Atrion Corporation
|
||
(Exact
Name of Registrant as Specified in its Charter)
|
Delaware
|
|
63-0821819
|
(State
or Other Jurisdiction of Incorporation or
Organization)
|
|
(I.R.S.
Employer Identification No.)
|
One Allentown Parkway, Allen, Texas 75002
|
||
(Address
of Principal Executive Offices) (Zip Code)
|
(972) 390-9800
|
||
(Registrant’s
Telephone Number, Including Area Code)
|
Large accelerated
filer
|
☐
|
Accelerated
filer
|
☑
|
Smaller reporting
company
|
☐
|
Non-accelerated
filer
|
☐
|
|
|
Emerging growth
company
|
☐
|
Title of Each Class
|
|
Number of Shares Outstanding at
October 20, 2017
|
Common stock, Par Value $0.10 per share
|
|
1,851,842
|
PART I. Financial Information
|
|
3
|
||
|
|
|
|
|
|
Item 1. Financial Statements
|
|
3
|
|
|
|
|
|
|
|
|
Consolidated Statements of Income (Unaudited) For the Three and
Nine months Ended September 30, 2017 and 2016
|
|
3
|
|
|
|
|
|
|
|
Consolidated Statements of Comprehensive Income (Unaudited) For the
Three and Nine months Ended September 30, 2017 and
2016
|
|
4
|
|
|
|
|
|
|
|
Consolidated Balance Sheets (Unaudited) September 30, 2017 and
December 31, 2016
|
|
5
|
|
|
|
|
|
|
|
Consolidated Statements of Cash Flows (Unaudited) For the Nine
months Ended September 30, 2017 and 2016
|
|
6
|
|
|
|
|
|
|
|
Consolidated Statement of Changes in Stockholders’ Equity
(Unaudited) September 30, 2017 and December 31, 2016
|
|
7
|
|
|
|
|
|
|
|
Notes to Consolidated Financial Statements (Unaudited)
|
|
8
|
|
|
|
|
|
|
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations
|
|
13
|
|
|
|
|
|
|
|
Item 3.
Quantitative and Qualitative Disclosures About Market Risk
|
|
18
|
|
|
|
|
|
|
|
Item 4. Controls and Procedures
|
|
18
|
|
|
|
|
|
|
PART II. Other Information
|
|
19
|
||
|
|
|
|
|
|
Item 1. Legal Proceedings
|
|
19
|
|
|
|
|
|
|
|
Item 1A. Risk Factors
|
|
19
|
|
|
|
|
|
|
|
Item 6. Exhibits
|
|
19
|
|
|
|
|
|
|
SIGNATURES
|
|
20
|
||
|
|
|
|
|
Exhibit Index
|
|
21
|
|
Three Months Ended
September 30,
|
Nine Months Ended
September 30,
|
||
|
2017
|
2016
|
2017
|
2016
|
|
(in
thousands, except per share amounts)
|
|||
Revenues
|
$37,903
|
$37,835
|
$112,571
|
$110,193
|
Cost
of goods sold
|
19,498
|
20,211
|
57,841
|
57,789
|
Gross
profit
|
18,405
|
17,624
|
54,730
|
52,404
|
Operating
expenses:
|
|
|
|
|
Selling
|
1,691
|
1,471
|
5,303
|
4,871
|
General
and administrative
|
4,086
|
3,613
|
12,390
|
11,442
|
Research
and development
|
1,149
|
1,564
|
4,056
|
4,576
|
|
6,926
|
6,648
|
21,749
|
20,889
|
Operating
income
|
11,479
|
10,976
|
32,981
|
31,515
|
|
|
|
|
|
Interest
and dividend income
|
287
|
106
|
806
|
315
|
Other
income (expense), net
|
--
|
1
|
1
|
(309)
|
|
287
|
107
|
807
|
6
|
|
|
|
|
|
Income
before provision for income taxes
|
11,766
|
11,083
|
33,788
|
31,521
|
Provision
for income taxes
|
(3,795)
|
(3,469)
|
(5,841)
|
(9,511)
|
|
|
|
|
|
Net
income
|
$7,971
|
$7,614
|
$27,947
|
$22,010
|
|
|
|
|
|
Net
income per basic share
|
$4.30
|
$4.17
|
$15.16
|
$12.07
|
Weighted
average basic shares outstanding
|
1,852
|
1,825
|
1,844
|
1,823
|
|
|
|
|
|
|
|
|
|
|
Net
income per diluted share
|
$4.29
|
$4.10
|
$15.06
|
$11.86
|
Weighted
average diluted shares outstanding
|
1,857
|
1,858
|
1,856
|
1,856
|
|
|
|
|
|
Dividends
per common share
|
$1.20
|
$1.05
|
$3.30
|
$2.85
|
|
Three Months Ended
September 30,
|
Nine Months Ended
September 30,
|
||
|
2017
|
2016
|
2017
|
2016
|
|
(In
thousands)
|
|||
|
|
|
|
|
Net
Income
|
$7,971
|
$7,614
|
$27,947
|
$22,010
|
Other Comprehensive
Income (Loss)
|
|
|
|
|
Unrealized
income (loss) on investments, net of tax expense (benefit) of $23,
($273), $58 and ($445)
|
43
|
(506)
