Inventories

12 Months Ended

Sep. 30, 2019

Inventory Disclosure [Abstract]

Inventories

NOTE 2 – INVENTORIES

Inventories are valued at the lower of cost or net realizable value. During the fourth quarter of fiscal 2019, the Company changed its method for accounting for cost of inventories from the LIFO method to the FIFO method. The Company believes the FIFO method will improve financial reporting by better reflecting the current value of inventory on the consolidated balance sheets, by more closely aligning the flow of physical inventory with the accounting for the inventory, and by providing better matching of revenues and expenses.

Net inventories consist of the following:

	September 30,
	2019		2018
			(as adjusted)
Raw materials	$	14,158,000	$	13,470,000
Work in process		1,397,000		1,247,000
Finished goods		9,811,000		7,157,000
Used equipment		—		16,000
Inventories, net	$	25,366,000	$	21,890,000

The fiscal 2018 consolidated financial statements have been retrospectively adjusted to apply the new method of FIFO cost accounting for inventories. The cumulative effect of this change on periods prior to those presented herein resulted in an increase in retained earnings of $2,708,000.

Slow-moving and obsolete inventory reserves were $4,700,000 and $4,543,000 (as adjusted) at September 30, 2019 and 2018, respectively.

As a result of the retrospective application of this change in accounting method, the following financial statement line items within the accompanying fiscal 2018 consolidated financial statements were adjusted, as follows:

	As Originally Reported under LIFO			Effect of Change			As Reported under FIFO
Consolidated Balance Sheets
ASSETS
Inventories, net	$	18,214,000		$	3,676,000		$	21,890,000
Prepaid expenses		1,904,000			(556,000	)		1,348,000
LIABILITIES & SHAREHOLDERS’ EQUITY
Deferred and other income taxes		2,358,000			282,000			2,640,000
Retained earnings		128,863,000			2,838,000			131,701,000
Consolidated Income Statements
Cost of goods sold	$	71,993,000		$	(175,000	)	$	71,818,000
Income before income tax expense		14,889,000			175,000			15,064,000
Income tax expense		2,325,000			45,000			2,370,000
Net income	$	12,564,000		$	130,000		$	12,694,000
Basic earnings per common share	$	0.87		$	0.01		$	0.88
Diluted earnings per common share	$	0.85		$	0.01		$	0.86
Consolidated Statements of Cash Flows
Net income	$	12,564,000		$	130,000		$	12,694,000
Deferred and other income taxes		757,000			(495,000	)		262,000
Inventories		(1,527,000	)		(175,000	)		(1,702,000	)
Prepaid expenses		(244,000	)		556,000			312,000
Accrued expenses		(341,000	)		(16,000	)		(357,000	)

There was no material impact to the previously reported unaudited interim fiscal 2018 quarterly condensed consolidated results of operations or statements of income as a result of the retrospective application of the change in inventory accounting principle.