10-Q

UNITED STATES 

SECURITIES AND EXCHANGE COMMISSION 

Washington, D.C. 20549 

______________________________

FORM 10-Q 

 ______________________________

☒   QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED October 1, 2023

☐   TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM _____ TO _____

Commission file number 1-2451 

______________________________

NATIONAL PRESTO INDUSTRIES, INC. 

(Exact name of registrant as specified in its charter)

Wisconsin	39-0494170
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
3925 North Hastings Way
Eau Claire,  Wisconsin	54703-3703
(Address of principal executive offices)	(Zip Code)

(Registrant’s telephone number, including area code) 715-839-2121

______________________________

Securities registered pursuant to Section 12(b) of the Securities Exchange Act of 1934:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, $1 par value	NPK	NYSE

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒   No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company.  See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	☐	Accelerated filer	☒	Non-accelerated filer	☐	Smaller reporting company	☐
Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  Yes ☐    No ☒

There were 7,082,407 shares of the Issuer’s Common Stock outstanding as of November 13, 2023.

TABLE OF CONTENTS
PART I – FINANCIAL INFORMATION	3
Item 1 – Financial Statements	3
Condensed Consolidated Balance Sheets	3
Consolidated Statements of Comprehensive Income	5
Consolidated Statements of Cash Flows	6
Consolidated Statements of Stockholders’ Equity	7
Notes to Condensed Consolidated Financial Statements	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	14
Item 4 – Controls and Procedures	15
PART II – OTHER INFORMATION	16
Item 1 – Legal Proceedings	16
Item 5 – Other Information	16
Item 6 – Exhibits	16
SIGNATURES	17
CERTIFICATIONS	19

2

PART I – FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

NATIONAL PRESTO INDUSTRIES, INC. AND SUBSIDIARIES 

CONDENSED CONSOLIDATED BALANCE SHEETS 

October 1, 2023 and December 31, 2022

(Dollars in thousands)

	October 1, 2023 (Unaudited)				December 31, 2022
ASSETS
CURRENT ASSETS:
Cash and cash equivalents			$	70,411			$	70,711
Marketable securities				24,966				24,863
Accounts receivable, net				49,142				71,024
Inventories:
Finished goods	$	46,742			$	36,249
Work in process		122,580				105,564
Raw materials		13,609		182,931		10,324		152,137
Notes receivable, current				1,608				2,226
Other current assets				4,742				5,671
Total current assets				333,800				326,632
PROPERTY, PLANT AND EQUIPMENT	$	106,966			$	105,425
Less allowance for depreciation		66,368		40,598		63,634		41,791
GOODWILL				19,433				18,573
INTANGIBLE ASSETS, net				5,670				6,926
RIGHT-OF-USE LEASE ASSETS				10,547				10,731
DEFERRED INCOME TAXES				4,638				5,506
OTHER ASSETS				1,283				1,688
			$	415,969			$	411,847

The accompanying notes are an integral part of the condensed consolidated financial statements.

3

NATIONAL PRESTO INDUSTRIES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

October 1, 2023 and December 31, 2022

(Dollars in thousands)

	October 1, 2023 (Unaudited)					December 31, 2022
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES
CURRENT LIABILITIES:
Accounts payable				$	44,361				$	34,604
Federal and state income taxes					2,105					2,552
Lease liabilities					676					577
Accrued liabilities					16,274					15,908
Total current liabilities					63,416					53,641
LEASE LIABILITIES - NON-CURRENT					9,871					10,154
Total liabilities					73,287					63,795
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY
Common stock, $1 par value:
Authorized: 12,000,000 shares
Issued: 7,440,518 shares	$	7,441				$	7,441
Paid-in capital		15,788					14,799
Retained earnings		331,087					338,071
Accumulated other comprehensive loss		(75	)				(103	)
		354,241					360,208
Treasury stock, at cost		11,559					12,156
Total stockholders' equity					342,682					348,052
				$	415,969				$	411,847

The accompanying notes are an integral part of the condensed consolidated financial statements.

4

NATIONAL PRESTO INDUSTRIES, INC. AND SUBSIDIARIES 

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME 

Three and Nine Months Ended October 1, 2023 and October 2, 2022

(Unaudited) 

(In thousands except per share data) 

	Three Months Ended					Nine Months Ended
	2023		2022			2023		2022
Net sales	$	83,141	$	69,683		$	242,496	$	207,575
Cost of sales		67,742		52,621			195,697		165,764
Gross profit		15,399		17,062			46,799		41,811
Selling and general expenses		7,904		6,486			23,804		20,181
Intangibles amortization		427		78			1,257		186
Operating profit		7,068		10,498			21,738		21,444
Other income		1,775		1,085			5,502		2,529
Earnings before provision for income taxes		8,843		11,583			27,240		23,973
Provision for income taxes		1,824		2,656			5,840		5,447
Net earnings	$	7,019	$	8,927		$	21,400	$	18,526
Weighted average shares outstanding:
Basic and diluted		7,108		7,083			7,104		7,079
Net Earnings per share:
Basic and diluted	$	0.99	$	1.26		$	3.01	$	2.62
Comprehensive income:
Net earnings	$	7,019	$	8,927		$	21,400	$	18,526
Other comprehensive income (loss), net of tax:
Unrealized gain (loss) on available-for-sale securities		20		(89	)		28		(176	)
Comprehensive income	$	7,039	$	8,838		$	21,428	$	18,350
Cash dividends declared and paid per common share	$	0.00	$	0.00		$	4.00	$	4.50

The accompanying notes are an integral part of the condensed consolidated financial statements.

5

NATIONAL PRESTO INDUSTRIES, INC. AND SUBSIDIARIES 

CONSOLIDATED STATEMENTS OF CASH FLOWS 

Nine Months Ended October 1, 2023 and October 2, 2022

(Unaudited) 

(Dollars in thousands) 

	2023			2022
Cash flows from operating activities:
Net earnings	$	21,400		$	18,526
Adjustments to reconcile net earnings to net cash provided by operating activities:
Provision for depreciation		2,887			1,974
Intangibles amortization		1,257			186
Non-cash retirement plan expense		672			620
Proceeds from insurance claim		527			89
Gain on bargain purchase		-			(492	)
Other		628			492
Changes in operating accounts:
Accounts receivable, net		22,317			9,522
Inventories		(31,756	)		(32,030	)
Other assets and current assets		1,335			243
Accounts payable and accrued liabilities		10,123			(2,277	)
Federal and state income taxes		(600	)		(133	)
Net cash provided by (used in) operating activities		28,790			(3,280	)
Cash flows from investing activities:
Marketable securities purchased		(42,195	)		(12,575	)
Marketable securities - maturities and sales		42,127			2,832
Proceeds from note receivable		627			76
Acquisition of business, net cash required		-			(3,125	)
Purchase of property, plant and equipment		(1,693	)		(522	)
Net used in investing activities		(1,134	)		(13,314	)
Cash flows from financing activities:
Dividends paid		(28,385	)		(31,827	)
Proceeds from sale of treasury stock		429			436
Other		-			(36	)
Net cash used in financing activities		(27,956	)		(31,427	)
Net decrease in cash and cash equivalents		(300	)		(48,021	)
Cash and cash equivalents at beginning of period		70,711			109,805
Cash and cash equivalents at end of period	$	70,411		$	61,784

The accompanying notes are an integral part of the condensed consolidated financial statements.