|
109
|
(827)
|
|
|
|
|
|
Comprehensive
Income
|
$8,014
|
$7,108
|
$28,056
|
$21,183
|
Assets
|
September
30,
2017
|
December
31,
2016
|
|
(in
thousands)
|
|
Current assets:
|
|
|
Cash and cash
equivalents
|
$20,995
|
$20,022
|
Short-term
investments
|
38,959
|
24,080
|
Accounts
receivable
|
19,585
|
17,166
|
Inventories
|
29,924
|
29,015
|
Prepaid expenses
and other current assets
|
3,001
|
3,181
|
|
112,464
|
93,464
|
|
|
|
Long-term
investments
|
10,112
|
9,945
|
|
|
|
Property, plant and
equipment
|
167,148
|
160,413
|
Less accumulated
depreciation and amortization
|
100,630
|
95,148
|
|
66,518
|
65,265
|
|
|
|
Other assets and
deferred charges:
|
|
|
Patents
|
1,808
|
1,929
|
Goodwill
|
9,730
|
9,730
|
Other
|
1,494
|
1,609
|
|
13,032
|
13,268
|
|
|
|
Total
assets
|
$202,126
|
$181,942
|
Liabilities
and Stockholders’ Equity
|
|
|
Current
liabilities:
|
|
|
Accounts payable
and accrued liabilities
|
$10,382
|
$8,663
|
Accrued income and
other taxes
|
2,312
|
410
|
|
12,694
|
9,073
|
|
|
|
Line of
credit
|
--
|
--
|
|
|
|
Other non-current
liabilities
|
10,981
|
9,881
|
|
|
|
Stockholders’
equity:
|
|
|
Common stock, par
value $0.10 per share; authorized10,000 shares, issued 3,420
shares
|
342
|
342
|
Paid-in
capital
|
48,360
|
37,448
|
Accumulated other
comprehensive (loss) income
|
(365)
|
(474)
|
Retained
earnings
|
261,777
|
239,946
|
Treasury
shares,1,584 at September 30, 2017 and 1,596 at December 31, 2016,
at cost
|
(131,663)
|
(114,274)
|
Total
stockholders’ equity
|
178,451
|
162,988
|
|
|
|
|
|
|
Total
liabilities and stockholders’ equity
|
$202,126
|
$181,942
|
|
Nine Months Ended
September 30,
|
|
|
2017
|
2016
|
|
(In
thousands)
|
|
Cash
flows from operating activities:
|
|
|
Net
income
|
$27,947
|
$22,010
|
Adjustments
to reconcile net income tonet cash provided by operating
activities:
|
|
|
Depreciation
and amortization
|
6,458
|
6,655
|
Deferred
income taxes
|
1,002
|
(116)
|
Stock-based
compensation
|
1,240
|
1,323
|
Bond
impairment
|
--
|
345
|
Net change in
accrued interest, premiums, and discounts
|
|
|
on
investments
|
(167)
|
(5)
|
Other
|
(2)
|
--
|
|
36,478
|
30,212
|
|
|
|
Changes
in operating assets and liabilities:
|
|
|
Accounts
receivable
|
(2,419)
|
(3,504)
|
Inventories
|
(909)
|
(285)
|
Prepaid
expenses
|
180
|
754
|
Other
non-current assets
|
115
|
(633)
|
Accounts
payable and accrued liabilities
|
1,719
|
265
|
Accrued
income and other taxes
|
1,902
|
1,405
|
Other
non-current liabilities
|
39
|
195
|
|
37,105
|
28,409
|
|
|
|
Cash
flows from investing activities:
|
|
|
Property,
plant and equipment additions
|
(7,590)
|
(8,836)
|
Purchase
of investments
|
(46,712)
|
(21,798)
|
Proceeds
from sale of investments
|
--
|
210
|
Proceeds
from maturities of investments
|
32,000
|
5,000
|
|
(22,302)
|
(25,424)
|
|
|
|
Cash
flows from financing activities:
|
|
|
Shares tendered for employees’ withholding
taxes on stock-based
compensation
|
(7,735)
|
(1,112)
|
Purchase
of treasury stock
|
--
|
(1,276)
|
Dividends
paid
|
(6,095)
|
(5,196)
|
|
(13,830)
|
(7,584)
|
|
|
|
Net
change in cash and cash equivalents
|
973
|
(4,599)
|
Cash
and cash equivalents at beginning of period
|
20,022
|
28,346
|
Cash
and cash equivalents at end of period
|
$20,995
|
$23,747
|
|
|
|
|
|
|
Cash
paid for:
|
|
|
Income
taxes
|
$2,411
|
$7,568
|
|
|
|
Non-cash
financing activities:
|
|
|
Non-cash
effect of stock option exercises
|
$10,237
|
--
|
|
Common
Stock
|
Treasury
Stock
|
|
|
|
|
||
|
Shares
Outstanding
|
Amount
|
Shares
|
Amount
|
Additional
Paid-in Capital
|
Accumulated
Other Comprehensive Income (Loss)
|
Retained
Earnings
|
Total
|
Balances, January
1, 2017
|
