income per share computation. For the years ended September 30, 2018 and September 30, 2017, there were no shares subject to stock options excluded from the diluted net income per share calculation because their inclusion would have been anti-dilutive. Non-vested restricted stock awards of 165,000 shares were excluded from net income (loss) per share from continuing operations as there was a net loss from continuing operations for the year ended September 30, 2018, and their inclusion would have been anti-dilutive. Use of Estimates The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States 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. Actual results may differ from those estimates under different assumptions or conditions. Stock-Based Compensation We measure and recognize compensation expense for all stock-based payment awards made to employees and directors including stock options and nonvested shares of restricted common stock based on estimated fair values of stock-based payment awards on the date of grant. The Company uses the Black-Scholes option-pricing model to calculate the fair value of stock option grants. The fair value of nonvested restricted share awards is equal to the quoted market price of our common stock as quoted on the Nasdaq Global Market on the date of grant. The fair value of the portion of the award that is ultimately expected to vest is recognized as expense over the requisite service periods in the Company's consolidated statements of operations. Because stock-based compensation expense recognized in the consolidated statements of operations for the fiscal years ended September 30, 2018 and 2017 is based on awards ultimately expected to vest, it has been reduced for estimated forfeitures and will be revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates. Stock-based compensation expense recognized for the fiscal years ended September 30, 2018 and 2017 consisted of stock-based compensation expense related to options and restricted stock granted pursuant to the Company's stock incentive and employee stock purchase plans of approximately $0.7 million and $0.6 million, respectively. Concentrations of Credit Risk Cash and cash equivalents are maintained with several financial institutions in the U.S. and the U.K. Deposits held with banks may exceed the amount of insurance on such deposits. Generally, these deposits may be redeemed upon demand. The Company has not experienced any losses in such accounts and believes it is not exposed to any significant credit risk on cash and cash equivalents. Subsequent Events The Company recognizes in the consolidated financial statements the effects of all subsequent events that provide additional evidence about conditions that existed at the date of the statement of financial position, including the estimates inherent in the process of preparing financial statements. The Company has evaluated subsequent events through the date of this filing. New Accounting Pronouncements In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers, which requires an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers. The standard outlines a five-step model whereby revenue is recognized as performance obligations within a contract are satisfied. The standard also requires new, expanded disclosures regarding revenue recognition. The ASU replaces most existing revenue recognition guidance in GAAP. We utilized a bottom-up approach to analyze the standard's impact on our contract portfolio, comparing our historical accounting policies and practices, and identifying potential differences from applying the requirements of the new standard to our contracts. Because the new standard impacts our business processes, systems and controls, we developed a comprehensive change management project plan to guide the implementation. The new standard was adopted by the Company effective October 1, 2018 using the modified retrospective approach. A portfolio approach for similar contracts was utilized in adoption. Under the new standard, product revenue sold as part of a multi-element agreement will no longer be deferred as it will now be recognized when control is transferred due to product being a separate performance obligation. Additionally, revenue will not be deferred on customer support related to the HPP segment as this was determined to be immaterial within the context of the contract, and therefore not a separate performance obligation under the new standard. Onboarding revenue will be amortized over the contract period and, under the new standard, includes the estimated renewal period. Each reporting period the Company will make estimates for contracts that have volume discounts, as separate performance obligations may arise from these discounts if a material right to the customer exists, which could affect the timing of revenue recognition. The Company enters into noncancelable contracts in which it has an unconditional right to consideration when the contract is signed by both parties. This will result in a receivable and deferred revenue being recorded when the contract is signed by both parties rather than when work is performed. The new standard requires an entity to present any unconditional rights to consideration separately as a receivable and conditional rights as a contract asset. The Company has determined when it has the right to bill a customer, accounts receivable is recorded as an unconditional right exists. This could result as contract assets being recorded rather than a receivable. The effects of adoption did not have a material impact on October 1, 2018. Effective September 30, 2017, the Company adopted FASB ASU No. 2014-15, Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern, an amendment of the FASB Accounting Standards Codification. The ASU has added additional disclosure requirements to the codification. It requires management to assess, at each interim and annual reporting period, whether substantial doubt exists about an entity’s ability to continue as a going concern. Substantial doubt exists if it is probable (the “probable” threshold under GAAP has generally been interpreted to be between 75 and 80 percent) that the entity will be unable to meet its obligations as they become due within one year after the date the financial statements are issued or available to be issued (assessment date). This guidance did not have an impact to the Company's consolidated financial statements. In July 2015, the FASB issued ASU No. 2015-11, Inventory (Topic 330) Simplifying the Measurement of Inventory, which requires entities to measure inventory at the lower of cost and net realizable value, except for inventory measured using last-in, first-out (LIFO) or the retail inventory method. Net realizable value is the estimated selling prices in the ordinary course of business, less reasonably predictable costs of completion, disposal, and transportation. This ASU is effective for fiscal years beginning after December 15, 2016 and requires prospective application, with early adoption permitted as of the beginning of an interim or annual reporting period. Beginning October 1, 2017, the Company adopted the ASU and it hasn’t had a material impact on our consolidated financial statements. In November 2015, the FASB issued ASU No, 2015-17, Income Taxes (Topic 740) Balance Sheet Classification of Deferred Taxes, which require that deferred tax liabilities and assets be classified as noncurrent in a classified statement of financial position. The amendments in this Topic apply to all entities that present a classified statement of financial position. The current requirement that deferred tax liabilities and assets of a tax-paying component of an entity be offset and presented as a single amount is not affected by the amendments in this Topic. The amendments in this Topic are effective for financial statements issued for annual periods beginning after December 15, 2016, and interim periods within those annual periods. Beginning October 1, 2017, the Company adopted the ASU and it did not have a material impact on our consolidated financial statements. In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842), an amendment of the FASB Accounting Standards Codification. This ASU requires lessees to recognize a right-of-use asset and lease liability for most lease arrangements. The new standard is effective for the Company on October 1, 2019. The standard mandates a modified retrospective transition method for all entities and early adoption is permitted. The Company is evaluating the effect that ASU 2016-02 will have on its consolidated financial statements and related disclosures. In March 2016, the FASB issued ASU No. 2016-09, Compensation - Stock Compensation, Improvements to Employee Share-Based Payment Accounting (Topic 718), to simplify several aspects of 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. Additionally, the amendments eliminate the guidance in Topic 718 that was indefinitely deferred shortly after the issuance of FASB Statement No. 123 (revised 2004), Share-Based Payment. This should not result in a change in practice because the guidance that is being superseded was never effective. The Company has adopted this ASU effective October 1, 2017 and it did not have a material impact on our consolidated financial statements. In August 2016, the FASB issued ASU No. 2016-15, Classification of Certain Cash Receipts and Cash Payments, an amendment of the FASB Accounting Standards Codification. This ASU will reduce diversity in practice for classifying cash payments and receipts in the statement of cash flows for a number of common transactions. It will also clarify when identifiable cash flows should be separated versus classified based on their predominant source or use. This ASU is effective for public business entities for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. Early adoption is permitted, including adoption in an interim period. If an entity early adopts the amendments in an interim period, any adjustments should be reflected as of the beginning of the fiscal year that includes that interim period. An entity that elects early adoption must adopt all of the amendments in the same period. The Company is evaluating the effect that ASU 2016-15 will have on its consolidated financial statements and related disclosures. In October 2016, the FASB issued ASU No. 2016-16, Intra-Entity Transfers of Assets Other Than Inventory, an amendment of the FASB Accounting Standards Codification. This ASU requires the seller and buyer to recognize at the transaction date the current and deferred income tax consequences of intercompany asset transfers (except transfers of inventory). Under current GAAP, the seller and buyer defer the consolidated tax consequences of an intercompany asset transfer from the period of the transfer to a future period when the asset is transferred out of the consolidated group, or otherwise affects consolidated earnings. This standard will cause volatility in companies’ effective tax rates, particularly for those that transfer intangible assets to foreign subsidiaries. For public entities, the new standard is effective for annual and interim periods in fiscal years beginning after December 15, 2017. An entity may early adopt the standard but only at the beginning of an annual period for which it has not issued or made available for issuance financial statements (interim or annual). The Company is evaluating the effect that ASU 2016-16 will have on its consolidated financial statements and related disclosures. In January 2017, FASB issued ASU No. 2017-01, Business Combinations Clarifying the Definition of a Business (Topic 805) (“ASU No. 2017-01”). ASU 2017-01 provides a framework to use in determining when a set of assets and activities is a business. ASU 2017-01 provides more consistency in applying the business combination guidance, reduces the costs of application, and makes the definition of a business more operable. ASU 2017-01 is effective for interim and annual periods within those annual periods beginning after December 15, 2017. The Company is currently evaluating the impact ASU 2017-01 will have on the Company’s results of operations, financial position and disclosures. In March 2017, the FASB issued ASU No. 2017-07, Compensation Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost, an amendment of the FASB Accounting Standards Codification. This ASU requires employers that sponsor defined benefit pension and/or other post-retirement benefit plans to report the service cost component of net benefit cost in the same line item as other compensation costs arising from services rendered by the pertinent employees during the period. Employers are required to present the other components of net benefit costs in the income statement separately from the service cost component and outside a subtotal of income from operations. Additionally, only the service cost component of net periodic pension cost will be eligible for asset capitalization. For public entities, the new standard is effective for annual periods beginning after December 15, 2017, including interim periods within that annual period. Early adoption is permitted as of the beginning of an annual period for which financial statements (interim or annual) have not been issued or made available for issuance. This ASU should be applied retrospectively for the presentation of the service cost component and the other components of net periodic pension cost and net periodic postretirement benefit cost in the income statement and prospectively, on and after the effective date, for the capitalization of the service cost component of net periodic pension cost and net periodic postretirement benefit in assets. The Company is evaluating the effect that ASU 2017-07 will have on its consolidated financial statements and related disclosures. In February 2018, the FASB issued ASU No. 2018-02, Income Statement - Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income, an amendment of the FASB Accounting Standards Codification. This update addresses issues from the Tax Cuts and Jobs Act enacted on December 22, 2017. The amendment allows for a reclassification from accumulated other comprehensive income to retained earnings for stranded tax effects resulting from the Act. There are also certain required disclosures about the stranded tax effects. For public entities, the new standard is effective for annual periods beginning after December 15, 2018. The Company is evaluating the effect that ASU 2018-02 will have on its consolidated financial statements and related disclosures. In June 2018, the FASB issued ASU No. 2018-07, Compensation - Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting, an amendment of the FASB Accounting Standards Codification. Under this ASU companies will no longer be required to value non-employee awards differently from employee awards, but the accounting remains different for attribution and a contractual term election for valuing nonemployee equity share options. Equity-classified awards to nonemployees will now be measured at the grant date using fair value of the equity instruments the company is obligated to issue and recognition is associated with the probable outcome. Awards are subsequently measured using stock compensation guidance unless they are modified after the nonemployee stops providing goods or services. Existing disclosure requirements within the stock compensation guidance also apply to nonemployee awards. For public entities, the new standard is effective for annual periods beginning after December 15, 2018, including interim periods within that fiscal year. The Company is evaluating the effect that ASU 2018-07 will have on its consolidated financial statements and related disclosures. In August 2018, the FASB issued ASU No. 2018-14, Compensation - Retirement Benefits - Defined Benefit Plans - General (Subtopic 715-20): Disclosure Framework-Changes to the Disclosure Requirements for Defined Benefit Plans, an amendment of the FASB Accounting Standards Codification. Under this ASU existing disclosures not considered cost beneficial are removed, disclosures identified as relevant are added, and there is added clarification regarding specific existing disclosures. For public entities, the new standard is effective for annual periods beginning after December 15, 2020. The Company is evaluating the effect that ASU 2018-14 will have on its consolidated financial statements and related disclosures. |
Discontinued Operations |
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Discontinued Operations and Disposal Groups [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Disposal Groups, Including Discontinued Operations, Disclosure [Text Block] | 2. Discontinued Operations of TS segment On July 31, 2018, CSPi LTD, a wholly owned indirect subsidiary of the Company, completed its sale of all of the outstanding stock of Modcomp GmbH, to Reply AG, an affiliate of Reply SpA, a holding company for a worldwide group of companies, pursuant to the terms of a Share Purchase and Assignment Agreement dated June 27, 2018. Modcomp GmbH, dba CSPI GmbH, through itself and its wholly owned subsidiaries, provided managed security services to customers primarily in Germany. Upon the closing of the Share Purchase Agreement, Reply AG paid to CSPI total cash at closing of approximately $14.4 million, which consisted of the original purchase price of $11.7 million plus an adjustment at closing for Net Cash (as defined in the Share Purchase Agreement) of approximately $2.7 million. An additional €400 thousand is included in escrow and will be recorded if and when received by the Company. Accordingly, CSPi determined that the assets and liabilities of this reportable segment met the discontinued operations criteria in U.S. GAAP in the year ended September 30, 2018. The gain recorded due to the sale of all the stock of Modcomp GmbH was approximately $16.8 million. No income taxes were provided as the transaction was a tax-free exchange in the U.K. As such, Modcomp GmbH's results have been recorded as discontinued operations in the accompanying consolidated balance sheets and consolidated statements of operations for all periods presented. Summarized Discontinued Operations Financial Information The following table provides a reconciliation of the carrying amounts of major classes of assets and liabilities which are included in assets and liabilities of discontinued operations in the accompanying consolidated balance sheets for the years ended September 30, 2018 and 2017:
The following table summarizes the results of discontinued operations for the years ended September 30, 2018, and 2017.