6

NATIONAL PRESTO INDUSTRIES, INC. AND SUBSIDIARIES 

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

Three and Nine Months Ended October 1, 2023 and October 2, 2022

(Unaudited) 

(In thousands except per share data) 

	Shares of Common Stock Outstanding Net of Treasury Shares		Common Stock		Paid-in Capital		Retained Earnings		Accumulated Other Comprehensive Income (Loss)			Treasury Stock			Total
Balance July 3, 2022		7,057	$	7,441		14,374	$	326,970	$	(67	)	$	(12,346	)	$	336,372
Net earnings								8,927								8,927
Unrealized loss on available-for-sale securities, net of tax										(89	)					(89	)
Other		3				211		-		-			104			315
Balance October 2, 2022		7,060	$	7,441	$	14,585	$	335,897	$	(156	)	$	(12,242	)	$	345,525
Balance July 2, 2023		7,079	$	7,441	$	15,540	$	324,068	$	(95	)	$	(11,658	)	$	335,296
Net earnings								7,019								7,019
Unrealized gain on available-for-sale securities, net of tax										20						20
Other		3				248		-					99			347
Balance October 1, 2023		7,082	$	7,441	$	15,788	$	331,087	$	(75	)	$	(11,559	)	$	342,682

	Shares of Common Stock Outstanding Net of Treasury Shares		Common Stock		Paid-in Capital		Retained Earnings			Accumulated Other Comprehensive Income (Loss)			Treasury Stock			Total
Balance December 31, 2021		7,042	$	7,441	$	13,743	$	349,198		$	20		$	(12,779	)	$	357,623
Net earnings								18,526									18,526
Unrealized loss on available-for-sale securities, net of tax											(176	)					(176	)
Dividends paid March 15, $1.00 per share regular, $3.50 per share extra								(31,827	)								(31,827	)
Other		18				842		-			-			537			1,379
Balance October 2, 2022		7,060	$	7,441	$	14,585	$	335,897		$	(156	)	$	(12,242	)	$	345,525
Balance December 31, 2022		7,063	$	7,441	$	14,798	$	338,072		$	(103	)	$	(12,156	)	$	348,052
Net earnings								21,400									21,400
Unrealized gain on available-for-sale securities, net of tax											28						28
Dividends paid March 15, $1.00 per share regular, $3.00 per share extra								(28,385	)								(28,385	)
Other		19				990		-						597			1,587
Balance October 1, 2023		7,082	$	7,441	$	15,788	$	331,087		$	(75	)	$	(11,559	)	$	342,682

The accompanying notes are an integral part of the Condensed Consolidated Financial Statements.

7

NATIONAL PRESTO INDUSTRIES, INC. AND SUBSIDIARIES 

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

NOTE A – BASIS OF PRESENTATION 

The condensed consolidated interim financial statements included herein are unaudited and have been prepared by the Company pursuant to the rules and regulations of the United States Securities and Exchange Commission (“SEC”). In the opinion of management of the Company, the consolidated interim financial statements reflect all of the adjustments which were of a normal recurring nature necessary for a fair presentation of the results of the interim periods.  The condensed consolidated balance sheet as of  December 31, 2022 is summarized from audited consolidated financial statements, but does not include all the disclosures contained therein and should be read in conjunction with the 2022 Annual Report on Form 10-K.  Interim results for the period are not indicative of those for the year.

NOTE B – GENERAL

As of the end of the quarter ending October 1, 2023, few of the after-effects of the government responses to the COVID-19 virus remain beyond inflation, labor shortages and the general attitude towards work. The extent to which these after-effects impact the Company’s business for the remainder of 2023 and beyond will depend on future developments that are highly uncertain and cannot be predicted.

NOTE C – REVENUES

The Company’s revenues are derived from short-term contracts and programs that are typically completed within 3 to 36 months and are recognized in accordance with Financial Accounting Standard Board (“FASB”) Accounting Standard Codification (“ASC”) Topic 606, Revenue from Contracts with Customers. The Company’s contracts generally contain one or more performance obligations: the physical delivery of distinct ordered product or products.  The Company provides an assurance type product warranty on its products to the original owner.  In addition, for the Housewares/Small Appliances segment, the Company estimates returns of seasonal products and returns of newly introduced products sold with a return privilege.  Stand-alone selling prices are set forth in each contract and are used to allocate revenue to the corresponding performance obligations.  For the Housewares/Small Appliances segment, contracts include variable consideration, as the prices are subject to customer allowances, which principally consist of allowances for cooperative advertising, defective product, and trade discounts.  Customer allowances are generally allocated to the performance obligations based on budgeted rates agreed upon with customers, as well as historical experience, and yield the Company’s best estimate of the expected value for the variable consideration.

The Company's contracts in the Defense segment are primarily with the U.S. Department of Defense (DOD) and DOD prime contractors. As a consequence, this segment's business essentially depends on the product needs and governmental funding of the DOD. Substantially all of the work performed by the Defense segment directly or indirectly for the DOD is performed on a fixed-price basis. Under fixed-price contracts, the price paid to the contractor is usually awarded based on competition at the outset of the contract and therefore, with the exception of limited escalation provisions on specific materials, is generally not subject to any adjustments reflecting the actual costs incurred by the contractor.

For the Housewares/Small Appliance segment, revenue is generally recognized as the completed, ordered product is shipped to the customer from the Company’s warehouses.  For the relatively few situations in which revenue should be recognized when product is received by the customer, the Company adjusts revenue accordingly.  For the Defense segment, revenue is primarily recognized when the customer has legal title and formally documents that it has accepted the products.    In some situations, the customer may obtain legal title and accept the products at the Company’s facilities, arranging for transportation at a later date, typically in one to four weeks.  The Company does not consider the short-term storage of the customer owned products to be a material performance obligation, and no part of the transaction price is allocated to it. There are also certain termination clauses in Defense segment contracts that may give rise to an over-time pattern of recognition of revenue in the absence of alternative use of the product.