1,824
|
$342
|
1,596
|
$(114,274)
|
$37,448
|
$(474)
|
$239,946
|
$162,988
|
|
|
|
|
|
|
|
|
|
Net
income
|
|
|
|
|
|
|
27,947
|
27,947
|
Other
comprehensive income (loss)
|
|
|
|
|
|
109
|
|
109
|
Stock-based
compensation transactions
|
46
|
|
(46)
|
583
|
10,912
|
|
|
11,495
|
Shares
surrendered in stock transactions
|
(34)
|
|
34
|
(17,972)
|
|
|
|
(17,972)
|
Dividends
|
|
|
|
|
|
|
(6,116)
|
(6,116)
|
Balances,
September 30, 2017
|
1,836
|
$342
|
1,584
|
$(131,663)
|
$48,360
|
$(365)
|
$261,777
|
$178,451
|
|
September
30,
|
December
31,
|
|
2017
|
2016
|
Raw
materials
|
$13,334
|
$12,984
|
Work in
process
|
7,174
|
6,230
|
Finished
goods
|
9,416
|
9,801
|
Total
inventories
|
$29,924
|
$29,015
|
|
Three Months
Ended September 30,
|
Nine Months
Ended September 30,
|
||
|
2017
|
2016
|
2017
|
2016
|
|
(in
thousands, except per share amounts)
|
|||
Net
income
|
$7,971
|
$7,614
|
$27,947
|
$22,010
|
Weighted average
basic shares outstanding
|
1,852
|
1,825
|
1,844
|
1,823
|
Add: Effect of
dilutive securities
|
5
|
33
|
12
|
33
|
Weighted average
diluted shares outstanding
|
1,857
|
1,858
|
1,856
|
1,856
|
Earnings
per share:
|
|
|
|
|
Basic
|
$4.30
|
$4.17
|
$15.16
|
$12.07
|
Diluted
|
$4.29
|
$4.10
|
$15.06
|
$11.86
|
|
|
Gross
Unrealized
|
|
|
|
Cost
|
Gains
|
Losses
|
Fair
Value
|
As
of September 30, 2017:
|
|
|
|
|
Short-term
Investments:
|
|
|
|
|
Certificates of
Deposit
|
$9,096
|
$--
|
$(1)
|
$9,095
|
Commercial
Paper
|
$29,833
|
$62
|
$(4)
|
$29,891
|
Corporate
bonds
|
$30
|
$--
|
$--
|
$30
|
|
|
|
|
|
Long-term
Investments
|
|
|
|
|
Corporate
bonds
|
$5,000
|
$--
|
$(36)
|
$4,964
|
Equity
investments
|
$5,675
|
$--
|
$(563)
|
$5,112
|
|
|
Gross
Unrealized
|
|
|
|
Cost
|
Gains
|
Losses
|
Fair
Value
|
As
of December 31, 2016:
|
|
|
|
|
Short-term
Investments:
|
|
|
|
|
Certificates of
Deposit
|
$24,000
|
$9
|
$--
|
$24,009
|
Corporate
bonds
|
$80
|
$--
|
$--
|
$80
|
|
|
|
|
|
Long-term
Investments
|
|
|
|
|
Corporate
bonds
|
$5,000
|
$--
|
$(287)
|
$4,713
|
Equity
investments
|
$5,675
|
$--
|
$(730)
|
$4,945
|
September 30,
2017
|
December 31,
2016
|
||||
Weighted Average
Original Life (years)
|
Gross Carrying
Amount
|
Accumulated
Amortization
|
Weighted Average
Original Life (years)
|
Gross Carrying
Amount
|
Accumulated
Amortization
|
15.67
|
$13,840
|
$12,032
|
15.67
|
$13,840
|
$11,911
|
2018
|
$119
|
2019
|
$119
|
2020
|
$119
|
2021
|
$119
|
2022
|
$117
|
|
Three Months ended September 30,
|
|
|
2017
|
2016
|
|
|
|
Fluid
Delivery
|
$16,083
|
$16,573
|
Cardiovascular
|
12,837
|
11,389
|
Ophthalmology
|
3,595
|
4,386
|
Other
|
5,388
|
5,487
|
Total
|
$37,903
|
$37,835
|
|
Nine Months ended September 30,
|
|
|
2017
|
2016
|
|
|
|
Fluid
Delivery
|
$49,718
|
$47,183
|
Cardiovascular
|
36,523
|
35,649
|
Ophthalmology
|
11,030
|
12,417
|
Other
|
15,300
|
14,944
|
Total
|
$112,571
|
$110,193
|
Exhibit Number
|
|
Description
|
|
Atrion
Corporation Nonqualified Deferred Compensation Plan
|
|
|
Amended
and Restated Atrion Corporation 2006 Equity Incentive Plan (As last
amended on August 14, 2017)
|
|
|
Sarbanes-Oxley
Act Section 302 Certification of Chief Executive
Officer
|
|
|
Sarbanes-Oxley
Act Section 302 Certification of Chief Financial
Officer
|
|
|
Certification
Pursuant To 18 U.S.C. Section 1350, As Adopted Pursuant To Section
906 of The Sarbanes – Oxley Act Of 2002
|
|
|
Certification
Pursuant To 18 U.S.C. Section 1350, As Adopted Pursuant To Section
906 of The Sarbanes – Oxley Act Of 2002
|
|
101.INS
|
|
XBRL
Instance Document
|
101.SCH
|
|
XBRL
Taxonomy Extension Schema Document
|
101.CAL
|
|
XBRL
Taxonomy Extension Calculation Linkbase Document
|
101.DEF
|
|
XBRL