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Inventories |
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Inventories | Inventories Inventories consist of the following:
Finished goods includes inventory that has been shipped, but for which all revenue recognition criteria has not been met, of approximately $0.7 million and $0.4 million as of September 30, 2018 and September 30, 2017, respectively. |
Accumulated Other Comprehensive Loss |
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Accumulated Other Comprehensive Loss | Accumulated Other Comprehensive Loss The components of accumulated other comprehensive loss are as follows:
The changes in the minimum pension liability are net of amortization of net gain of $151 thousand in 2018 and net gain of $224 thousand in 2017 included in net periodic pension cost. |
Income Taxes |
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Income Tax Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Income Taxes | Income Taxes The components of income before income tax and income tax expense are comprised of the following:
As of September 30, 2018, management assessed the positive and negative evidence in the U.S. operations, and estimated we will have sufficient future taxable income to utilize the existing deferred tax assets, except for certain state tax credit carry-forwards. Significant objective positive evidence included the cumulative profits that we realized over the most recent years. This evidence enhances our ability to consider other subjective evidence such as our projections for future growth. Other factors we considered are the likelihood for continued royalty income in future years, and our expectation that the TS segment will continue to be profitable in future years. On the basis of this evaluation, as of September 30, 2018, we have concluded that our U.S. deferred tax asset is more likely than not to be realized. It should be noted however, that the amount of the deferred tax asset realized could be adjusted in future years, if estimates of taxable income during the carryforward periods are reduced, or if objective negative evidence in the form of cumulative loses is present. The recording and ultimate reversal of valuation allowances for our deferred tax asset requires significant judgment associated with past and projected performance. In assessing the realizability of deferred tax assets, we consider our taxable future earnings and the expected timing of the reversal of temporary differences. We recorded a valuation allowance which reduced the gross deferred tax asset to an amount that we believed was more likely than not to be realized because of the cumulative losses incurred in the U.K. in recent years represented sufficient negative evidence to record a valuation allowance against certain deferred tax assets. We continue to maintain a full valuation allowance against our U.K. deferred tax assets as we have experienced cumulative loses and do not have any indication that the operation will be profitable in the future to an extent that will allow us to utilize much of our net operating loss carryforwards. To the extent that actual experience deviates from our assumptions, our projections would be affected and hence our assessment of realizability of our deferred tax assets may change. Reconciliation of federal statutory rate and income tax expense to the Company's effective tax rate and actual income tax expense is as follows:
For the years ended September 30, 2018 and 2017, temporary differences, which give rise to deferred tax assets (liabilities), are as follows:
The deferred tax valuation allowance decreased by approximately $54 thousand, which is primarily due to the decrease in the U.K. valuation allowance. In assessing the realizability of deferred tax assets, the Company considers its taxable future earnings and the expected timing of the reversal of temporary differences. Accordingly, the Company has recorded a valuation allowance which reduces the gross deferred tax asset to an amount which management believes will more likely than not be realized. The valuation allowance was determined by assessing both positive and negative evidence whether it is more likely than not that deferred tax assets are realizable. Such assessment is done on a jurisdiction-by-jurisdiction basis. The Company's inability to project future profitability beyond fiscal year 2018 and the cumulative losses incurred in recent years in the U.K. represent sufficient negative evidence to record a valuation allowance against certain deferred tax assets. On December 22, 2017, the President of the United States signed into law the Tax Cuts and Jobs Act ("Tax Reform Act"). The legislation significantly changes U.S. tax law by, among other things, lowering corporate income tax rates, implementing a territorial tax system, expanding the tax base and imposing a tax on deemed repatriated earnings of foreign subsidiaries. The Tax Reform Act permanently reduces the U.S. corporate federal income tax rate from a maximum of 35% to a flat 21% rate, effective January 1, 2018. The Company has recognized the impact of the Tax Reform Act in these consolidated financial statements and related disclosures. Staff Accounting Bulletin No. 118 ("SAB 118") provides Companies with guidance on accounting for the impact of the Tax Reform Act. Specifically, SAB 118 provides for a measurement period, not to exceed one year, that begins on the date of enactment of December 22, 2017, and ends when the Company has obtained, prepared, and analyzed information needed to complete accounting requirements which is substantially complete. In accordance with SAB 118, the recorded amounts reflecting the impact of the Tax Reform Act in these consolidated financial statements and related disclosures. The impact of the remeasurement of the Company’s US deferred tax assets and liabilities to 21% resulted in a tax expense of approximately $0.5 million consisting of a reduction of the Company’s net deferred tax asset. The Company recorded tax expense of approximately $0.8 million related to the deemed repatriation tax. As new provisions for Global Intangible Low-Tax Income ("GILTI") are effective for tax years beginning after December 31, 2017, the Company has not calculated any tax related impact for GILTI during the period. For fiscal taxpayers, the rate change is effective at the beginning of the Company’s fiscal year, using a blended rate for the annual period. The Company’s blended U.S. statutory tax rate for fiscal 2018 is 24.28%. In future years, the corporate tax rate will be 21%. As of September 30, 2018 and 2017, the Company had U.S. net operating loss carryforwards for federal purposes of approximately $1.7 million and $0, respectively, which are available to offset future taxable income with no expiration. The company had U.S. net operating loss carryforwards for state purposes of approximately $0.5 million and $0.4 million, respectively, which are available to offset future taxable income through 2034. As of September 30, 2018, the Company had other state tax credit carryforwards of $55 thousand available to reduce future state tax expense which has unlimited carryover status. As of September 30, 2018, the Company concluded that a net increase of $41 thousand of the valuation allowance for the U.S. was appropriate. As part of the Company’s analysis, the Company evaluated, among other factors, its recent history of generating taxable income in state jurisdictions and its near-term forecasts of future taxable income. The net increase in the Company’s valuation allowance of $41 thousand is to reserve for state tax credit carryforwards that the Company believes will expire unused. As of September 30, 2018, the Company had U.K. net operating loss carryforwards of approximately $8.8 million that have an indefinite life with no expiration. Undistributed earnings of the Company's foreign subsidiaries amounted to approximately $12.7 million and $2.8 million at September 30, 2018 and 2017, respectively. The Company is considering cash distribution of undistributed foreign earnings in the future and will continue to access the potential impact of any future distributions on U.S. taxes. The state impact of a distribution of foreign earnings and profits would not be material. In addition, the calculation of the Company's tax liabilities involves dealing with uncertainties in the application of complex tax regulations in a multitude of jurisdictions. The Company records liabilities for estimated tax obligations in the U.S. and other tax jurisdictions. These estimated tax liabilities include the provision for taxes that may become payable in the future. As of September 30, 2018, the total amount of uncertain tax liabilities was $220 thousand. We recognized $11 thousand of interest and potential penalties accrued related to unrecognized tax benefits in our provision for income taxes. A reconciliation of the beginning and ending balances of the total amounts of gross unrecognized tax benefits is as follows:
We file income tax returns in the U.S. federal jurisdiction and various state and foreign jurisdictions. The Company has reviewed the tax positions taken on returns filed domestically and in its foreign jurisdictions for all open years, generally fiscal 2014 through 2018, and believes that tax adjustments in any audited year will not be material, except for the uncertain tax position described above. |
Property, Equipment and Improvements, Net |
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Property, Plant and Equipment [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Property, Equipment and Improvements, Net | Property, Equipment and Improvements, Net Property, equipment and improvements, net consist of the following:
The Company uses the straight-line method over the estimated useful lives of the assets to record depreciation expense. Depreciation expense was $506 thousand and $365 thousand for the years ended September 30, 2018 and 2017, respectively. |
Acquired Intangible Assets |
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Goodwill and Intangible Assets Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Acquired Intangible Assets | Acquired Intangible Assets As of September 30, 2018 and 2017, intangible assets are as follows:
Amortization expense on these intangible assets was $119 thousand and $120 thousand for fiscal 2018 and 2017, respectively. Annual amortization expense related to intangible assets for each of the following successive fiscal years is as follows:
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Accounts Payable and Accrued Expenses |
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Payables and Accruals [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accounts Payable and Accrued Expenses | Accounts Payable and Accrued Expenses Accounts payable and accrued expenses consist of the following:
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Product Warranties |
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Payables and Accruals [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Product Warranty Disclosure [Text Block] | Product Warranties Product warranty activity for the years ended September 30 was as follows:
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Stock Options and Awards |
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Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stock Options and Awards | Stock Based Incentive Compensation In 1997, the Company adopted the 1997 Stock Option Plan (the "1997 Plan"), and authorized 199,650 shares of common stock to be reserved for issuance pursuant to the 1997 Plan. The 1997 plan expired in 2007. Because the 1997 Plan has expired, no further awards will be issued under this plan. In 2003, the Company adopted the 2003 Stock Incentive Plan (the "2003 Plan") and authorized 200,000 shares of common stock to be reserved for issuance pursuant to the 2003 Plan. The 2003 plan expired in 2013. Because the 2003 Plan has expired, no further awards will be issued under this plan. In 2007, the Company adopted the 2007 Stock Incentive Plan (the "2007 Plan") and authorized 250,000 shares of common stock to be reserved for issuance pursuant to the 2007 Plan. The 2007 plan expired in 2017. Because the 2007 Plan has expired, no further awards will be issued under this plan. In 2015, the Company adopted the 2015 Stock Incentive Plan (the "2015 Plan") and authorized 300,000 shares of common stock to be reserved for issuance pursuant to the 2015 Plan. As of September 30, 2018, there were 125,965 shares available to be granted under the 2015 Plan. Under all of the stock incentive plans, both incentive stock options and non-qualified stock options may be granted to officers, key employees and other persons providing services to the Company. The 2003 Plan and 2007 Plan also provide for awards of nonvested shares of common stock. All of the Company's stock incentive plans have a ten year life. The total number of available shares under all plans for future awards was 125,965 as of September 30, 2018. Awards issued under any of the stock option plans are not affected by termination of the plan. The Company issues stock options at their fair market value on the date of grant. Vesting of stock options granted pursuant to the Company's stock incentive plans is determined by the Company's compensation committee. Generally, options granted to employees vest over four years and expire ten years from the date of grant. Options granted to non-employee directors have historically included cliff vesting after six months from the date of grant and expire three years from the date of grant. In fiscal years 2016 through 2018, the Company granted certain officers including its Chief Executive Officer and non-employee directors, and key employees shares of nonvested common stock instead of stock options. The vesting periods for the officers', the Chief Executive Officer's and the non-employee directors' nonvested stock awards are four years, three years and one year, respectively. The vesting period for the key employees' awards is four years. We measure and recognize compensation expense for all stock-based payment awards made to employees and directors including employee stock options and awards of nonvested stock based on estimated fair values, as described in Note 1. Stock-based compensation expense incurred and recognized for the years ended September 30, 2018 and 2017 related to stock options and nonvested stock granted to employees and non-employee directors under the Company's stock incentive and employee stock purchase plans totaled approximately $691 thousand and $577 thousand, respectively. The classification of the cost of stock-based compensation, in the consolidated statements of operations, is consistent with the nature of the services being rendered in exchange for the share based payment. The following table summarizes stock-based compensation expense in the Company's consolidated statements of operations:
For the year ended September 30, 2018, the Company granted 12,000 nonvested shares to certain key employees, 40,000 nonvested shares to certain officers including 30,000 shares granted to the Chief Executive Officer, and 20,000 nonvested shares to its non-employee directors. For the year ended September 30, 2017, the Company granted 34,000 nonvested shares to certain key employees, 40,000 nonvested shares to certain officers including 30,000 to its Chief Executive Officer and 20,000 nonvested shares to its non-employee directors. The Company measures the fair value of nonvested stock awards based upon the market price of its common stock as of the date of grant. The Company used the Black-Scholes option-pricing model to value stock options. The Black-Scholes model requires the use of a number of assumptions including volatility of the Company's stock price, the weighted average risk-free interest rate and the weighted average expected life of the options, at the time of grant. The expected dividend yield is equal to the divided per share declared, divided by the closing share price on the date the options were granted. All equity compensation awards granted for the years ended September 30, 2018 and September 30, 2017 were nonvested stock awards. As stock-based compensation expense recognized in the consolidated statements of operations is based on awards ultimately expected to vest, expense for grants beginning upon adoption on October 1, 2005 has been reduced for estimated forfeitures. Forfeitures are estimated at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates. The forfeiture rates for the years ended September 30, 2018 and 2017 were based on actual forfeitures. No cash was used to settle equity instruments granted under share-base payment arrangements in any of the years in the two-year period ended September 30, 2018. The following tables provide summary data of stock option award activity:
There were no stock options granted in the years ended September 30, 2018 and 2017. The aggregate intrinsic value of stock options exercised during the years ended September 30, 2018 and 2017 was $33 thousand and $38 thousand, respectively. The following table provides summary data of nonvested stock award activity:
As of September 30, 2018, there was $1.1 million of total unrecognized compensation cost related to nonvested stock-based compensation arrangements (including stock option and nonvested stock awards) granted under the Company's stock incentive plans. This cost is expected to be expensed over a weighted average period of approximately 2.41 years. The total fair value of shares vested during the years ended September 30, 2018 and 2017 was $662 thousand and $472 thousand, respectively. |
Employee Stock Purchase Plan |
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Sep. 30, 2018 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Employee Stock Purchase Plans | Employee Stock Purchase Plan In December 2013, the Board of Directors of the Company adopted the 2014 Employee Stock Purchase Plan covering up to 250,000 shares of Common Stock (the "ESPP"), which was ratified by a vote of the Company's shareholders in February 2014. Under the ESPP, the Company’s employees may purchase shares of common stock at a price per share that is currently 95% of the lesser of the fair market value as of the beginning or end of semi-annual option periods. Pursuant to the ESPP, the Company issued 22,895 and 22,996 shares for the two years ended September 30, 2018 and September 30, 2017, respectively. Since inception of the plan, there are 126,191 shares available for future issuance under the ESPP as of September 30, 2018. |
Pension and Retirement Plans |
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Retirement Benefits [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Pension and Retirement Plans | Pension and Retirement Plans We have defined benefit and defined contribution plans in the U.K. and in the U.S. In the U.K., the Company provides defined benefit pension plans for certain employees and former employees and defined contribution plans for the majority of the employees. The defined benefit plans in the U.K. are closed to newly hired employees and have been for the two years ended September 30, 2018. In the U.S., the Company also provides defined contribution plans that cover most employees and supplementary retirement plans to certain employees and former employees who are now retired. These supplementary retirement plans are also closed to newly hired employees and have been for the two years ended September 30, 2018. These supplementary plans are funded through whole life insurance policies. The Company expects to recover all insurance premiums paid under these policies in the future, through the cash surrender value of the policies and any death benefits or portions thereof to be paid upon the death of the participant. These whole life insurance policies are carried on the balance sheet at their cash surrender values as they are owned by the Company and not assets of the defined benefit plans. In the U.S., the Company also provides for officer death benefits and post-retirement health insurance benefits through supplemental post-retirement plans to certain officers. The Company also funds these supplemental plans' obligations through whole life insurance policies on the officers. Defined Benefit Plans The Company funds its pension plans in amounts sufficient to meet the requirements set forth in applicable employee benefits laws and local tax laws. Liabilities for amounts in excess of these funding levels are accrued and reported in the consolidated balance sheet. The domestic supplemental retirement plans have life insurance policies which are not considered plan assets but were purchased by the Company as a vehicle to fund the costs of the plan. These insurance policies are included in the balance sheet at their cash surrender value, net of policy loans, aggregating $2.1 million and $2.1 million as of September 30, 2018 and 2017, respectively. The loans against the policies have been taken out by the Company to pay the premiums. The costs and benefit payments for these plans are paid through operating cash flows of the Company to the extent that they cannot be funded through the use of the cash values in the insurance policies. The Company expects that the recorded value of the insurance policies will be sufficient to fund all of the Company's obligations under these plans. Assumptions: The following table provides the weighted average actuarial assumptions used to determine the actuarial present value of projected benefit obligations at:
The following table provides the weighted average actuarial assumptions used to determine net periodic benefit cost for years ended:
For domestic plans, the discount rate was determined by comparison against the FTSE pension liability index for AA rated corporate instruments. The Company monitors other indices to assure that the pension obligations are fairly reported on a consistent basis. The international discount rates were determined by comparison against country specific AA corporate indices, adjusted for duration of the obligation. The periodic benefit cost and the actuarial present value of projected benefit obligations are based on actuarial assumptions that are reviewed on an annual basis. The Company revises these assumptions based on an annual evaluation of long-term trends, as well as market conditions that may have an impact on the cost of providing retirement benefits. The components of net periodic benefit costs related to the U.S. and international plans are as follows:
The following table presents an analysis of the changes in 2018 and 2017 of the benefit obligation, the plan assets and the funded status of the plans:
The amounts recognized in the consolidated balance sheet consist of:
Plans with projected benefit obligations in excess of plan assets are attributable to unfunded domestic supplemental retirement plans, and our U.K. retirement plan. Accrued benefit liability reported as:
As of September 30, 2018 and 2017, the amounts included in accumulated other comprehensive income, consisted of deferred net losses totaling approximately $5.3 million and $5.8 million, respectively. The amount of net deferred gain expected to be recognized as a component of net periodic benefit cost for the year ending September 30, 2018, is approximately $116 thousand. Contributions The Company expects to contribute $0.3 million to its pension plans for fiscal 2019. Estimated Future Benefit Payments The following benefit payments, which reflect expected future service, as appropriate, are expected to be paid (amounts in thousands):
Plan Assets At September 30, 2018, our pension plan in the U.K. was the only plan with assets, holding investments of approximately $8.3 million. Pension plan assets are managed by a fiduciary committee. The Company's investment strategy for pension plan assets is to maximize the long-term rate of return on plan assets within an acceptable level of risk while maintaining adequate funding levels. Local regulations, local funding rules, and local financial and tax considerations are part of the funding and investment process. In deciding on the investments to be held, the trustees take into account the risk of possible fluctuations in income from, and market values of, the assets as well as the risk of departing from an asset profile which broadly matches the liability profile. The committee has invested the plan assets in a single pooled fund with an authorized investment company (the “Fund”). The Fund selected by the trustees is consistent with the plan's overall investment principles and strategy described herein. There are no specific targets as to asset allocation other than those contained within the Fund that is managed by the authorized investment company. The fair value of the assets held by the U.K. pension plan by asset category are as follows:
The expected long-term rates of return on plan assets are equal to the yields to maturity of appropriate indices for government and corporate bonds and by adding a premium to the government bond return for equities. The expected rate of return on cash is the Bank of England base rate in force at the effective date. Level 1 investments represent mutual funds for which a quoted market price is available on an active market. These investments primarily hold stocks or bonds, or a combination of stocks and bonds. Defined Contribution Plans The Company has defined contribution plans in domestic and international locations under which the Company matches a portion of the employee's contributions and may make discretionary contributions to the plans. The Company's contributions were $204 thousand and $152 thousand for the years ended September 30, 2018 and 2017, respectively. |
Lines of Credit |
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Sep. 30, 2018 | |
Debt Disclosure [Abstract] | |
Lines of Credit | Lines of Credit As of September 30, 2018 and September 30, 2017, the Company maintained a line of credit note that allows for borrowings of up to $1.0 million. Availability under this facility is reduced by outstanding borrowings thereunder. The interest rates on outstanding borrowings is the London Inter-Bank Offer Rate ("LIBOR") plus 2.5%, with a floor of 4%. Borrowings under the credit agreement are required to be repaid on demand by the lender in some cases, upon termination of the agreements or may be prepaid by the Company without penalty. The credit agreement is not subject to financial covenants and the Company did not borrow under the line of credit during the fiscal years ending September 30, 2018 and 2017. As of September 30, 2018 and September 30, 2017, the Company maintained an inventory line of credit that may be used by the TS division in the U.S. to purchase inventory from approved vendors with payment terms which exceed those offered by the vendors. No interest accrues under the inventory line of credit when advances are paid within terms, late payments are subject to an interest charge of Prime plus 5%. The credit agreements contain financial covenants which require the Company to maintain the following division specific financial ratios: (1) a minimum current ratio of 1.2, (2) tangible net worth of $2.5 million and (3) a maximum ratio of total liabilities to total net worth of less than 5.0:1. As of September 30, 2018 and September 30, 2017, Company borrowings under the inventory line of credit were $3.2 million and $3.1 million, respectively, which is included as a component of accounts payable and accrued expenses on the accompanying consolidated balance sheets. |
Commitments and Contingencies |
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Commitments and Contingencies Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Commitments and Contingencies | Commitments and Contingencies Leases The Company occupies office space under lease agreements expiring at various dates during the next ten years. The leases are classified as operating leases and provide for the payment of real estate taxes, insurance, utilities and maintenance. The Company was obligated under non-cancelable operating leases as follows:
Occupancy expenses under the operating leases approximated $0.8 million in 2018 and $0.7 million in 2017. The Company leases equipment under an agreement expiring in three years. The lease is classified as a capital lease. The Company has the capital lease obligation within its consolidated balance sheets. The current portion of $0.3 million is within accounts payable and accrued expenses and the long-term portion of $0.5 million is included in other long term liabilities. The assets acquired under the capital lease were sub-leased to a customer. See Investment in Lease Note 18. The Company was obligated under non-cancelable capital leases as follows:
Common Stock Repurchase From time to time the Company's Board of Directors passes resolutions to authorize the Company to purchase shares of its outstanding common stock. The Company did not repurchase any shares during the years ended September 30, 2018 and 2017. As of September 30, 2018, the Company is authorized to repurchase an additional 201 thousand shares pursuant to such resolutions. |
Segment Information |
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Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment Reporting Disclosure [Text Block] | Segment Information The following table presents certain operating segment information.