The timing of revenue recognition, billings, and cash collections results in billed accounts receivable, and customer advances and deposits (contract liabilities) on the Company’s Condensed Consolidated Balance Sheets. For the Defense segment, the Company occasionally receives advances or deposits from certain customers before revenue is recognized, resulting in contract liabilities.  These advances or deposits do not represent a significant financing component.  As of October 1, 2023 and December 31, 2022, $2,975,000 and $4,434,000, respectively, of contract liabilities were included in Accounts Payable on the Company’s Condensed Consolidated Balance Sheets.  The Company recognized revenue of $285,000 during the nine month period ended October 1, 2023 that was included in the Defense segment contract liability at the beginning of that period. The Company monitors its estimates of variable consideration, which includes customer allowances for cooperative advertising, defective product, trade discounts, and returns of seasonal and newly introduced product, all of which pertain to the Housewares/Small Appliances segment, and periodically makes cumulative adjustments to the carrying amounts of these contract liabilities as appropriate.  During the three and nine month periods ended October 1, 2023, the Company made a cumulative adjustment increasing customer allowances by $775,000. There were no material adjustments to the aforementioned estimates during the three and nine month periods ended October 2, 2022.  There were no amounts of revenue recognized during the same periods related to performance obligations satisfied in a previous period.  The portion of contract transaction prices allocated to unsatisfied performance obligations, also known as the contract backlog, in the Company’s Defense segment were $554,865,000 and $505,069,000 as of October 1, 2023 and December 31, 2022, respectively.  The Company anticipates that the unsatisfied performance obligations (contract backlog) will be fulfilled in an 18 to 36-month period.  The performance obligations in the Housewares/Small Appliances segment have original expected durations of less than one year.

The Company’s principal sources of revenue are derived from three segments: Housewares/Small Appliance, Defense, and Safety, as shown in Note E. Management utilizes the performance measures by segment to evaluate the financial performance of and make operating decisions for the Company.

8

 

NOTE D – EARNINGS PER SHARE 

Basic earnings per share is based on the weighted average number of common shares and participating securities outstanding during the period.  Diluted earnings per share also includes the dilutive effect of additional potential common shares issuable.  Unvested stock awards, which contain non-forfeitable rights to dividends whether paid or unpaid (“participating securities”), are included in the number of shares outstanding for both basic and diluted earnings per share calculations. 

NOTE E – BUSINESS SEGMENTS 

In the following summary, operating profit represents earnings before other income and income taxes.  The Company's segments operate discretely from each other with no shared owned or leased manufacturing facilities.  Costs associated with corporate activities (such as cash and marketable securities management) and the assets associated with such activities are included within the Housewares/Small Appliances segment for all periods presented. 

	(in thousands)
	Housewares / Small Appliances		Defense		Safety			Total
Quarter ended October 1, 2023
External net sales	$	21,545	$	61,311	$	285		$	83,141
Gross profit (loss)		3,920		12,740		(1,261	)		15,399
Operating profit (loss)		760		9,085		(2,777	)		7,068
Total assets		182,221		225,636		8,112			415,969
Depreciation and amortization		262		842		89			1,193
Capital expenditures		216		554		97			867
Quarter ended October 2, 2022
External net sales	$	27,120	$	42,347	$	216		$	69,683
Gross profit (loss)		8,787		8,846		(571	)		17,062
Operating profit (loss)		6,083		6,268		(1,853	)		10,498
Total assets		215,752		175,966		15,725			407,443
Depreciation and amortization		504		747		143			1,394
Capital expenditures		100		194		924			1,218

	(in thousands)
	Housewares / Small Appliances		Defense		Safety			Total
Nine Months Ended October 1, 2023
External net sales	$	61,533	$	179,874	$	1,089		$	242,496
Gross profit (loss)		12,814		36,992		(3,007	)		46,799
Operating profit (loss)		2,957		26,720		(7,939	)		21,738
Total assets		182,221		225,636		8,112			415,969
Depreciation and amortization		769		3,060		315			4,144
Capital expenditures		444		1,074		175			1,693
Nine Months Ended October 2, 2022
External net sales	$	72,267	$	134,828		480		$	207,575
Gross profit (loss)		14,020		28,941		(1,150	)		41,811
Operating profit (loss)		5,151		20,900		(4,607	)		21,444
Total assets		215,752		175,966		15,725			407,443
Depreciation and amortization		766		1,136		258			2,160
Capital expenditures		177		286		927			1,390

NOTE F - FAIR VALUE OF FINANCIAL INSTRUMENTS

The Company utilizes the methods of fair value as described in FASB ASC 820, Fair Value Measurements and Disclosures, to value its financial assets and liabilities. ASC 820 utilizes a three-tier fair value hierarchy which prioritizes the inputs used in measuring fair value. These tiers include: Level 1, defined as observable inputs such as quoted prices in active markets; Level 2, defined as inputs other than quoted prices in active markets that are either directly or indirectly observable; and Level 3, defined as unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions.

The carrying amounts for cash and cash equivalents, accounts receivable, notes receivable, accounts payable, and accrued liabilities approximate fair value due to the immediate or short-term maturity of these financial instruments.  See Note G for fair value information on marketable securities.

9

 

NOTE G - CASH, CASH EQUIVALENTS AND MARKETABLE SECURITIES 

The Company considers all highly liquid marketable securities with an original maturity of three months or less to be cash equivalents.  Cash equivalents include money market funds.  The Company deposits its cash in high quality financial institutions.  The balances, at times, may exceed federally insured limits.  Money market funds are reported at fair value determined using quoted prices in active markets for identical securities (Level 1, as defined by FASB ASC 820).

The Company has classified all marketable securities as available-for-sale which requires the securities to be reported at estimated fair value, with unrealized gains and losses, net of tax, reported as a separate component of stockholders' equity.  Highly liquid, tax-exempt variable rate demand notes with put options exercisable in three months or less are classified as marketable securities.

At October 1, 2023 and December 31, 2022, cost for marketable securities was determined using the specific identification method.  A summary of the amortized costs and fair values of the Company’s marketable securities at the end of the periods presented is shown in the following table.  All of the Company’s marketable securities are classified as Level 2, as defined by FASB ASC 820, with fair values determined using significant other observable inputs, which include quoted prices in markets that are not active, quoted prices of similar securities, recently executed transactions, broker quotations, and other inputs that are observable.