Taxonomy Extension Definition Linkbase Document
|
101.LAB
|
|
XBRL
Taxonomy Extension Label Linkbase Document
|
101.PRE
|
|
XBRL
Taxonomy Extension Presentation Linkbase Document
|
|
Atrion Corporation
(Registrant)
|
|
|
|
|
|
|
Date: November 7, 2017 |
By:
|
/s/
David
A. Battat
|
|
|
|
David A. Battat |
|
|
|
President and Chief
Executive Officer
|
|
|
|
|
|
Date: November 7, 2017 |
By:
|
/s/
Jeffery
Strickland
|
|
|
|
Jeffery Strickland |
|
|
|
Vice
President and Chief
Financial Officer
(Principal Accounting and Financial Officer)
|
|
Exhibit Number
|
|
Description
|
|
Atrion
Corporation Nonqualified Deferred Compensation Plan
|
|
|
Amended
and Restated Atrion Corporation 2006 Equity Incentive Plan (As last
amended on August 14, 2017)
|
|
|
Sarbanes-Oxley
Act Section 302 Certification of Chief Executive
Officer
|
|
|
Sarbanes-Oxley
Act Section 302 Certification of Chief Financial
Officer
|
|
|
Certification
Pursuant To 18 U.S.C. Section 1350, As Adopted Pursuant To Section
906 of The Sarbanes – Oxley Act Of 2002
|
|
|
Certification
Pursuant To 18 U.S.C. Section 1350, As Adopted Pursuant To Section
906 of The Sarbanes – Oxley Act Of 2002
|
|
101.INS
|
|
XBRL
Instance Document
|
101.SCH
|
|
XBRL
Taxonomy Extension Schema Document
|
101.CAL
|
|
XBRL
Taxonomy Extension Calculation Linkbase Document
|
101.DEF
|
|
XBRL
Taxonomy Extension Definition Linkbase Document
|
101.LAB
|
|
XBRL
Taxonomy Extension Label Linkbase Document
|
101.PRE
|
|
XBRL
Taxonomy Extension Presentation Linkbase Document
|
|
|
|
|
Date: November 7, 2017 |
|
/s/
David
A. Battat
|
|
|
|
David A. Battat |
|
|
|
President
and Chief Executive Officer |
|
|
|
|
|
Date: November 7, 2017 |
|
/s/
Jeffery
Strickland
|
|
|
|
Jeffery
Strickland
|
|
|
|
Vice
President and Chief Financial Officer |
|
|
|
|
|
Date: November 7, 2017 |
|
/s/
David
A. Battat
|
|
|
|
David A. Battat |
|
|
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President
and Chief Executive Officer |
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Date: November 7, 2017 |
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/s/
Jeffery
Strickland
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Jeffery
Strickland
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Vice
President and Chief Financial Officer |
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Document and Entity Information - shares |
9 Months Ended | |
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Sep. 30, 2017 |
Oct. 20, 2017 |
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Document And Entity Information [Abstract] | ||
Entity Registrant Name | ATRION CORP | |
Entity Central Index Key | 0000701288 | |
Document Type | 10-Q | |
Document Period End Date | Sep. 30, 2017 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Is Entity a Well-known Seasoned Issuer? | No | |
Is Entity a Voluntary Filer? | No | |
Is Entity's Reporting Status Current? | Yes | |
Entity Filer Category | Accelerated Filer | |
Entity Common Stock, Shares Outstanding | 1,851,842 | |
Document Fiscal Period Focus | Q3 | |
Document Fiscal Year Focus | 2017 |
Consolidated Statements of Income (Unaudited) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2017 |
Sep. 30, 2016 |
Sep. 30, 2017 |
Sep. 30, 2016 |
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Income Statement [Abstract] | ||||
Revenues | $ 37,903 | $ 37,835 | $ 112,571 | $ 110,193 |
Cost of goods sold | 19,498 | 20,211 | 57,841 | 57,789 |
Gross profit | 18,405 | 17,624 | 54,730 | 52,404 |
Operating expenses: | ||||
Selling | 1,691 | 1,471 | 5,303 | 4,871 |
General and administrative | 4,086 | 3,613 | 12,390 | 11,442 |