Profit (loss) from operations is sales less cost of sales, engineering and development, selling, general and administrative expenses but is not affected by either non-operating charges/income or by income taxes. Non-operating charges/income consists principally of investment income and interest expense. All intercompany transactions have been eliminated. The following table details the Company's sales by operating segment for fiscal years September 30, 2018 and 2017. The Company's sales by geographic area based on the location of where the products were shipped or services rendered are as follows:
Substantially all Americas amounts are United States. Long-lived assets by geographic location at September 30, 2018 and 2017 were as follows:
Deferred tax assets by geographic location at September 30, 2018 and 2017 were as follows:
The following table lists customers from which the Company derived revenues in excess of 10% of total revenues for the years ended September 30, 2018 and 2017.
In addition, accounts receivable from Customer A totaled approximately $1.1 million, or 9%, and approximately $2.4 million, or 14%, of total consolidated accounts receivable as of September 30, 2018 and September 30, 2017, respectively. One additional customer, B, accounted for accounts receivable of 10% or more, but did not account for sales of 10% or more. Accounts receivable from Customer B totaled approximately $1.7 million, or 14%, of total consolidated accounts receivable as of September 30, 2018. We believe that the Company is not exposed to any significant credit risk with respect to the accounts receivable with these customers as of September 30, 2018. No other customers accounted for 10% or more of total consolidated accounts receivable as of September 30, 2018. |
Fair Value Measures |
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Sep. 30, 2018 | |
Fair Value Disclosures [Abstract] | |
Fair Value Disclosures [Text Block] | Fair Value Measures The Company had no assets or liabilities measured at fair value on a recurring or non-recurring basis as of September 30, 2018 or September 30, 2017, except for pension plan assets values, which are discussed in Note 12. |
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Stockholders' Equity Note [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Dividend | Dividend For the years ended September 30, 2018 and 2017, the Company declared and paid cash dividends as follows:
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Investment in Lease |
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Investments, All Other Investments [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Investment in Lease | Investment in Lease Investment in Lease, net During fiscal year 2018 the Company entered into an agreement where it would supply equipment to be used in a customer's IT infrastructure in conjunction with the Company providing managed services. The agreement contained a lease because the customer had a right to use the equipment for a stated period of time. The lease was determined to be a direct-financing lease and an account was created for the lease. At lease inception a lease receivable was recorded, which included future minimum lease payments at present value using the implicit interest rate. Interest income will be recognized on a monthly basis utilizing the effective-interest method. Interest income is recorded in revenue as equipment leasing is part of the Company's central operations. A summary of components for the Company's investment in lease, net is as follows:
The schedule of future minimum lease payments receivable is as follows:
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Accounting Policies, by Policy (Policies) |
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Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Principles of Consolidation | Principles of Consolidation The consolidated financial statements include the accounts of the Company and its subsidiaries. All significant inter-company accounts and transactions have been eliminated. Certain prior year amounts have been reclassified for consistency with the current period presentation. These reclassifications had no effect on the reported results of operations. |
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Foreign Currency Translation | Foreign Currency Translation The U.S. Dollar is the reporting currency for all periods presented. The financial information for entities outside the United States is measured using the local currency as the functional currency. Assets and liabilities of the Company's foreign operations are translated into U.S. dollars at the exchange rates in effect at the balance sheet date. Revenue and expenses are translated at average rates in effect during the period. The resulting translation adjustment is reflected as accumulated other comprehensive income (loss), a separate component of shareholders' equity on the consolidated balance sheets. The translation adjustment for intercompany foreign currency loans that are of a long-term-investment nature is also reflected as accumulated other comprehensive income (loss). Currency transaction gains and losses are recorded as other income (expense) in the consolidated statements of operations. |
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Cash Equivalents | Cash Equivalents For purposes of the consolidated statements of cash flows, highly liquid investments with original maturities of three months or less at the time of acquisition are considered cash equivalents. Fair Value of Financial Instruments Our financial instruments are limited to cash and cash equivalents, accounts receivable, carrying amounts of net investment in leases, pension plan assets, accounts payable and our inventory line of credit. Fair value of these financial instruments was not materially different from their carrying values at September 30, 2018, and 2017. |
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Impairment Long-Lived Assets | Impairment of Long-Lived Assets The Company reviews its long-lived assets, including intangible assets subject to amortization, for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Management assesses the recoverability of the long-lived assets (other than goodwill) by comparing the estimated undiscounted cash flows associated with the related asset or group of assets against their respective carrying amounts. The amount of impairment, if any, is calculated based on the excess of the carrying amount over the fair value of those assets. |
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Intangible Assets | Intangible assets that are not subject to amortization are also required to be tested annually, or more frequently if events or circumstances indicate that the asset may be impaired. We did not have intangible assets with indefinite lives at any time during the two years ended September 30, 2018. Intangible assets subject to amortization are amortized on a straight-line basis over their estimated useful lives, generally three to ten years, and are carried at net book value. The remaining useful lives of intangible assets are evaluated on an annual basis. Intangible assets subject to amortization are also tested for recoverability whenever events or changes in circumstances indicate that their carrying amount may not be recoverable. If the fair value of an intangible asset subject to amortization is determined to be less than its carrying value, then an impairment charge is recorded to write down that asset to its fair value. |
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Inventories | Inventories Inventories are stated at the lower of cost or net realizable value, with cost determined using the first-in, first-out method. The recoverability of inventories is based upon the types and levels of inventories held, forecasted demand, pricing, competition and changes in technology. We write down our inventory for estimated obsolescence or unmarketable inventory equal to the difference between the cost of inventory and the estimated market value based upon assumptions about future demand and market conditions. If actual market conditions are less favorable than those projected by management, additional inventory write-downs may be required. |
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Property, Equipment and Improvements | Property, Equipment and Improvements The components of property, equipment and improvements are stated at cost. The Company provides for depreciation by use of the straight-line method over the estimated useful lives of the related assets (three to seven years). Leasehold improvements are amortized by use of the straight-line method over the lesser of the estimated useful life of the asset or the lease term. Repairs and maintenance costs are expensed as incurred. Property, equipment and improvements are tested for recoverability whenever events or changes in circumstances indicate that its carrying amount may not be recoverable. If the fair value of property, equipment and improvements is determined to be less than their carrying value, then an impairment charge is recorded to write down that asset to its fair value. |
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Trade Accounts Receivable and Allowance for Doubtful Accounts | Trade Accounts Receivable and Allowance for Doubtful Accounts Trade accounts receivable are stated at amounts that have been billed to customers less an allowance for doubtful accounts. Allowances for doubtful accounts are recorded for the estimated losses resulting from the inability of our customers to make required payments. The estimates for the allowance for doubtful accounts are based on the length of time the receivables are past due, current business environment and our historical experience. If the financial condition of our customers were to deteriorate, resulting in impairment of their ability to make payments, additional allowances may be required. Accounts receivable are charged off against the reserve when management has determined they are uncollectible. |
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Pension and Retirement Plans | Pension and Retirement Plans The funded status of pension and other postretirement benefit plans is recognized on the consolidated balance sheet. Gains and losses, prior service costs and credits and any remaining transition amounts that have not yet been recognized through pension expense will be recognized in accumulated other comprehensive income, net of tax, until they are amortized as a component of net periodic pension/postretirement benefits expense. Additionally, plan assets and obligations are measured as of our fiscal year-end balance sheet date (September 30). We have defined benefit and defined contribution plans in the United Kingdom (the “U.K.”) and in the U.S. In the U.K. the Company provides defined benefit pension plans for certain employees and former employees and defined contribution plans for the majority of the employees. The defined benefit plan in the U.K. is closed to newly hired employees and has been for the two years ended September 30, 2018. In the U.S., the Company also provides defined contribution plans that cover most employees and supplementary retirement plans to certain employees and former employees who are now retired. These supplementary retirement plans are also closed to newly hired employees and have been for the two years ended September 30, 2018. These supplementary plans are funded through whole life insurance policies. The Company expects to recover all insurance premiums paid under these policies in the future, through the cash surrender value of the policies and any death benefits or portions thereof to be paid upon the death of the participant. These whole life insurance policies are carried on the balance sheet at their cash surrender values as they are owned by the Company and not assets of the defined benefit plans. In the U.S., the Company also provides for officer death benefits and post-retirement health insurance benefits through supplemental post-retirement plans to certain officers. The Company also funds these supplemental plans' obligations through whole life insurance policies on the officers. Pension expense is based on an actuarial computation of current future benefits using estimates for expected return on assets, expected compensation increases and applicable discount rates. Management has reviewed the discount rates and rates of return with our consulting actuaries and investment advisor and concluded they were reasonable. A decrease in the expected return on pension assets would increase pension expense. Expected compensation increases are estimated based on historical and expected increases in the future. Increases in estimated compensation increases would result in higher pension expense while decreases would lower pension expense. Discount rates are selected based upon rates of return on high quality fixed income investments currently available and expected to be available during the period to maturity of the pension benefit. A decrease in the discount rate would result in greater pension expense while an increase in the discount rate would decrease pension expense. The Company funds its pension plans in amounts sufficient to meet the requirements set forth in applicable employee benefits laws and local tax laws. Liabilities for amounts in excess of these funding levels are accrued and reported in the consolidated balance sheets. |