	(In Thousands)
	MARKETABLE SECURITIES
	Amortized Cost		Fair Value		Gross Unrealized Gains		Gross Unrealized Losses
October 1, 2023
Fixed Rate Municipal Bonds	$	2,091	$	2,087	$	-	$	4
Certificates of Deposit		18,791		18,700		.		91
Variable Rate Demand Notes		4,179		4,179		-		-
Total Marketable Securities	$	25,061	$	24,966	$	-	$	95
December 31, 2022
Fixed Rate Municipal Bonds	$	11,460	$	11,405	$	-	$	58
Certificates of Deposit		9,895		9,820		22		94
Variable Rate Demand Notes		3,638		3,638		-		-
Total Marketable Securities	$	24,993	$	24,863	$	22	$	152

Proceeds from maturities and sales of available-for-sale securities totaled $3,961,000 and $195,000 for the three month periods ended October 1, 2023 and October 2, 2022, respectively, and totaled $42,127,000 and $2,832,000 for the nine month periods then ended, respectively.  There were no gross gains or losses related to sales of marketable securities during the same periods.  Net unrealized gain (loss) included in other comprehensive income were $25,000 and $(86,000) before taxes for the three month periods ended October 1, 2023 and October 2, 2022, respectively, and were a net unrealized gain (loss) of $35,000 and $(197,000) before taxes for the nine month periods then ended, respectively. No unrealized gains or losses were reclassified out of accumulated other comprehensive income during the same periods.

The contractual maturities of the marketable securities held at October 1, 2023 are as follows: $15,425,000 within one year; $6,964,000 beyond one year to five years; and $2,672,000 beyond five years to ten years. All of the instruments in the beyond five year range are variable rate demand notes which can be tendered for cash at par plus interest within seven days.  Despite the stated contractual maturity date, to the extent a tender is not honored, the notes become immediately due and payable.

NOTE H – OTHER ASSETS

Other Assets includes prepayments that are made from time to time by the Company for certain materials used in the manufacturing process in the Housewares/Small Appliances segment.  The Company expects to utilize the prepayments and related materials over an estimated period of two years.  As of October 1, 2023 and December 31, 2022, $4,171,000 and $7,065,000 of such prepayments, respectively, remained unused and outstanding.  At  October 1, 2023 and December 31, 2022, $2,888,000 and $5,377,000 of those payments, respectively were included in Other Current Assets, representing the Company’s best estimate of the expected utilization of the prepayments and related materials during the twelve-month periods following those dates.

10

 

NOTE I – LEASES

The Company accounts for leases under ASC Topic 842, Leases.  The Company’s leasing activities include roles as both lessee and lessor.  As lessee, the Company’s primary leasing activities include buildings and structures to support its manufacturing operations at one location in its Defense segment, buildings and structures to support its Safety segment, and warehouse space and equipment to support its distribution center operations in its Housewares/Small Appliances segment.  As lessor, the Company’s primary leasing activity is comprised of manufacturing and office space located adjacent to its corporate offices.  All of the Company’s leases are classified as operating leases.

The Company’s leases as lessee in its Defense segment provide for variable lease payments that are based on changes in the Consumer Price Index.  As lessor, the Company’s primary lease also provides for variable lease payments that are based on changes in the Consumer Price Index, as well as on increases in costs of insurance, real estate taxes, and utilities related to the leased space. Generally, all of the Company’s lease contracts include options for extensions and early terminations.  The majority of lease terms of the Company’s lease contracts recognized on the balance sheet reflect extension options, while none reflect early termination options.

The Company has determined that the rates implicit in its leases are not readily determinable and therefore, estimates its incremental borrowing rates utilizing quotes from financial institutions for real estate and equipment, as applicable, over periods of time similar to the terms of its leases. The Company has entered into various short-term (12 months or less) leases as lessee and has elected a non-recognition accounting policy, as permitted by ASC Topic 842.

	Three Months Ended		Three Months Ended		Nine Months Ended		Nine Months Ended
Summary of Lease Cost (in thousands)	October 1, 2023		October 2, 2022		October 1, 2023		October 2, 2022
Operating lease cost	$	302	$	284	$	893	$	784
Short-term and variable lease cost		37		79		155		158
Total lease cost	$	339	$	363	$	1,048	$	942

Operating cash used for operating leases was $339,000 and $1,048,000 for the three and nine months ended October 1, 2023, respectively, and $363,000 and $942,000 for the three and  nine months ended October 2, 2022, respectively.  The weighted-average remaining lease term was 19.8 years, and the weighted-average discount rate was 4.6% as of October 1, 2023.

Maturities of operating lease liabilities are as follows:

Years ending December 31:	(In thousands)
2023 (remaining three months)	$	247
2024		981
2025		855
2026		782
2027		782
Thereafter		13,475
Total lease payments	$	17,122
Less: future interest expense		6,575
Lease liabilities	$	10,547

Lease income from operating lease payments was $551,000 and $514,000 for the quarters ended October 1, 2023 and October 2, 2022, respectively, and $1,653,000 and $1,552,000 for the nine months then ended, respectively.  Undiscounted cash flows provided by lease payments are expected as follows:

Years ending December 31:	(In thousands)
2023 (remaining three months)	$	551
2024		2,186
2025		2,186
2026		2,186
2027		2,186
Thereafter		15,302
Total lease payments	$	24,597

The Company considers risk associated with the residual value of its leased real property to be low, given the nature of the long-term lease agreement, the Company’s ability to control the maintenance of the property, and the creditworthiness of the lessee.  The residual value risk is further mitigated by the long-lived nature of the property, and the propensity of such assets to hold their value or, in some cases, appreciate in value.

NOTE J – COMMITMENTS AND CONTINGENCIES

The Company is involved in largely routine litigation incidental to its business.  Management believes the ultimate outcome of the litigation will not have a material effect on the Company's consolidated financial position, liquidity, or results of operations. 

In the state of Mississippi, inventory that is shipped out of state that is held in a licensed Free Port Warehouse is exempt from personal property taxes.  One of the Company's subsidiaries operates in Hinds County, Mississippi.  That subsidiary has submitted its Hinds County Free Port Warehouse tax filing for approximately 40 years.  Each year, the county then assessed the subsidiary in accordance with the Company's filing.  However, in June 2020, the Hinds County tax assessor notified the Company that the county had no record of a Free Port Warehouse License and issued an assessment totaling $2,506,000, reflecting personal property tax going back seven years.  The Company is vigorously fighting the assessment, and does not consider the ultimate payment of the taxes to be probable.  Accordingly, as prescribed by ASC 450 - Contingencies, no accrual has been recorded on the Company's consolidated financial statements as of October 1, 2023.