Research and development | 1,149 | 1,564 | 4,056 | 4,576 |
Operating Expenses, Total | 6,926 | 6,648 | 21,749 | 20,889 |
Operating income | 11,479 | 10,976 | 32,981 | 31,515 |
Interest income | 287 | 106 | 806 | 315 |
Other income (expense), net | 0 | 1 | 1 | (309) |
Nonoperating Income | 287 | 107 | 807 | 6 |
Income before provision for income taxes | 11,766 | 11,083 | 33,788 | 31,521 |
Provision for income taxes | (3,795) | (3,469) | (5,841) | (9,511) |
Net income | $ 7,971 | $ 7,614 | $ 27,947 | $ 22,010 |
Net income per basic share | $ 4.30 | $ 4.17 | $ 15.16 | $ 12.07 |
Weighted average basic shares outstanding | 1,852 | 1,825 | 1,844 | 1,823 |
Net income per diluted share | $ 4.29 | $ 4.10 | $ 15.06 | $ 11.86 |
Weighted average diluted shares outstanding | 1,857 | 1,858 | 1,856 | 1,856 |
Dividends per common share | $ 1.20 | $ 1.05 | $ 3.30 | $ 2.85 |
Consolidated Statements of Comprehensive Income (Unaudited) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
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Sep. 30, 2017 |
Sep. 30, 2016 |
Sep. 30, 2017 |
Sep. 30, 2016 |
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Consolidated Statements Of Comprehensive Income | ||||
Net Income | $ 7,971 | $ 7,614 | $ 27,947 | $ 22,010 |
Other Comprehensive Income (Loss): Unrealized income (loss) on investments, net of tax expense (benefit) of $23, ($273), $58 and ($445) | 43 | (506) | 109 | (827) |
Comprehensive Income | $ 8,014 | $ 7,108 | $ 28,056 | $ 21,183 |
Consolidated Balance Sheets (Parenthetical) - $ / shares |
Sep. 30, 2017 |
Dec. 31, 2016 |
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Statement of Financial Position [Abstract] | ||
Common stock, par value | $ 0.10 | $ 0.10 |
Common stock, authorized | 10,000 | 10,000 |
Common stock, issued | 3,420 | 3,420 |
Treasury shares, shares | 1,584 | 1,596 |
Consolidated Statements of Shareholders' Equity - 9 months ended Sep. 30, 2017 - USD ($) $ in Thousands |
Common Stock |
Treasury Stock |
Additional Paid-In Capital |
Other Comprehensive Income (Loss) |
Retained Earnings |
Total |
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Beginning Balance, shares at Dec. 31, 2016 | 1,824 | 1,596 | ||||
Beginning Balance, amount at Dec. 31, 2016 | $ 342 | $ (114,274) | $ 37,448 | $ (474) | $ 239,946 | $ 162,988 |
Net income | 27,947 | 27,947 | ||||
Other comprehensive income (loss) | 109 | 109 | ||||
Stock-based compensation transactions, shares | 46 | (46) | ||||
Stock-based compensation transactions, amount | 583 | 10,912 | 11,495 | |||
Shares surrendered in stock transactions | $ (34) | $ 34 | ||||
Shares surrendered in stock transactions, amount | (17,972) | (17,972) | ||||
Dividends | (6,116) | (6,116) | ||||
Ending Balance, Shares at Sep. 30, 2017 | 1,836 | 1,584 | ||||
Ending Balance, Amount at Sep. 30, 2017 | $ 342 | $ (131,663) | $ 48,360 | $ (365) | $ 261,777 | $ 178,451 |
1. Basis of Presentation |
9 Months Ended |
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Sep. 30, 2017 | |
Accounting Policies [Abstract] | |
Basis of Presentation | The accompanying unaudited consolidated financial statements of Atrion Corporation and its subsidiaries have been prepared in accordance with accounting principles generally accepted in the United States for interim financial information and with the instructions to Form 10-Q. Accordingly, they do not include all of the information and notes required by accounting principles generally accepted in the United States for complete financial statements. In the opinion of management, these statements include all normal and recurring adjustments necessary to present a fair