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Revenue Recognition | Revenue Recognition We derive revenue from the sale of integrated hardware and software, professional services, maintenance contracts, other services, and third party service contracts. Professional services generally include implementation, installation, and training services. Other services generally include revenue generated through our royalty and extended warranty contracts. We recognize revenue when persuasive evidence of an arrangement exists, delivery of the product or service has occurred, the fee is fixed and determinable and collectability is reasonably assured. We enter into multiple element arrangements as well as standalone sales of product, professional services, and other services. We recognize revenue from standalone product sales upon transfer of title, which is typically upon shipment, provided all other revenue recognition criteria have been met. Revenue generated from standalone professional services and extended warranty contracts is recognized as services are completed, provided all other revenue recognition criteria have been met. In some instances professional service contracts include a customer acceptance provision, in which case revenue is deferred until we have evidence of customer acceptance. We recognize revenue from usage based royalty contracts upon confirmation from the customer of shipment of the system produced pursuant to the royalty agreement. We recognize revenue from multiple element arrangements in accordance with ASC 605-25, Multiple Element Arrangements. We evaluate multiple element arrangements to determine if separate units of accounting exist, and if so, we allocate revenue to each element based upon the relative selling price of each element. ASC 605-25 establishes a hierarchy for determining the amount to allocate to each separate deliverable in an arrangement. We determine selling price using vendor specific objective evidence ("VSOE"), if it exists; or, if VSOE does not exist, third party evidence ("TPE") of fair value if applicable; otherwise, we use the best estimate of selling price ("BESP"). The objective of BESP is to determine the price at which the Company would transact if the element was sold on a standalone basis. Management’s determination of BESP involves several factors including budgeted profit margins, and cost to complete services. We recognize revenue from third party service contracts as either gross sales or net sales in accordance with ASC 605-45, Principal Agent Considerations, which requires us to determine if the Company is acting as a principal party to the transaction or simply acting as an agent or broker. Under ASC 605-45, the assumption of the risks and rewards under the arrangement are considered indicators of principal parties to the arrangement. We record revenue as gross when it is a principal party to the arrangement and net of cost when we are acting as a broker or agent. Under gross sales recognition, the entire selling price is recorded in revenue and our cost to the third-party service provider or vendor is recorded in cost of goods sold. Under net sales recognition, the cost to the third-party service provider or vendor is recorded as a reduction to revenue resulting in net sales equal to the gross profit on the transaction. The following policies are applicable to our major categories of segment revenue transactions: HPP Segment Revenue HPP segment revenue is derived from the sale of integrated hardware and software, maintenance, and other services through the Multicomputer and Myricom product lines. Multicomputer product revenue is generally recognized when product is shipped, provided that all revenue recognition criteria are met. Service revenue consists principally of royalty revenue, repair service revenue and warranty revenue. Revenue generated from extended warranty contracts is recognized as services are completed, provided all other revenue recognition criteria have been met. We recognize revenue from usage based royalty contracts upon confirmation from the customer of shipment of the system produced pursuant to the royalty agreement. In the years ended September 30, 2018 and 2017, respectively, $2.5 million and $5.4 million of royalty income is included in service revenues. Myricom revenue is derived from the sale of products, which are comprised of both hardware and embedded software which is essential to the products functionality, and post contract maintenance and support. Revenue on multiple element arrangements is recognized in accordance with ASC 605-25. We evaluate multiple element arrangements to determine if separate units of accounting exist, and if so, we allocate revenue to each element based upon the relative selling price of each element. We determine selling price using BESP. Management’s determination of BESP is based on several factors, including, but not limited to, internal costs and gross margin objectives. Accordingly, revenue for post contract maintenance and support is recognized over the implied maintenance period of either one or three years, and revenue for product sales is recognized upon delivery assuming all other revenue recognition criteria have been met. TS Segment Revenue TS Segment revenue is derived from the sale of hardware, financing of hardware and software, software, professional services, and third party service contracts. TS product revenue is generally recognized when product is shipped, provided that all revenue recognition criteria are met. Service revenue consists of professional services which generally include implementation, installation, and training services. Revenue generated from standalone professional services is recognized as services are completed, provided all other revenue recognition criteria has been met. Our standard sales agreements generally do not include customer acceptance provisions. However, in certain instances when arrangements include a customer acceptance provision or there is uncertainty about customer acceptance, revenue is deferred until we have evidence of customer acceptance. Revenue derived from the sale of products, which are comprised of both hardware and software, and professional services is recognized in accordance with ASC 605-25. We evaluate multiple element arrangements to determine if separate units of accounting exist, and if so, we allocate revenue to each element based upon the relative selling price of each element. We determine selling price using BESP. Management’s determination of BESP is based on several factors, including, but not limited to, internal costs and gross margin objectives. Accordingly, revenue for professional services is recognized as services are completed, and revenue for product sales is recognized upon delivery assuming all other revenue recognition criteria have been met. We recognize revenue from certain third party service contracts, which are evaluated to determine whether such service revenue should be recorded as gross sales or net sales in accordance ASC 605-45. We evaluate all third party service contracts to determine whether we act as a principal in the transaction and assume the risks and rewards of ownership or if we are simply acting as an agent or broker. Under gross sales recognition, the entire selling price is recorded in sales and our cost to the third-party service provider or vendor is recorded in cost of goods sold. Under net sales recognition, the cost to the third-party service provider or vendor is recorded as a reduction to sales resulting in net sales equal to the gross profit on the transaction and there are no costs of goods sold. We use the net sales recognition method for the third party service contracts that we sell when we are not the primary obligor on the contract. We use the gross sales recognition for the third party service contracts that we sell when we act as principal and are the primary obligor |
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Product Warranty Accrual | Product Warranty Accrual Our product sales generally include a hardware warranty which ranges from 90-days to three-years. At time of product shipment, we accrue for the estimated cost to repair or replace potentially defective products. Estimated warranty costs are based upon prior actual warranty costs for substantially similar products. |
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Research, Engineering and Development Expenses | Research and Development Expense For the years ended September 30, 2018 and 2017, our expenses for research and development were approximately $3.3 million and $2.4 million, respectively. Expenditures for research and development are expensed as they are incurred. Engineering and Development Expenses Engineering and development expenses include payroll, employee benefits, stock-based compensation and other headcount-related expenses associated with product development. Engineering and development expenses also include third-party development and programming costs. We consider technological feasibility for our software products to be reached upon the release of the software, accordingly, no internal software development costs have been capitalized. |
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Income Taxes | Income Taxes We use the asset and liability method of accounting for income taxes whereby deferred tax assets and liabilities are recognized for the estimated future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates in effect for the year in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. We also reduce deferred tax assets by a valuation allowance if, based on the weight of available evidence, it is more likely than not that some portion or all of the recorded deferred tax assets will not be realized in future periods. This methodology requires estimates and judgments in the determination of the recoverability of deferred tax assets and in the calculation of certain tax liabilities. Valuation allowances are recorded against the gross deferred tax assets that management believes, after considering all available positive and negative objective evidence, historical and prospective, with greater weight given to historical evidence, that it is more likely than not that these assets will not be realized. In addition, we are required to recognize in the consolidated financial statements, those tax positions determined to be more-likely-than-not of being sustained upon examination, based on the technical merits of the positions as of the reporting date. If a tax position is not considered more-likely-than-not to be sustained based solely on its technical merits, no benefits of the position are recognized. In addition, the calculation of the Company's tax liabilities involves dealing with uncertainties in the application of complex tax regulations in a multitude of jurisdictions. The Company records liabilities for estimated tax obligations in the U.S. and other tax jurisdictions. These estimated tax liabilities include the provision for taxes that may become payable in the future. |
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Earnings per Share of Common Stock | Earnings per Share of Common Stock Basic net income per common share is computed by dividing net income available to common shareholders by the weighted average number of common shares outstanding for the period. Diluted net income per common share reflects the maximum dilution that would have resulted from the assumed exercise and share repurchase related to dilutive stock options and is computed by dividing net income by the assumed weighted average number of common shares outstanding. We are required to present earnings per share ("EPS") utilizing the two class method because we had outstanding, non-vested share-based payment awards that contain non-forfeitable rights to dividends or dividend equivalents, which are considered participating securities. Basic and diluted earnings per share computations for the Company's reported net income attributable to common stockholders are as follows:
All anti-dilutive securities, including stock options, are excluded from the diluted income per share computation. For the years ended September 30, 2018 and September 30, 2017, there were no shares subject to stock options excluded from the diluted net income per share calculation because their inclusion would have been anti-dilutive. Non-vested restricted stock awards of 165,000 shares were excluded from net income (loss) per share from continuing operations as there was a net loss from continuing operations for the year ended September 30, 2018, and their inclusion would have been anti-dilutive. |
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Use of Estimates | Use of Estimates The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States 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. Actual results may differ from those estimates under different assumptions or conditions. |
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Stock-based Compensation | Stock-Based Compensation We measure and recognize compensation expense for all stock-based payment awards made to employees and directors including stock options and nonvested shares of restricted common stock based on estimated fair values of stock-based payment awards on the date of grant. The Company uses the Black-Scholes option-pricing model to calculate the fair value of stock option grants. The fair value of nonvested restricted share awards is equal to the quoted market price of our common stock as quoted on the Nasdaq Global Market on the date of grant. The fair value of the portion of the award that is ultimately expected to vest is recognized as expense over the requisite service periods in the Company's consolidated statements of operations. Because stock-based compensation expense recognized in the consolidated statements of operations for the fiscal years ended September 30, 2018 and 2017 is based on awards ultimately expected to vest, it has been reduced for estimated forfeitures and will be revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates. Stock-based compensation expense recognized for the fiscal years ended September 30, 2018 and 2017 consisted of stock-based compensation expense related to options and restricted stock granted pursuant to the Company's stock incentive and employee stock purchase plans of approximately $0.7 million and $0.6 million, respectively. |
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Concentrations of Credit Risk | Concentrations of Credit Risk Cash and cash equivalents are maintained with several financial institutions in the U.S. and the U.K. Deposits held with banks may exceed the amount of insurance on such deposits. Generally, these deposits may be redeemed upon demand. The Company has not experienced any losses in such accounts and believes it is not exposed to any significant credit risk on cash and cash equivalents. |
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Subsequent Events | The Company recognizes in the consolidated financial statements the effects of all subsequent events that provide additional evidence about conditions that existed at the date of the statement of financial position, including the estimates inherent in the process of preparing financial statements. The Company has evaluated subsequent events through the date of this filing. |