11

NOTE K – RECENTLY ISSUED OR ADOPTED ACCOUNTING PRONOUNCEMENTS

The Company assesses the impacts of adopting recently issued accounting standards by the Financial Accounting Standards Board on the Company's financial statements, and updates previous assessments, as necessary, from the Company's Quarterly Report on Form 10-Q for the fiscal quarter ended July 2, 2023.  There were no new accounting standards issued or adopted in the quarter ended October 1, 2023 that would have a material impact on the Company's consolidated financial statements.

NOTE L – BUSINESS ACQUISITIONS

On July 29, 2022, the Company’s wholly owned subsidiary, UESCO, Inc., purchased with cash on hand of $3,125,000 certain assets and assumed certain liabilities of Knox Safety, Inc., a company formed in 2019 with operations in Illinois and North Carolina. In addition, upon closing the Company paid a deposit of $500,000 and, subsequently in the first fiscal quarter of 2023, an additional deposit of $1,000,000 to a vendor that had previously been a supplier of Knox Safety. Knox Safety is a startup company that designs and sells carbon monoxide detectors for residential use, the acquisition of which should complement the product lines currently offered by the Company’s Safety segment. Subsequent to the acquisition of Knox Safety, UESCO legally adopted the corporate name Rely Innovations, Inc.

The acquisition was accounted for under the acquisition method of accounting with the Company treated as the acquiring entity. Accordingly, the consideration paid by the Company to complete the acquisition has been recorded to the assets acquired and liabilities assumed based upon their estimated fair values as of the date of acquisition. The carrying values for current assets and liabilities were deemed to approximate their fair values due to the short-term nature of these assets and liabilities. The following table shows the amounts recorded as of their acquisition date.

	(in thousands)
Accounts receivable		1,832
Inventories		1,274
Other current assets		7
Property, plant and equipment		868
Intangible assets		290
Right-of-Use Lease Assets		1,126
Total assets acquired		5,397
Less: Current liabilities assumed		(776)
Less: Lease Liability - Noncurrent		(1,004)
Net assets acquired	$	3,617

The acquired intangibles primarily included trademarks and safety certifications that will be amortized over a period of two years. Due to its startup nature and history of operating losses, the acquisition of Knox Safety resulted in a bargain purchase gain of $492,000, which was included with Selling and general expenses in the Consolidated Statements of Comprehensive Income for the quarter ended October 2, 2022. There was no material tax impact from the acquisition on the Company’s Consolidated Financial Statements. 

On October 26, 2022, the Company’s wholly owned subsidiary, National Defense Corporation, and newly formed subsidiary Woodlawn Manufacturing, LLC, acquired with cash on hand of $21,558,000 the equity interests of Woodlawn Manufacturing, Ltd. Woodlawn Manufacturing, Ltd, is a high volume manufacturer of precision metal parts and assemblies primarily for the defense and aerospace industry.

The acquisition was accounted for under the acquisition method of accounting with the Company treated as the acquiring entity. Accordingly, the consideration paid by the Company to complete the acquisition has been recorded to the assets acquired and liabilities assumed based upon their estimated fair values as of the date of acquisition. The carrying values for current assets and liabilities were deemed to approximate their fair values due to the short-term nature of these assets and liabilities. The following table shows the amounts recorded as of their acquisition date. During the quarter ended April 2, 2023, $860,000 of additional deferred tax liabilities were identified that would have existed as of the date of acquisition.  Accordingly, both Goodwill and Deferred tax liability balances were increased during that quarter.  The table below reflects those adjustments.

	(in thousands)
Accounts receivable		2,136
Inventories		2,309
Other current assets		130
Property, plant and equipment		6,400
Intangible assets		6,058
Goodwill		7,948
Total assets acquired		24,981
Less: Current liabilities assumed		(1,084	)
Less: Deferred tax liability		(2,339	)
Net assets acquired	$	21,558

The acquired intangible assets primarily include customer contracts and will be amortized over a period of four years. The amount of goodwill recorded reflects expected earning potential and synergies with other operations in the Defense segment. The recorded goodwill is not deductible for income tax purposes. 

The following pro forma condensed consolidated results of operations has been prepared as if the acquisitions had occurred as of January 1, 2022.

	(unaudited)		(unaudited)
	(in thousands, except per share data)		(in thousands, except per share data)
	Three Months Ended		Nine Months Ended
	October 2, 2022		October 2, 2022
Net sales	$	76,778	$	224,881
Net earnings		8,967		17,462
Net earnings per share (basic and diluted)	$	1.27	$	2.47
Weighted average shares outstanding (basic and diluted)		7,083		7,079

The unaudited pro forma financial information presented above is not intended to represent or be indicative of what would have occurred if the transactions had taken place on the dates presented and is not indicative of what the Company’s actual results of operations would have been had the acquisition been completed at the beginning of the periods indicated above.  The pro forma combined results reflect one-time costs to fully merge and operate the combined organization more efficiently, but do not reflect anticipated synergies expected to result from the combination and should not be relied upon as being indicative of the future results that the Company will experience.

NOTE M - SUBSEQUENT EVENT

The Company has evaluated subsequent events through the filing of this Form 10-Q, and determined that there have been no events that have occurred that would require adjustments to the disclosures in the Company’s consolidated financial statements.

12

 

ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS    

Forward-looking statements in this Management’s Discussion and Analysis of Financial Condition and Results of Operations, elsewhere in this Form 10-Q, in the Company’s 2022 Annual Report to Stockholders, in the Proxy Statement for the annual meeting held on May 16, 2023, and in the Company’s press releases and oral statements made with the approval of an authorized executive officer are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. There are certain important factors that could cause results to differ materially from those anticipated by some of the statements made herein.  Investors are cautioned that all forward-looking statements involve risks and uncertainty. In addition to the factors discussed herein and in the Notes to Consolidated Financial Statements, among the other factors that could cause actual results to differ materially are the following: consumer spending and debt levels; interest rates; continuity of relationships with and purchases by major customers; product mix; the benefit and risk of business acquisitions; competitive pressure on sales and pricing; development and market acceptance of new products; increases in material, freight/shipping, tariffs, or production cost which cannot be recouped in product pricing; delays or interruptions in shipping or production; shipment of defective product which could result in product liability claims or recalls; work or labor disruptions stemming from a unionized work force; changes in government requirements, military spending, and funding of government contracts, which could result in, among other things, the modification or termination of existing contracts; dependence on subcontractors or vendors to perform as required by contract; the ability of startup businesses to ultimately have the potential to be successful; the efficient start-up and utilization of capital equipment investments; political actions of federal and state governments which could have an impact on everything from the value of the U.S dollar vis-à-vis other currencies to the availability of affordable labor and energy; and security breaches and disruptions to the Company’s information technology systems.  Additional information concerning these and other factors is contained in the Company's Securities and Exchange Commission filings.

