Revision of prior period financial statements and out-of-period adjustments

12 Months Ended

Dec. 31, 2014

Accounting Changes and Error Corrections [Abstract]

Accounting Changes and Error Corrections [Text Block]

2.      Revision of prior period financial statements and out-of-period adjustments

         During the year ended December 31, 2014, we identified and corrected two errors that originated in prior periods.  We assessed the materiality of the errors using quantitative and qualitative factors.  Based on this analysis, we determined that the errors were immaterial to each of the prior reporting periods affected.  However, we have concluded that correcting the errors in our 2014 consolidated financial statements would materially understate the results for the year ending December 31, 2014. Accordingly, we have reflected the corrections of the prior period errors in the periods in which they originated and revised our consolidated balance sheet as of December 31, 2013, our consolidated statements of operations and comprehensive (loss) income, our consolidated statements of changes in stockholders' equity and our consolidated statements of cash flows for the years ended December 31, 2013 and 2012.

The first error was an understatement of our benefit liability related to a legacy deferred compensation plan. The plan was effective in 1986 and since the inception of the plan, we have recorded the plan’s liability based on the participants’ deferred amount plus an overall rate of return less any payments made to participants. The plan should have been accounted for as a pension plan with the liability determined based on the ultimate projected benefit that would be owed participants based on the payments over time under the plan using expected mortality, discounted using a high quality corporate bond discount rate. The second error originated in 2012 and was the result of not properly recognizing ocean freight expense and the related accounts payable.

        The previously reported annual amounts included in the following tables reflect recasting for discontinued operations associated with ceasing manufacturing of our Young America product line (see Note 9).

The effects of the error corrections on the consolidated balance sheet as of December 31, 2013 are as follows (in thousands):

	As Previously Reported		Correction		Revised
Inventory	$	23,640	$	261	$	23,901
Total assets	$	95,224	$	261	$	95,485
Accounts payable	$	5,989	$	1,070	$	7,059
Total current liabilities	$	13,640	$	1,070	$	14,710
Deferred compensation, long-term portion	$	661	$	3,842	$	4,503
Total liabilities	$	19,583	$	4,912	$	24,495
Retained earnings	$	59,784	$	(3,209)	$	56,575
Accumulated other comprehensive loss		(158)		(1,442)		(1,600)
Total stockholders’ equity	$	75,641	$	(4,651)	$	70,990

            At December 31, 2011, retained earnings and accumulated other comprehensive loss were reported as $42,037,000 and ($182,000) and were revised to $39,431,000 and ($1,528,000), respectively.

            The effects of the error corrections on the consolidated statements of operations and comprehensive (loss) income for the years ended December 31, 2013 and 2012 are as follows (in thousands):

December 31, 2013	As Previously Reported		Correction		Revised
Net sales	$	58,559	$	-	$	58,559
Total expenses		61,991		245		62,236
Operating loss		(3,432)		245		(3,677)
Net loss from continuing operations		(5,877)		245		(6,122)
Net loss from discontinued operations		(6,760)		(48)		(6,712)
Net loss		(12,637)		197		(12,834)
Other comprehensive loss:
Actuarial gain		(460)		(302)		(762)
Amortization of actuarial loss		(33)		(78)		(111)
Adjustments to net periodic benefit income		(326)		(380)		(706)
Comprehensive loss	$	(12,311)	$	(183)	$	(12,128)

December 31, 2012	As Previously Reported		Correction		Revised
Net sales	$	61,260	$	-	$	61,260
Total expenses		62,544		482		63,026
Operating loss		(1,284)		482		(1,766)
Net income from continuing operations		35,179		482		34,697
Net loss from discontinued operations		(4,795)		(76)		(4,719)
Net income		30,384		406		29,978
Other comprehensive loss:
Actuarial loss		157		524		681
Amortization of actuarial loss		(32)		(48)		(80)
Adjustments to net periodic benefit cost		302		476		778
Comprehensive income	$	30,082	$	(882)	$	29,200

Since our primary statement of cash flows is presented on the direct method, the revisions above did not have an impact on the statements of cash flows. However, the impact of the revision amounts above have been adjusted in the reconciliation of net (loss) income to net cash (used by) provided by operating activities by adjusting the net (loss) income totals and the inventory, accounts payable, and other long-term liabilities totals within the changes in assets and liabilities section.

During 2014, management noted that a current asset of approximately $2.5 million related to prepaid legal services should have been classified as non-current. We have revised the consolidated balance sheet for December 31, 2013 to appropriately classify this asset as noncurrent.

The effect of the error correction on the consolidated statements of operations and comprehensive (loss) income for the interim periods within the years ended December 31, 2014 and 2013 are as follows (in thousands):

(Unaudited)	First Quarter				Second Quarter				Third Quarter				Fourth Quarter
As Reported:	2014		2013		2014		2013		2014		2013		2013
Net sales	$	21,891	$	26,052	$	24,038	$	24,166	$	13,928	$	14,661	$	22,744
Operating loss		(4,025)		(1,472)		(18,321)		(2,928)		(378)		(232)		(3,860)
Net loss from continuing operations		-		-		-		-		(1,146)		(770)		-
Net loss from discontinued operations		-		-		-		-		(1,118)		(1,700)		-
Net loss		(4,410)		(2,094)		(19,060)		(3,529)		(2,264)		(2,470)		(4,544)

(Unaudited)	First Quarter				Second Quarter				Third Quarter				Fourth Quarter
As Recast for discontinued operations:	2014		2013		2014		2013		2014		2013		2013
Net sales	$	14,642	$	16,169	$	16,033	$	14,465	$	13,928	$	14,661	$	13,264
Operating (loss) income		(1,124)		29		(1,018)		(1,558)		(378)		(232)		(1,671)
Net loss from continuing operations		(1,509)		(593)		(1,757)		(2,159)		(1,146)		(770)		(2,355)
Net loss from discontinued operations		(2,901)		(1,501)		(17,303)		(1,370)		(1,118)		(1,700)		(2,189)
Net loss		(4,410)		(2,094)		(19,060)		(3,529)		(2,264)		(2,470)		(4,544)

(Unaudited)	First Quarter				Second Quarter				Third Quarter				Fourth  Quarter
Adjustments:	2014		2013		2014		2013		2014		2013		2013
Net sales	$	-	$	-	$	-	$	-	$	-	$	-	$	-
Operating (loss) income		(216)		-		(440)		-		(292)		-		(245)
Net loss from continuing operations		(216)		-		(440)		-		(292)		-		(245)
Net loss from discontinued operations		-		-		-		-		-		-		48
Net loss	$	(216)	$	-	$	(440)	$	-	$	(292)	$	-	$	(197)

(Unaudited)	First Quarter				Second Quarter				Third Quarter				Fourth  Quarter
As Revised:	2014		2013		2014		2013		2014		2013		2013
Net sales	$	14,642	$	16,169	$	16,033	$	14,465	$	13,928	$	14,661	$	13,264
Operating (loss) income		(1,340)		29		(1,458)		(1,558)		(670)		(232)		(1,916)
Net loss from continuing operations		(1,725)		(593)		(2,197)		(2,159)		(1,438)		(770)		(2,600)
Net loss from discontinued operations		(2,901)		(1,501)		(17,303)		(1,370)		(1,118)		(1,700)		(2,141)
Net loss	$	(4,626)	$	(2,094)	$	(19,500)	$	(3,529)	$	(2,556)	$	(2,470)	$	(4,741)