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New Accounting Pronouncements | New Accounting Pronouncements In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers, which requires an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers. The standard outlines a five-step model whereby revenue is recognized as performance obligations within a contract are satisfied. The standard also requires new, expanded disclosures regarding revenue recognition. The ASU replaces most existing revenue recognition guidance in GAAP. We utilized a bottom-up approach to analyze the standard's impact on our contract portfolio, comparing our historical accounting policies and practices, and identifying potential differences from applying the requirements of the new standard to our contracts. Because the new standard impacts our business processes, systems and controls, we developed a comprehensive change management project plan to guide the implementation. The new standard was adopted by the Company effective October 1, 2018 using the modified retrospective approach. A portfolio approach for similar contracts was utilized in adoption. Under the new standard, product revenue sold as part of a multi-element agreement will no longer be deferred as it will now be recognized when control is transferred due to product being a separate performance obligation. Additionally, revenue will not be deferred on customer support related to the HPP segment as this was determined to be immaterial within the context of the contract, and therefore not a separate performance obligation under the new standard. Onboarding revenue will be amortized over the contract period and, under the new standard, includes the estimated renewal period. Each reporting period the Company will make estimates for contracts that have volume discounts, as separate performance obligations may arise from these discounts if a material right to the customer exists, which could affect the timing of revenue recognition. The Company enters into noncancelable contracts in which it has an unconditional right to consideration when the contract is signed by both parties. This will result in a receivable and deferred revenue being recorded when the contract is signed by both parties rather than when work is performed. The new standard requires an entity to present any unconditional rights to consideration separately as a receivable and conditional rights as a contract asset. The Company has determined when it has the right to bill a customer, accounts receivable is recorded as an unconditional right exists. This could result as contract assets being recorded rather than a receivable. The effects of adoption did not have a material impact on October 1, 2018. Effective September 30, 2017, the Company adopted FASB ASU No. 2014-15, Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern, an amendment of the FASB Accounting Standards Codification. The ASU has added additional disclosure requirements to the codification. It requires management to assess, at each interim and annual reporting period, whether substantial doubt exists about an entity’s ability to continue as a going concern. Substantial doubt exists if it is probable (the “probable” threshold under GAAP has generally been interpreted to be between 75 and 80 percent) that the entity will be unable to meet its obligations as they become due within one year after the date the financial statements are issued or available to be issued (assessment date). This guidance did not have an impact to the Company's consolidated financial statements. In July 2015, the FASB issued ASU No. 2015-11, Inventory (Topic 330) Simplifying the Measurement of Inventory, which requires entities to measure inventory at the lower of cost and net realizable value, except for inventory measured using last-in, first-out (LIFO) or the retail inventory method. Net realizable value is the estimated selling prices in the ordinary course of business, less reasonably predictable costs of completion, disposal, and transportation. This ASU is effective for fiscal years beginning after December 15, 2016 and requires prospective application, with early adoption permitted as of the beginning of an interim or annual reporting period. Beginning October 1, 2017, the Company adopted the ASU and it hasn’t had a material impact on our consolidated financial statements. In November 2015, the FASB issued ASU No, 2015-17, Income Taxes (Topic 740) Balance Sheet Classification of Deferred Taxes, which require that deferred tax liabilities and assets be classified as noncurrent in a classified statement of financial position. The amendments in this Topic apply to all entities that present a classified statement of financial position. The current requirement that deferred tax liabilities and assets of a tax-paying component of an entity be offset and presented as a single amount is not affected by the amendments in this Topic. The amendments in this Topic are effective for financial statements issued for annual periods beginning after December 15, 2016, and interim periods within those annual periods. Beginning October 1, 2017, the Company adopted the ASU and it did not have a material impact on our consolidated financial statements. In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842), an amendment of the FASB Accounting Standards Codification. This ASU requires lessees to recognize a right-of-use asset and lease liability for most lease arrangements. The new standard is effective for the Company on October 1, 2019. The standard mandates a modified retrospective transition method for all entities and early adoption is permitted. The Company is evaluating the effect that ASU 2016-02 will have on its consolidated financial statements and related disclosures. In March 2016, the FASB issued ASU No. 2016-09, Compensation - Stock Compensation, Improvements to Employee Share-Based Payment Accounting (Topic 718), to simplify several aspects of 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. Additionally, the amendments eliminate the guidance in Topic 718 that was indefinitely deferred shortly after the issuance of FASB Statement No. 123 (revised 2004), Share-Based Payment. This should not result in a change in practice because the guidance that is being superseded was never effective. The Company has adopted this ASU effective October 1, 2017 and it did not have a material impact on our consolidated financial statements. In August 2016, the FASB issued ASU No. 2016-15, Classification of Certain Cash Receipts and Cash Payments, an amendment of the FASB Accounting Standards Codification. This ASU will reduce diversity in practice for classifying cash payments and receipts in the statement of cash flows for a number of common transactions. It will also clarify when identifiable cash flows should be separated versus classified based on their predominant source or use. This ASU is effective for public business entities for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. Early adoption is permitted, including adoption in an interim period. If an entity early adopts the amendments in an interim period, any adjustments should be reflected as of the beginning of the fiscal year that includes that interim period. An entity that elects early adoption must adopt all of the amendments in the same period. The Company is evaluating the effect that ASU 2016-15 will have on its consolidated financial statements and related disclosures. In October 2016, the FASB issued ASU No. 2016-16, Intra-Entity Transfers of Assets Other Than Inventory, an amendment of the FASB Accounting Standards Codification. This ASU requires the seller and buyer to recognize at the transaction date the current and deferred income tax consequences of intercompany asset transfers (except transfers of inventory). Under current GAAP, the seller and buyer defer the consolidated tax consequences of an intercompany asset transfer from the period of the transfer to a future period when the asset is transferred out of the consolidated group, or otherwise affects consolidated earnings. This standard will cause volatility in companies’ effective tax rates, particularly for those that transfer intangible assets to foreign subsidiaries. For public entities, the new standard is effective for annual and interim periods in fiscal years beginning after December 15, 2017. An entity may early adopt the standard but only at the beginning of an annual period for which it has not issued or made available for issuance financial statements (interim or annual). The Company is evaluating the effect that ASU 2016-16 will have on its consolidated financial statements and related disclosures. In January 2017, FASB issued ASU No. 2017-01, Business Combinations Clarifying the Definition of a Business (Topic 805) (“ASU No. 2017-01”). ASU 2017-01 provides a framework to use in determining when a set of assets and activities is a business. ASU 2017-01 provides more consistency in applying the business combination guidance, reduces the costs of application, and makes the definition of a business more operable. ASU 2017-01 is effective for interim and annual periods within those annual periods beginning after December 15, 2017. The Company is currently evaluating the impact ASU 2017-01 will have on the Company’s results of operations, financial position and disclosures. In March 2017, the FASB issued ASU No. 2017-07, Compensation Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost, an amendment of the FASB Accounting Standards Codification. This ASU requires employers that sponsor defined benefit pension and/or other post-retirement benefit plans to report the service cost component of net benefit cost in the same line item as other compensation costs arising from services rendered by the pertinent employees during the period. Employers are required to present the other components of net benefit costs in the income statement separately from the service cost component and outside a subtotal of income from operations. Additionally, only the service cost component of net periodic pension cost will be eligible for asset capitalization. For public entities, the new standard is effective for annual periods beginning after December 15, 2017, including interim periods within that annual period. Early adoption is permitted as of the beginning of an annual period for which financial statements (interim or annual) have not been issued or made available for issuance. This ASU should be applied retrospectively for the presentation of the service cost component and the other components of net periodic pension cost and net periodic postretirement benefit cost in the income statement and prospectively, on and after the effective date, for the capitalization of the service cost component of net periodic pension cost and net periodic postretirement benefit in assets. The Company is evaluating the effect that ASU 2017-07 will have on its consolidated financial statements and related disclosures. In February 2018, the FASB issued ASU No. 2018-02, Income Statement - Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income, an amendment of the FASB Accounting Standards Codification. This update addresses issues from the Tax Cuts and Jobs Act enacted on December 22, 2017. The amendment allows for a reclassification from accumulated other comprehensive income to retained earnings for stranded tax effects resulting from the Act. There are also certain required disclosures about the stranded tax effects. For public entities, the new standard is effective for annual periods beginning after December 15, 2018. The Company is evaluating the effect that ASU 2018-02 will have on its consolidated financial statements and related disclosures. In June 2018, the FASB issued ASU No. 2018-07, Compensation - Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting, an amendment of the FASB Accounting Standards Codification. Under this ASU companies will no longer be required to value non-employee awards differently from employee awards, but the accounting remains different for attribution and a contractual term election for valuing nonemployee equity share options. Equity-classified awards to nonemployees will now be measured at the grant date using fair value of the equity instruments the company is obligated to issue and recognition is associated with the probable outcome. Awards are subsequently measured using stock compensation guidance unless they are modified after the nonemployee stops providing goods or services. Existing disclosure requirements within the stock compensation guidance also apply to nonemployee awards. For public entities, the new standard is effective for annual periods beginning after December 15, 2018, including interim periods within that fiscal year. The Company is evaluating the effect that ASU 2018-07 will have on its consolidated financial statements and related disclosures. In August 2018, the FASB issued ASU No. 2018-14, Compensation - Retirement Benefits - Defined Benefit Plans - General (Subtopic 715-20): Disclosure Framework-Changes to the Disclosure Requirements for Defined Benefit Plans, an amendment of the FASB Accounting Standards Codification. Under this ASU existing disclosures not considered cost beneficial are removed, disclosures identified as relevant are added, and there is added clarification regarding specific existing disclosures. For public entities, the new standard is effective for annual periods beginning after December 15, 2020. The Company is evaluating the effect that ASU 2018-14 will have on its consolidated financial statements and related disclosures. |
Summary of Significant Accounting Policies (Tables) |
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Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Earnings Per Share, Basic and Diluted | Basic and diluted earnings per share computations for the Company's reported net income attributable to common stockholders are as follows:
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Discontinued Operations (Tables) |
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Discontinued Operations and Disposal Groups [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summarized Discontinued Operations Financial Information | The following table provides a reconciliation of the carrying amounts of major classes of assets and liabilities which are included in assets and liabilities of discontinued operations in the accompanying consolidated balance sheets for the years ended September 30, 2018 and 2017:
The following table summarizes the results of discontinued operations for the years ended September 30, 2018, and 2017.