statement of our consolidated results of operations, financial position and cash flows. Operating results for any interim period are not necessarily indicative of the results that may be expected for the full year. Preparation of the Company’s 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 in the financial statements and notes. Actual results could differ from those estimates. This Quarterly Report on Form 10-Q should be read in conjunction with the Company’s consolidated financial statements and notes included in its Annual Report on Form 10-K/A for the fiscal year ended December 31, 2016 ("2016 Form 10-K/A"). References herein to "Atrion," the "Company," "we," "our," and "us" refer to Atrion Corporation and its subsidiaries.
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2. Inventories |
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Inventory Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Inventories | Inventories are stated at the lower of cost or market. Cost is determined by using the first-in, first-out method. The following table details the major components of inventories (in thousands):
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3. Income per share |
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Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Income per share | The following is the computation for basic and diluted income per share:
Incremental shares from stock options and restricted stock units were included in the calculation of weighted average diluted shares outstanding using the treasury stock method. Dilutive securities representing 447 and 41 shares of common stock for the quarters ended September 30, 2017 and 2016, respectively, were excluded from the computation of weighted average diluted shares outstanding because their effect would have been anti-dilutive.
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4. Investments |
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Investments Schedule [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Investments | As of September 30, 2017, we held investments in certificates of deposit, commercial paper, corporate bonds and equity securities that are required to be measured for disclosure purposes at fair value on a recurring basis. The certificates of deposit, commercial paper and corporate bonds are considered held-to-maturity and are recorded at amortized cost in the accompanying consolidated balance sheet. The equity securities are considered available for sale and recorded at fair value in the accompanying consolidated balance sheet with the unrealized gains and losses recorded as a component of other comprehensive income. These investments are considered Level 2 investments. We consider as current assets those investments which will mature in the next 12 months including interest receivable on the long-term corporate bonds. The remaining investments are considered non-current assets including our investment in equity securities we intend to hold longer than 12 months. The fair values of these Level 2 investments were estimated using recently executed transactions and market price quotations. The amortized cost and fair value of our investments, and the related gross unrealized gains and losses, were as follows as of the dates shown below (in thousands):
The above long-term corporate bonds represent an investment in one issuer at September 30, 2017. The unrealized loss for this investment relates to a rise in interest rates which resulted in a lower market price for that security. This investment has not been in a loss position for more than 12 months.