COVID-19 Disclosure

All of the Company’s businesses were deemed essential and as a result, all operated during the COVID-19 shutdowns.  Distribution systems of customers that survived the shutdowns are largely intact as most key retail customers' outlets have been open since third quarter 2020. Although more people are working from home, customer offices are open and trade shows have resumed.  As a result of government COVID-19 policies, labor and material costs have materially increased.  Labor shortages continue.  Due to the Company's historical conservative practices, it has no debt and has adequate balances to fund its operations.  

For historical information about the impact of the government responses to COVID-19, please see “Item 1A. Risk Factors” titled “The COVID-19 or Other Pandemics, Epidemics or Similar Public Health Crises Risks” included in the Company's Annual Report on Form 10-K for year ended December 31, 2022.

Comparison of Third Quarter 2023 and 2022

Readers are directed to Note E to the Consolidated Financial Statements, “Business Segments,” for data on the financial results of the Company’s three business segments for the quarters ended October 1, 2023 and October 2, 2022.

On a consolidated basis, net sales increased by $13,458,000 (19%), gross profit decreased by $1,663,000 (10%), selling and general expenses increased by $1,418,000 (22%), and amortization increased 349,000 (447%).  Other income increased by $690,000 (64%), earnings before provision for income taxes decreased by $2,740,000 (24%), and net earnings decreased by $1,908,000 (21%).  Details concerning these changes can be found in the comments by segment below.

Housewares/Small Appliance net sales decreased by $5,575,000 from $27,120,000 to $21,545,000, or 21%, approximately 66% of which was attributable to a decrease in units shipped, with the remainder of the decrease attributable to a decrease in pricing and changes in mix.  Defense net sales increased by $18,964,000 from $42,347,000 to $61,311,000 or 45%, primarily reflecting an increase in shipments from the segment's backlog.   

Housewares/Small Appliance gross profit decreased $4,867,000 from $8,787,000 to $3,920,000, primarily reflecting lower margins on the decrease in sales mentioned above, augmented by increased accruals for customer allowances, as well as higher facility repair costs. Defense gross profit increased $3,894,000 from $8,846,000 to $12,740,000, primarily reflecting the increase in sales mentioned above. Due to the startup nature of the businesses in the Safety segment and the resulting limited revenues, gross margins were negative in both years. 

Selling and general expenses for the Housewares/Small Appliance increased $456,000, primarily reflecting higher accruals for self insurance of $357,000, and increased accruals for legal and professional costs. Selling and general expenses for the Defense segment increased $698,000, primarily reflecting increased salaries and compensation costs of $337,000 and increased accruals for legal settlement costs of $288,000. Selling and general expenses for the Safety segment increased $264,000, primarily reflecting the absence of the 2022 bargain purchase gain recognized upon the acquisition of Rely Innovations, Inc. of $492,000 (see Note L to the Consolidated Financial Statements) and increased employee compensation costs of $165,000, partially offset by decreased legal and professional cost accruals of $464,000.

Intangibles amortization increased as a result of the acquisition of contracts/customer relationship and intellectual property intangibles in the acquisitions of Rely Innovations, Inc. and Woodlawn Manufacturing, Ltd. See Note L to the Consolidated Financial Statements.

The above items were responsible for the change in operating profit.

The $690,000 increase in other income was primarily attributable to an increase in interest income on marketable securities largely stemming from higher yields on a lower average daily investment.

Earnings before provision for income taxes decreased $2,740,000 from $11,583,000 to $8,843,000.  The provision for income taxes decreased from $2,656,000 to $1,824,000. The effective income tax rate was 21% and 23% for the quarters ended October 1, 2023 and October 2, 2022, respectively.  Net earnings decreased $1,908,000 from $8,927,000 to $7,019,000, or 21%.

Comparison of First Nine Months 2023 and 2022

Readers are directed to Note E to the Consolidated Financial Statements, “Business Segments,” for data on the financial results of the Company’s three business segments for the first nine months ended October 1, 2023 and October 2, 2022.

On a consolidated basis, net sales increased by $34,921,000 (17%), gross profit increased by $4,988,000 (12%), selling and general expenses increased by $3,623,000 (18%), and amortization increased $1,071,000 (576%).  Other income increased by $2,973,000 (118%), earnings before provision for income taxes increased by $3,267,000 (14%), and net earnings increased by $2,874,000 (16%).  Details concerning these changes can be found in the comments by segment below.

Housewares/Small Appliance net sales decreased by $10,734,000 from $72,267,000 to $61,533,000, or 15%, approximately 77% of which was attributable to a decrease in units shipped, with the remainder of the decrease attributable to a decrease in pricing and changes in mix.  Defense net sales increased by $45,046,000 from $134,828,000 to $179,874,000, or 33%, primarily reflecting an increase in shipments from the segment's backlog.   

Housewares/Small Appliance gross profit decreased $1,206,000 from $14,020,000 to $12,814,000, primarily reflecting the decrease in sales mentioned above, year-to year timing differences in accruals for customer allowances and warranty, as well as higher facility repair costs. Defense gross profit increased $8,051,000 from $28,941,000 to $36,992,000, primarily reflecting the increase in sales mentioned above.  Due to the startup nature of the businesses in the Safety segment and the resulting limited revenues, gross margins were negative in both years. 

Selling and general expenses for the Housewares/Small Appliance segment increased $988,000, primarily reflecting higher accruals for self insurance of $866,000 and increased salaries and compensation of $310,000, partially offset by lower accruals for legal and professional costs of $263,000.  Selling and general expenses for the Defense segment increased $1,168,000, primarily reflecting increased salaries and compensation costs of $806,000, increased accruals for legal settlement costs of $288,000, and one-time insurance related costs of $250,000.  These were partially offset by an adjustment of $313,000 related to the purchase of  Woodlawn Manufacturing, LTD, which was acquired on October 26, 2022.  See Note L to the Condensed Consolidated Financial Statements. Selling and general expenses for the Safety segment increased $1,467,000, primarily reflecting increased employee compensation costs of $1,083,000 and the absence of the 2022 bargain purchase gain recognized upon the acquisition of Rely Innovations, Inc. of $492,000 (see Note L to the Consolidated Financial Statements). These were partially offset by a decrease in legal and professional cost accruals of $519,000. 