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Inventories (Tables) |
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Inventory Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Inventories | Inventories consist of the following:
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Accumulated Other Comprehensive Loss (Tables) |
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Equity [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Accumulated Other Comprehensive Income (Loss) | The components of accumulated other comprehensive loss are as follows:
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Income Taxes (Tables) |
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Income Tax Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Components of Income Tax Expense (Benefit) | The components of income before income tax and income tax expense are comprised of the following:
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Schedule of Effective Income Tax Rate Reconciliation | Reconciliation of federal statutory rate and income tax expense to the Company's effective tax rate and actual income tax expense is as follows:
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Schedule of Deferred Tax Assets and Liabilities | For the years ended September 30, 2018 and 2017, temporary differences, which give rise to deferred tax assets (liabilities), are as follows:
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Schedule of Unrecognized Tax Benefits Roll Forward | A reconciliation of the beginning and ending balances of the total amounts of gross unrecognized tax benefits is as follows:
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Property, Equipment and Improvements, Net (Tables) |
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Schedule of Property, Equipment and Improvements | Property, equipment and improvements, net consist of the following:
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Acquired Intangible Assets (Tables) |
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Goodwill and Intangible Assets Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Finite-Lived Intangible Assets | As of September 30, 2018 and 2017, intangible assets are as follows:
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Schedule of Finite-Lived Intangible Assets, Future Amortization Expense | Annual amortization expense related to intangible assets for each of the following successive fiscal years is as follows:
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Accounts Payable and Accrued Expenses (Tables) |
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Schedule of Accounts Payable and Accrued Liabilities | Accounts payable and accrued expenses consist of the following:
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Product Warranties (Tables) |
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Schedule of Product Warranty Liability | Product warranty activity for the years ended September 30 was as follows:
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Stock Options and Awards (Tables) |
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Sep. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Employee Service Share-based Compensation, Allocation of Recognized Period Costs | The following table summarizes stock-based compensation expense in the Company's consolidated statements of operations:
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Share-based Compensation, Stock Options, Activity | The following tables provide summary data of stock option award activity:
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Schedule of Nonvested Share Activity | The following table provides summary data of nonvested stock award activity:
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Pension and Retirement Plans (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Net Benefit Costs | The components of net periodic benefit costs related to the U.S. and international plans are as follows:
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Schedule of Changes in Projected Benefit Obligations | The following table presents an analysis of the changes in 2018 and 2017 of the benefit obligation, the plan assets and the funded status of the plans:
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Schedule of Amounts Recognized in Balance Sheet | The amounts recognized in the consolidated balance sheet consist of:
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Schedule of Accrued Liabilities | Accrued benefit liability reported as:
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Schedule of Expected Benefit Payments | The following benefit payments, which reflect expected future service, as appropriate, are expected to be paid (amounts in thousands):
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Schedule of Allocation of Plan Assets | The fair value of the assets held by the U.K. pension plan by asset category are as follows:
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Projected Benefit Obligations | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Assumptions Used | The following table provides the weighted average actuarial assumptions used to determine the actuarial present value of projected benefit obligations at:
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Net Periodic Benefit Cost | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Assumptions Used | The following table provides the weighted average actuarial assumptions used to determine net periodic benefit cost for years ended:
|
Commitments and Contingencies (Tables) |
12 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2018 | ||||||||||||||||||||||||||||||||||||||||||||||
Commitments and Contingencies Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Future Minimum Rental Payments for Operating Leases | The Company was obligated under non-cancelable operating leases as follows:
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Schedule of Future Minimum Lease Payments for Capital Leases | The Company was obligated under non-cancelable capital leases as follows:
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Segment Information (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Revenue, Major Customer [Line Items] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Revenue from External Customers Attributed to Foreign Countries by Geographic Area | The following table details the Company's sales by operating segment for fiscal years September 30, 2018 and 2017. The Company's sales by geographic area based on the location of where the products were shipped or services rendered are as follows:
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Schedule of Disclosure on Geographic Areas, Long-Lived Assets in Individual Foreign Countries by Country | Long-lived assets by geographic location at September 30, 2018 and 2017 were as follows:
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Schedule Of Deferred Tax Assets By Geographic Location | Deferred tax assets by geographic location at September 30, 2018 and 2017 were as follows:
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Operating Segments [Member] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Revenue, Major Customer [Line Items] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Revenue by Major Customers by Reporting Segments | The following table presents certain operating segment information.
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Revenues In Excess Of 10 Percent Of Total Revenues [Member] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Revenue, Major Customer [Line Items] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Revenue by Major Customers by Reporting Segments | The following table lists customers from which the Company derived revenues in excess of 10% of total revenues for the years ended September 30, 2018 and 2017.
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Investment in Lease (Tables) |
12 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2018 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Investments, All Other Investments [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Leases | A summary of components for the Company's investment in lease, net is as follows:
The schedule of future minimum lease payments receivable is as follows:
|
Inventories (Detail) - USD ($) $ in Thousands |
Sep. 30, 2018 |
Sep. 30, 2017 |
---|---|---|
Inventory Disclosure [Abstract] | ||
Raw materials | $ 1,098 | $ 1,334 |
Work-in-process | 226 | 260 |
Finished goods | 6,234 | 3,973 |
Total | $ 7,558 | $ 5,567 |
Inventories - Narrative (Detail) - USD ($) $ in Millions |
Sep. 30, 2018 |
Sep. 30, 2017 |
---|---|---|
Inventory Disclosure [Abstract] | ||
Other Inventory, Capitalized Costs, Gross | $ 0.7 | $ 0.4 |
Accumulated Other Comprehensive Loss - Narrative (Details) - USD ($) $ in Thousands |
12 Months Ended | |
---|---|---|
Sep. 30, 2018 |
Sep. 30, 2017 |
|
Other Income and Expenses [Abstract] | ||
Amortization of net (gain) loss included in net periodic pension cost | $ 151 | $ 224 |
Income Taxes (Detail) - USD ($) $ in Thousands |
12 Months Ended | |
---|---|---|
Sep. 30, 2018 |
Sep. 30, 2017 |
|
Valuation Allowance, Deferred Tax Asset, Change in Amount | $ 41 | |
Deferred tax asset, income tax expense (benefit) | 500 | |
Deemed repatriation tax | 771 | $ 0 |
Income tax expense | $ 882 | $ 1,162 |
Effective Income Tax Rate, Continuing Operations | (79.70%) | 34.10% |
Deferred Tax Assets, Valuation Allowance | $ 2,658 | $ 2,712 |
Deferred Tax Assets, Other Tax Carryforwards | 55 | |
Undistributed Earnings of Foreign Subsidiaries | 12,700 | 2,800 |
Unrecognized Tax Benefits that Would Impact Effective Tax Rate | 220 | |
Accrued penalties and interest | 11 | 7 |
U.S. | ||
Operating Loss Carryforwards | 1,700 | 0 |
State | ||
Valuation Allowance, Deferred Tax Asset, Change in Amount | 54 | |
Operating Loss Carryforwards | 500 | $ 400 |
U.K. | ||
Operating Loss Carryforwards | $ 8,800 |
Income Taxes (Detail) - Components of income before income tax and income tax expense (benefit) - USD ($) $ in Thousands |
12 Months Ended | |
---|---|---|
Sep. 30, 2018 |
Sep. 30, 2017 |
|
Income before income tax: | ||
U.S. | $ (1,077) | $ 3,383 |
Foreign | (29) | 22 |
Income (loss) before income taxes and discontinued operations | (1,106) | 3,405 |
Current: | ||
Federal | 771 | 1,067 |
State | 47 | 119 |
Foreign | 0 | 0 |
Current Income Tax Expense (Benefit) | 818 | 1,186 |
Deferred: | ||
Federal | 259 | (86) |
State | (118) | 37 |
Foreign | (77) | 25 |
Deferred Income Tax Expense (Benefit) | 64 | (24) |
Income tax expense (benefit) | $ 882 | $ 1,162 |
Income Taxes (Detail) - Deferred tax assets (liabilities) - USD ($) $ in Thousands |
Sep. 30, 2018 |
Sep. 30, 2017 |
---|---|---|
Deferred tax assets: | ||
Pension | $ 1,390 | $ 1,609 |
Intangibles | 104 | 219 |
Other reserves and accruals | 451 | 630 |
Inventory reserves and other | 502 | 563 |
State credits, net of federal benefit | 380 | 318 |
Federal and state net operating loss carryforwards | 626 | 52 |
Foreign net operating loss carryforwards | 1,489 | 1,531 |
Foreign exchange on intercompany loan | 7 | (77) |
Foreign tax credits | 0 | 7 |
Depreciation and amortization | (396) | (177) |
Gross deferred tax assets | 4,553 | 4,675 |
Less: valuation allowance | (2,658) | (2,712) |