The certificates of deposit have maturities from greater than two weeks to less than eight months. The commercial paper securities have maturities from two days to less than eleven months. The corporate bonds will mature in 44.5 months.
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5. Patents and Licenses |
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Patents and Licenses | Purchased patents and license fees paid for the use of other entities’ patents are amortized over the useful life of the patent or license. The following tables provide information regarding patents and licenses (dollars in thousands):
Aggregate amortization expense for patents and licenses was $30,000 and $63,000 for the three months ended September 30, 2017 and 2016, respectively, and $121,000 and $188,000 for the nine months ended September 30, 2017 and 2016, respectively.
Estimated future amortization expense for each of the years set forth below ending December 31 is as follows (in thousands):
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6. Recent Accounting Pronouncements |
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Sep. 30, 2017 | |||||||||
Accounting Changes and Error Corrections [Abstract] | |||||||||
6. Recent Accounting Pronouncements | In March 2016, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2016-09, Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting (ASU 2016-09). The objective of this update is to simplify several aspects of the accounting for employee share-based payments. Under this guidance all excess tax benefits (“windfalls”) and deficiencies (“shortfalls”) related to employee stock compensation are recognized within income tax expense. Under prior guidance windfalls were recognized in paid-in capital and shortfalls were only recognized to the extent they exceeded the pool of windfall tax benefits. The ASU also requires companies to classify cash flows resulting from employee share-based payments, including the additional tax benefits or expenses related to the vesting or settlement of share-based awards, as cash flows from operating activities. These items were previously included as cash flows from financing activities. ASU 2016-09 is effective for fiscal years beginning after December 15, 2016, including interim periods within those fiscal years. Early adoption is permitted. We elected to adopt ASU 2016-09 during the second quarter of 2016 and are therefore required to report the impacts as though the ASU had been adopted on January 1, 2016. As a result of the adoption, a tax benefit of $623,000 was recorded in the second quarter of 2016 reflecting the excess tax benefits. The adoption also impacted the computation of diluted shares outstanding for all 2016 reporting periods. First quarter of 2016 net income per diluted share was restated to $3.74 from $3.76. There was no restatement necessary for cash flows from operating activities or cash flows from financing activities in the previous 2016 period. The adoption was on a prospective basis and therefore had no impact on years prior to 2016. No tax benefit was recorded in the third quarter of 2017. In the first nine months of 2017 we recorded a tax benefit of $5.3 million, reflecting the excess tax benefits, resulting in a $2.83 per share favorable effect on the net income per diluted share.
In January 2016, the FASB issued ASU 2016-01, Financial Instruments - Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities. The main objective of this update is to enhance the reporting model for financial instruments in order to provide users of financial statements with more decision-useful information. The new guidance addresses certain aspects of recognition, measurement, presentation, and disclosure of financial instruments. This ASU is effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. We are currently evaluating the new guidance to determine the full impact it may have on our consolidated financial statements. We anticipate any impact in accounting changes to be limited to our equity investment that is classified as an available for sale investment in our consolidated balance sheets. We also anticipate disclosure changes as a result of this standard when effective.
In November 2015, the FASB issued ASU 2015-17, Balance Sheet Classification of Deferred Taxes (ASU 2015-17) which requires that deferred tax liabilities and assets be classified as noncurrent on the balance sheet. 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 this guidance. ASU 2015-17 is effective for annual and interim periods beginning after December 15, 2016 but early application is permitted and the guidance may be applied either prospectively to all deferred tax liabilities and assets or retrospectively to all periods presented. We elected to adopt this ASU in the first quarter of 2017 on a retrospective basis. Amounts reclassified from “Deferred income taxes” to “Other non-current liabilities” were $651,000 as of December 31, 2016.The adoption did not have a material impact on our consolidated financial statements.