Intangibles amortization increased as a result of the acquisition of contracts/customer relationship and intellectual property intangibles in the acquisitions of Rely Innovations, Inc. and Woodlawn Manufacturing, Ltd. See Note L to the Consolidated Financial Statements.

The above items were responsible for the change in operating profit.

The $2,973,000 increase in other income was primarily attributable to an increase in interest income on marketable securities largely stemming from higher yields on a lower average daily investment.

Earnings before provision for income taxes increased $3,267,000 from $23,973,000 to $27,240,000.  The provision for income taxes increased $393,000 from $5,447,000 to $5,840,000. The effective income tax rate was 21% and 23%, for the nine months ended October 1, 2023 and October 2, 2022, respectively.  Net earnings increased $2,874,000 from $18,526,000 to $21,400,000, or 16%.

Liquidity and Capital Resources

Net cash provided by operating activities was $28,790,000 during the first nine months of 2023 compared to $3,280,000 used in operating activities for the first nine months of 2022.  The principal factors contributing to the change can be found in the changes in the components of working capital within the Consolidated Statements of Cash Flows. Of particular note during the first nine months of 2023 were net earnings of $21,400,000, which included non-cash depreciation and amortization expenses of $4,144,000.  Contributing to the cash provided were decreases in accounts receivable levels stemming from cash collections on customer sales and deposits made to vendors included in other assets and current assets, and increases in payable and accrual levels. These were partially offset by increases in inventory levels. Of particular note during the first nine months of 2022 were net earnings of $18,526,000, which included non-cash depreciation and amortization expenses of $2,160,000. Contributing to the cash used were increased inventory levels and a net decrease in payable and accrual levels, partially offset by a decrease in accounts receivable levels stemming from cash collections on customer sales.

Net cash used in investing activities was $1,134,000 and $13,314,000, for the first nine months of 2023 and 2022, respectively.  Significant factors contributing to the change were net marketable securities purchased of $68,000 in 2023, in contrast with net marketable securities purchased of $9,743,000 in 2022. Also contributing to the change in cash were a payment to acquire Knox Safety, Inc. of $3,125,000 (see Note L to the Consolidated Financial Statements) in 2022 and an increase in the purchase of property, plant, and equipment in 2023 of $1,171,000.

Net cash used in financing activities was $27,956,000 and $31,427,000, for the first nine months of 2023 and 2022, respectively, and primarily relates to the annual dividend payments.  The extra dividend decreased from $3.50 per share in 2022 to $3.00 per share in 2023.  Cash flows for both nine month periods also reflected the proceeds from the sale of treasury stock to a Company sponsored retirement plan.

Working capital decreased by $2,607,000 during the first nine months of 2023 to $270,384,000 at October 1, 2023 for the reasons stated above.  The Company's current ratio was 5.3 to 1.0 and 6.1 to 1.0 at October 1, 2023 and December 31, 2022, respectively.

The Company expects to continue to evaluate acquisition opportunities that align with its business segments and will make further acquisitions, as well as continue to make capital investments in its business segments per existing authorized projects and for additional projects, if the appropriate return on investment is projected.

The Company has substantial liquidity in the form of cash and cash equivalents and marketable securities to meet all of its anticipated capital requirements, to make dividend payments, and to fund future growth through acquisitions and other means.  The bulk of its marketable securities are invested in the variable rate demand notes described in Item 3 of Part I of this quarterly report on Form 10-Q, fixed rate municipal notes and bonds, and certificates of deposits. The Company intends to continue its investment strategy of safety and short-term liquidity throughout its investment holdings.

13

Critical Accounting Estimates

The Company's discussion and analysis of financial condition and results of operations are based upon its Consolidated Financial Statements.  The preparation of the Company's Consolidated Financial Statements in accordance with accounting principles generally accepted in the United States requires management to make certain estimates and assumptions that affect the amount of reported assets and liabilities and disclosure of contingent assets and liabilities at the date of the Consolidated Financial Statements and revenues and expenses during the periods reported.  The estimates are based on experience and other assumptions that the Company believes are reasonable under the circumstances, and these estimates are evaluated on an ongoing basis.  Actual results may differ from those estimates.  

The Company's critical accounting policies are those that materially affect its Consolidated Financial Statements and involve difficult, subjective, or complex judgments by management. The Company reviewed the development and selection of the critical accounting policies and believes the following are the most critical accounting policies that could have an effect on the Company's reported results as they involve the use of significant estimates and assumptions as described above.  These critical accounting policies and estimates have been reviewed with the Audit Committee of the Board of Directors.  See Note A - Summary of Significant Accounting Policies to the Consolidated Financial Statements included in Part II, Item 8 of the Annual Report on Form 10-K for the year-ended December 31, 2022 filed on March 13, 2023 for more detailed information regarding the Company's critical accounting policies. 

Inventories    

New Housewares/Small Appliance and safety product introductions are an important part of the Company’s sales. In the case of the Housewares/Small Appliance segment, the introductions are important to offset the morbidity rate of other products and/or the effect of lowered acceptance of seasonal products due to weather conditions.  New products entail unusual risks and have occasionally, in the past, resulted in losses related to obsolete or excess inventory as a result of low or diminishing demand for a product.  During 2022, the Housewares/Small Appliance segment recorded an impairment related to such losses of $3,613,000.  In addition, due to fire safety regulations, commercial extinguishers have a limited shelf life, which is based on the date of production. The Safety segment recorded impairments of $1,807,000 and $3,090,000 in 2022 and 2021, respectively, in recognition of that fact. There were no other obsolescence issues that had a material effect during the nine months ended October 1, 2023.  In the future should product demand issues arise, the Company may incur losses related to the obsolescence of the related inventory.  Inventory risk for the Company’s Defense segment is not deemed to be significant, as products are largely built pursuant to customers’ specific orders. 

Self-Insured Product Liability and Health Insurance 

The Company is subject to product liability claims in the normal course of business and is self-insured for health care costs, although it does carry stop loss and other insurance to cover claims once a health care claim reaches a specified threshold.  The Company’s insurance coverage varies from policy year to policy year, and there are typically limits on all types of insurance coverage, which also vary from policy year to policy year.  Accordingly, the Company records an accrual for known claims and incurred but not reported claims, including an estimate for related legal fees in the Company’s Consolidated Financial Statements.  The Company utilizes historical trends and other analysis to assist in determining the appropriate accrual.  There are no known claims that would have a material adverse impact on the Company beyond the reserve levels that have been accrued and recorded on the Company’s books and records.  An increase in the number or magnitude of claims could have a material impact on the Company’s financial condition and results of operations. 