Realizable deferred tax asset | 1,895 | 1,963 |
Gross deferred tax liabilities | 0 | 0 |
Net deferred tax assets | $ 1,895 | $ 1,963 |
Income Taxes (Detail) - A reconciliation of the beginning and ending balances of the total amounts of gross unrecognized tax benefits - USD ($) $ in Thousands |
12 Months Ended | |
---|---|---|
Sep. 30, 2018 |
Sep. 30, 2017 |
|
Income Tax Disclosure [Abstract] | ||
Balance, beginning of year | $ 209 | $ 202 |
Accrued penalties and interest | 11 | 7 |
Balance, end of period | $ 220 | $ 209 |
Property, Equipment and Improvements, Net (Detail) - USD ($) $ in Thousands |
12 Months Ended | |
---|---|---|
Sep. 30, 2018 |
Sep. 30, 2017 |
|
Property, Plant and Equipment [Abstract] | ||
Depreciation, Depletion and Amortization | $ 506 | $ 365 |
Property, Equipment and Improvements, Net (Detail) - Property, equipment and improvements, net - USD ($) $ in Thousands |
Sep. 30, 2018 |
Sep. 30, 2017 |
---|---|---|
Property, Plant and Equipment [Line Items] | ||
Property, plant and equipment, gross | $ 7,899 | $ 7,592 |
Less accumulated depreciation and amortization | (7,052) | (6,673) |
Property, equipment and improvements, net | 847 | 919 |
Leasehold improvements | ||
Property, Plant and Equipment [Line Items] | ||
Property, plant and equipment, gross | 224 | 224 |
Equipment | ||
Property, Plant and Equipment [Line Items] | ||
Property, plant and equipment, gross | 7,574 | 7,294 |
Automobiles | ||
Property, Plant and Equipment [Line Items] | ||
Property, plant and equipment, gross | $ 101 | $ 74 |
Acquired Intangible Assets (Detail) - USD ($) $ in Thousands |
12 Months Ended | |
---|---|---|
Sep. 30, 2018 |
Sep. 30, 2017 |
|
Goodwill and Intangible Assets Disclosure [Abstract] | ||
Amortization of Intangible Assets | $ 119 | $ 120 |
Acquired Intangible Assets (Detail) - Intangible assets - USD ($) $ in Thousands |
12 Months Ended | |
---|---|---|
Sep. 30, 2018 |
Sep. 30, 2017 |
|
Impaired Intangible Assets [Abstract] | ||
Gross | $ 1,173 | $ 1,173 |
Accumulated Amortization | 1,125 | 1,006 |
Net | $ 48 | $ 167 |
Customer list | ||
Impaired Intangible Assets [Abstract] | ||
Weighted Average Remaining Amortization Period | 1 year | 2 years |
Gross | $ 910 | $ 910 |
Accumulated Amortization | 864 | 773 |
Net | $ 46 | $ 137 |
Non-compete agreements | ||
Impaired Intangible Assets [Abstract] | ||
Weighted Average Remaining Amortization Period | 0 years | 0 years |
Gross | $ 93 | $ 93 |
Accumulated Amortization | 93 | 93 |
Net | $ 0 | $ 0 |
Developed technology | ||
Impaired Intangible Assets [Abstract] | ||
Weighted Average Remaining Amortization Period | 0 years | 0 years |
Gross | $ 30 | $ 30 |
Accumulated Amortization | 30 | 30 |
Net | $ 0 | $ 0 |
Trade name | ||
Impaired Intangible Assets [Abstract] | ||
Weighted Average Remaining Amortization Period | 0 years | 1 year |
Gross | $ 140 | $ 140 |
Accumulated Amortization | 138 | 110 |
Net | $ 2 | $ 30 |
Acquired Intangible Assets (Detail) - Annual amortization expense related to intangible assets - USD ($) $ in Thousands |
Sep. 30, 2018 |
Sep. 30, 2017 |
---|---|---|
Goodwill and Intangible Assets Disclosure [Abstract] | ||
2017 | $ 11 | |
2018 | 9 | |
Finite-Lived Intangible Assets, Amortization Expense, Year Three | 9 | |
2020 | 9 | |
2021 | 9 | |
Thereafter | 1 | |
Total | $ 48 | $ 167 |
Accounts Payable and Accrued Expenses (Detail) - Accounts payable and accrued expenses consist of the following - USD ($) $ in Thousands |
Sep. 30, 2018 |
Sep. 30, 2017 |
---|---|---|
Payables and Accruals [Abstract] | ||
Accounts payable | $ 4,466 | $ 8,120 |
Line of Credit, Current | 3,247 | 3,110 |
Commissions | 312 | 269 |
Compensation and fringe benefits | 1,836 | 1,528 |
Professional fees and shareholders' reporting costs | 308 | 491 |
Taxes, other than income | 313 | 854 |
Warranty | 108 | 121 |
Other | 1,934 | 402 |
Accounts payable and accrued expenses | $ 12,524 | $ 14,895 |
Product Warranties (Details) - USD ($) $ in Thousands |
12 Months Ended | |
---|---|---|
Sep. 30, 2018 |
Sep. 30, 2017 |
|
Payables and Accruals [Abstract] | ||
Product Warranty Beg Balance | $ 121,450 | $ 130,841 |
Accrual for Warranties | 26,539 | 75,816 |
Fulfillment of Warranty Obligations | (40,451) | (85,207) |
Product Warranty End Balance | $ 107,538 | $ 121,450 |
Stock Options and Awards (Detail) - Stock-based compensation expense - USD ($) $ in Thousands |
12 Months Ended | |
---|---|---|
Sep. 30, 2018 |
Sep. 30, 2017 |
|
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | ||
Stock-based compensation expense | $ 691 | $ 577 |
Cost of sales | ||
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | ||
Stock-based compensation expense | 5 | 6 |
Engineering and development | ||
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | ||
Stock-based compensation expense | 32 | 24 |
Selling, general and administrative | ||
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | ||
Stock-based compensation expense | $ 654 | $ 547 |
Employee Stock Purchase Plan (Details) - shares |
12 Months Ended | ||
---|---|---|---|
Sep. 30, 2018 |
Sep. 30, 2017 |
Dec. 31, 2013 |
|
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |||
Number of shares covered under the Employee Stock Purchase Plan (ESPP) | 250,000 | ||
Purchase price per share as percentage of fair market value | 95.00% | ||
Issuance of shares under employee stock purchase plan (in shares) | 22,895 | 22,996 | |
Shares available for future issuance under the ESPP | 126,191 |
Pension and Retirement Plans (Detail) - Weighted average actuarial assumptions used to determine projected benefit obligation - Pension Plan |
Sep. 30, 2018 |
Sep. 30, 2017 |
---|---|---|
Domestic | ||
Defined Benefit Plan Disclosure [Line Items] | ||
Discount rate: | 4.00% | 3.75% |
International | ||
Defined Benefit Plan Disclosure [Line Items] | ||
Discount rate: | 2.90% | 2.80% |
Expected return on plan assets: | 3.80% | 3.70% |
Rate of compensation increase: | 0.00% | 0.00% |
Pension and Retirement Plans (Detail) - Weighted average actuarial assumptions used to determine net periodic benefit cost - Pension Plan |
12 Months Ended | |
---|---|---|
Sep. 30, 2018 |
Sep. 30, 2017 |
|
Domestic | ||
Defined Benefit Plan Disclosure [Line Items] | ||
Discount rate: | 3.75% | 3.50% |
International | ||
Defined Benefit Plan Disclosure [Line Items] | ||
Discount rate: | 2.80% | 2.40% |
Expected return on plan assets: | 3.70% | 3.60% |
Rate of compensation increase: | 0.00% | 0.00% |
Pension and Retirement Plans (Detail) - Accrued benefit liability - USD ($) $ in Thousands |
Sep. 30, 2018 |
Sep. 30, 2017 |
---|---|---|
Liability, Defined Benefit Plan [Abstract] | ||
Current accrued benefit liability | $ 340 | $ 325 |
Non-current accrued benefit liability | 6,168 | 6,653 |
Total accrued benefit liability | $ 6,508 | $ 6,978 |
Pension and Retirement Plans (Detail) - Future benefit payments $ in Thousands |
Sep. 30, 2018
USD ($)
|
---|---|
Defined Benefit Plan, Expected Future Benefit Payment [Abstract] | |
2015 | $ 445 |
2016 | 457 |
2017 | 475 |
2018 | 505 |
2019 | 521 |
Thereafter | $ 3,311 |
Lines of Credit (Detail) $ in Millions |
12 Months Ended | |
---|---|---|
Sep. 30, 2018
USD ($)
|
Sep. 30, 2017
USD ($)
|
|
Line of Credit Facility [Line Items] | ||
Maximum borrowing capacity | $ 1.0 | |
Interest rate terms | London Inter-Bank Offer Rate ("LIBOR") plus 2.5%, with a floor of 4% | |
Debt Instrument, Description of Variable Rate Basis | Prime plus 5% | |
liquidity ratio | 1.2 | |
Minimum Net Worth Required for Compliance | $ 2.5 | |
Ratio of Indebtedness to Net Capital | 5.0 | |
Short-term Debt | $ 3.2 | $ 3.1 |
Line of Credit | ||
Line of Credit Facility [Line Items] | ||
Line of Credit Facility, Description | 0.04 | 0.04 |
Line of Credit | Prime Rate | ||
Line of Credit Facility [Line Items] | ||
Basis spread on variable rate | 2.50% | 2.50% |
Commitments and Contingencies (Detail) - USD ($) shares in Thousands, $ in Millions |
12 Months Ended | |
---|---|---|
Sep. 30, 2018 |
Sep. 30, 2017 |
|
Commitments and Contingencies Disclosure [Abstract] | ||
Operating Leases, Rent Expense (in Dollars) | $ 0.8 | $ 0.7 |
Operating lease term | 3 years | |
Capital lease, current | $ 0.3 | |
Capital lease, noncurrent | $ 0.5 | |
Stock Repurchase Program, Remaining Number of Shares Authorized to be Repurchased | 201 |
Commitments and Contingencies (Detail) - Future minimum rental payments on non-cancelable operating leases $ in Thousands |
Sep. 30, 2018
USD ($)
|
---|---|
Operating Leases, Future Minimum Payments Due, Fiscal Year Maturity [Abstract] | |
2019 | $ 437 |
2020 | 399 |
2021 | 93 |
Operating Leases, Future Minimum Payments Due | 929 |
2019 | 312 |
2020 | 312 |
2021 | 234 |
Minimum lease payments including interest | 858 |
Amount representing interest | (60) |
Minimum lease payments excluding interest | $ 798 |
Segment Information (Detail) - USD ($) $ in Millions |
12 Months Ended | |
---|---|---|
Sep. 30, 2018 |
Sep. 30, 2017 |
|
Customer A [Member] | ||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||
Concentration risk, percentage | 10.00% | 25.00% |
Accounts Receivable [Member] | Customer Concentration Risk [Member] | Customer A [Member] | ||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||
Accounts receivable | $ 1.1 | $ 2.4 |
Concentration risk, percentage | 9.00% | 14.00% |
Accounts Receivable [Member] | Customer Concentration Risk [Member] | Customer C [Member] | ||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||
Accounts receivable | $ 1.7 | |
Concentration risk, percentage | 14.00% |
Segment Information (Detail) - Long-lived assets by geographic location - USD ($) $ in Thousands |
Sep. 30, 2018 |
Sep. 30, 2017 |
---|---|---|
Revenues from External Customers and Long-Lived Assets [Line Items] | ||
Long-Lived Assets | $ 1,460 | $ 1,086 |
North America [Member] | ||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||
Long-Lived Assets | 1,457 | 1,078 |
Europe [Member] | ||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||
Long-Lived Assets | $ 3 | $ 8 |
Segment Information (Detail) - Deferred tax assets by geographic location - USD ($) $ in Thousands |
Sep. 30, 2018 |
Sep. 30, 2017 |
---|---|---|
Deferred tax assets | $ 1,895 | $ 1,963 |
North America [Member] | ||
Deferred tax assets | 1,895 | 1,963 |
Europe [Member] | ||
Deferred tax assets | $ 0 | $ 0 |
Segment Information (Detail) - Major customers - Customer A [Member] - USD ($) $ in Millions |
12 Months Ended | |
---|---|---|
Sep. 30, 2018 |
Sep. 30, 2017 |
|
Revenue, Major Customer [Line Items] | ||
Concentration risk, percentage | 10.00% | 25.00% |
Revenues | $ 7.5 | $ 22.1 |
Dividend (Detail) - $ / shares |
12 Months Ended | |||||||||
---|---|---|---|---|---|---|---|---|---|---|
Sep. 14, 2018 |
Jun. 15, 2018 |
Mar. 16, 2018 |
Jan. 16, 2018 |
Sep. 05, 2017 |
Jun. 15, 2017 |
Mar. 17, 2017 |
Feb. 08, 2017 |
Sep. 30, 2018 |
Sep. 30, 2017 |
|
Stockholders' Equity Note [Abstract] | ||||||||||
Amount Paid Per Share (in Dollars per share) | $ 0.15 | $ 0.11 | $ 0.11 | $ 0.11 | $ 0.11 | $ 0.11 | $ 0.11 | $ 0.11 | $ 0.48 | $ 0.44 |
Investment in Lease (Details) $ in Thousands |
Sep. 30, 2018
USD ($)
|
---|---|
Investments, All Other Investments [Abstract] | |
Investment in lease, gross | $ 1,038 |
Unearned income | (228) |
Total investment in lease, net | 810 |
Noncurrent portion | 246 |
Noncurrent portion | 564 |
2019 | 378 |
2020 | 378 |
2021 | $ 282 |
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