In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers (ASU 2014-09). ASU 2014-09 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. ASU 2014-09 will replace most existing revenue recognition guidance in United States Generally Accepted Accounting Principles when it becomes effective. In July 2015, the FASB voted to delay the effective date of ASU 2014-09 by one year, making it effective for fiscal years, and interim periods within those years, beginning after December 15, 2017, with early adoption permitted as of the original effective date. ASU 2014-09 permits the use of either the retrospective or cumulative effect transition method. Based on our evaluation, we will adopt the requirements of the new standard on January 1, 2018, but have not yet selected a transition method for adoption. Presented below is the status of the process we have utilized for the adoption of the new standard and the significant implementation matters addressed:
We expect to complete this process prior to the filing of, and make disclosures in, our Form 10-K for the fiscal year ended December 31, 2017.
Based on our evaluation, we determined no significant changes are required to our business processes, systems and controls to effectively report revenue recognition under the new standard. Adoption of the new standard is not expected to materially change the timing or amount of revenue recognized in our Consolidated Financial Statements.
From time to time, new accounting standards updates applicable to us are issued by the FASB which we will adopt as of the specified effective date. Unless otherwise discussed, we believe the impact of recently issued standards updates that are not yet effective will not have a material impact on our consolidated financial statements upon adoption. |
2. Inventories (Tables) |
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Inventory Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Inventories |
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3. Income per share (Tables) |
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Computation for Basic and Diluted Income Per Share |
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4. Investments (Tables) |
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Investments Schedule [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Investments, Held-to-Maturity Securities |
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5. Patents and Licenses (Tables) |
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Patents and Licenses |
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Future Amortization Expense |
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2. Inventories (Details) - USD ($) $ in Thousands |
Sep. 30, 2017 |
Dec. 31, 2016 |
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Inventory Disclosure [Abstract] | ||
Raw materials | $ 13,334 | $ 12,984 |
Work in process | 7,174 | 6,230 |
Finished goods | 9,416 | 9,801 |
Total inventories | $ 29,924 | $ 29,015 |
3. Income Per Share (Details) - USD ($) $ / shares in Units, $ in Thousands |
3 Months Ended | 9 Months Ended | ||
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Sep. 30, 2017 |
Sep. 30, 2016 |
Sep. 30, 2017 |
Sep. 30, 2016 |
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Earnings Per Share [Abstract] | ||||
Net income | $ 7,971 | $ 7,614 | $ 27,947 | $ 22,010 |
Weighted average basic shares outstanding | 1,852 | 1,825 | 1,844 | 1,823 |
Add: Effect of dilutive securities | 5 | 33 | 12 | 33 |
Weighted average diluted shares outstanding | 1,857 | 1,858 | 1,856 | 1,856 |
Earnings per share: | ||||
Basic | $ 4.30 | $ 4.17 | $ 15.16 | $ 12.07 |
Diluted | $ 4.29 | $ 4.10 | $ 15.06 | $ 11.86 |
3. Income per share (Details Narrative) - shares |
3 Months Ended | |
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Sep. 30, 2017 |
Sep. 30, 2016 |
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Earnings Per Share [Abstract] | ||
Shares Excluded from Computation of Weighted average diluted Shares outstanding | 447 | 41 |
4. Investments (Details Narrative) |
9 Months Ended |
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Sep. 30, 2017 | |
Investments, Debt and Equity Securities [Abstract] | |
Securities maturity length | 44.5 months |
5. Patents and Licenses (Details) - USD ($) $ in Thousands |
9 Months Ended | 12 Months Ended |
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Sep. 30, 2017 |
Dec. 31, 2016 |
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Patents And Licenses Details | ||
Weighted Average Original Life (years) | 15 years 8 months 1 day | 15 years 8 months 1 day |
Gross Carrying Amount | $ 13,840 | $ 13,840 |
Accumulated Amortization | $ 12,032 | $ 11,911 |
5. Patents and Licenses (Details 1) $ in Thousands |
Sep. 30, 2017
USD ($)
|
---|---|
Patents And Licenses Details 1 | |
2018 | $ 119 |
2019 | 119 |
2020 | 119 |
2021 | 119 |
2022 | $ 117 |
5. Patents and Licenses (Details Narrative) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2017 |
Sep. 30, 2016 |
Sep. 30, 2017 |
Sep. 30, 2016 |
|
Patents And Licenses Details Narrative | ||||
Amortization expense for patents and licenses | $ 30 | $ 63 | $ 121 | $ 188 |
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