Revenues 

Sales are recorded net of discounts and returns for the Housewares/Small Appliance segment.  Sales discounts and returns are key aspects of variable consideration, which is a significant estimate utilized in revenue recognition.  Sales returns pertain primarily to warranty returns, returns of seasonal items, and returns of those newly introduced products sold with a return privilege.  The calculation of warranty returns is based in large part on historical data, while seasonal and new product returns are primarily developed using customer provided information.

Impairment and Valuation of Long-lived Assets

The Company reviews long-lived assets for impairment whenever events or changes in circumstances indicate that the related carrying amounts may not be recoverable. Long-lived assets consist of property, plant and equipment and intangible assets, including the value of contracts/customer relationships, trademarks and safety certifications, trade secrets, and technology software. Determining whether an impairment has occurred typically requires various estimates and assumptions, including determining which cash flows are directly related to the potentially impaired asset, the useful life over which cash flows will occur, the amounts of the cash flows and the asset’s residual value, if any. In turn, measurement of an impairment loss requires a determination of fair value, which is based on the best information available. The Company uses internal discounted cash flows estimates, quoted market prices when available, and independent appraisals, as appropriate, to determine fair value. The Company derives the required cash flow estimates from its historical experience and its internal business plans. 

The Company recognizes the excess cost of acquired entities over the net amount assigned to the fair value of assets acquired and liabilities assumed as goodwill.  Goodwill is tested for impairment on an annual basis at the start of the fourth quarter and between annual tests whenever an impairment is indicated.  The impairment test for goodwill requires the determination of fair value of the reporting unit.  The Company uses multiples of earnings before interest, taxes, depreciation, and amortization ("EBITDA"), sales, and discounted cash flow models, which are described above, to determine the reporting unit's fair value, as appropriate.

ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The Company's interest income on cash equivalents and marketable securities is affected by changes in interest rates in the United States.  Cash equivalents primarily consist of money market funds. Based on the accounting profession’s interpretation of cash equivalents under FASB ASC Topic 230, the Company’s seven-day variable rate demand notes are classified as marketable securities rather than as cash equivalents.  The demand notes are highly liquid instruments with interest rates set every seven days that can be tendered to the trustee or remarketer upon seven days notice for payment of principal and accrued interest amounts.  The seven-day tender feature of these variable rate demand notes is further supported by an irrevocable letter of credit from highly rated U.S. banks.  To the extent a bond is not remarketed at par plus accrued interest, the difference is drawn from the bank’s letter of credit.  The Company has had no issues tendering these notes to the trustees or remarketers.  Other than a failure of a major U.S. bank, there are no risks of which the Company is aware that relate to these notes in the current market. The balance of the Company’s investments is held primarily in fixed and variable rate municipal bonds and certificates of deposits with a weighted average life of 0.7 years.  Accordingly, changes in interest rates have not had a material effect on the Company, and the Company does not anticipate that future exposure to interest rate market risk will be material.  The Company uses sensitivity analysis to determine its exposure to changes in interest rates. 

The Company has no history of, and does not anticipate in the future, investing in derivative financial instruments.  Most transactions with international customers are entered into in U.S. dollars, precluding the need for foreign currency cash flow hedges. As the majority of the Housewares/Small Appliance segment’s suppliers are located in China, periodic changes in the U.S. dollar and Chinese Renminbi (RMB) exchange rates do have an impact on that segment’s product costs. It is anticipated that any potential material impact from fluctuations in the exchange rate will be to the cost of products secured via purchase orders issued subsequent to the revaluation.

14

ITEM 4. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures 

The Company’s management, including the Chief Executive Officer and Treasurer (principal financial officer), conducted an evaluation of the effectiveness of the design and operation of the Company’s disclosure controls and procedures pursuant to Rule 13a-15 under the Securities Exchange Act of 1934 (the “1934 Act”) as of October 1, 2023. Based on that evaluation, the Company’s Chief Executive Officer and Treasurer (principal financial officer) concluded that the Company’s disclosure controls and procedures were effective as of that date.

There were no changes to internal controls over financial reporting during the quarter ended October 1, 2023 that have materially affected or are reasonably likely to materially affect, the Company's internal control over financial reporting.  

15

PART II - OTHER INFORMATION

Item 1.  Legal Proceedings

See Note J to the Consolidated Financial Statements set forth under Part I - Item 1 above. 

Item  5. Other Information

Insider Trading Arrangement

During the fiscal quarter ended October 1, 2023, the following officer (as defined in Rule 16a-1(f) under the Securities Exchange Act of 1934) of the Company adopted a “non-Rule 10b5-1 trading arrangement” as defined in Regulation S-K Item 408:

David Peuse, Treasurer and Director of Financial Reporting, adopted a trading arrangement on August 17, 2023 providing for the one-time sale of 193 shares of the Company’s common stock. The duration of the trading arrangement was until the sale was completed.

No other officers or directors, as defined in Rule 16a-1(f), adopted or terminated a “Rule 10b5-1 trading arrangement” or a “non-Rule 10b5-1 trading arrangement,” as defined in Regulation S-K Item 408, during the last fiscal quarter.

Item 6.  Exhibits

Exhibit 3(i)	Restated Articles of Incorporation - incorporated by reference from Exhibit 3 (i) of the Company's annual report on Form 10-K for the year ended December 31, 2005
Exhibit 3(ii)	By-Laws - incorporated by reference from Exhibit 3 (ii) of the Company's current report on Form 8-K dated July 6, 2007
Exhibit 9.1	Voting Trust Agreement  - incorporated by reference from Exhibit 9 of the Company's quarterly report on Form 10-Q for the quarter ended July 6, 1997
Exhibit 9.2	Voting Trust Agreement Amendment - incorporated by reference from Exhibit 9.2 of the Company's annual report on Form 10-K for the year ended December 31, 2008
Exhibit 31.1	Certification of the Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
Exhibit 31.2	Certification of the Treasurer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
Exhibit 32.1	Certification of the Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
Exhibit 32.2	Certification of the Treasurer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
Exhibit 101.INS	eXtensible Business Reporting Language (XBRL) Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.
Exhibit 101.SCH	Inline XBRL Taxonomy Extension Schema Document
Exhibit 101.CAL	Inline XBRL Taxonomy Calculation Linkbase Document
Exhibit 101.DEF	Inline XBRL Taxonomy Extension Definition Linkbase Document
Exhibit 101.LAB	Inline XBRL Taxonomy Extension Label Linkbase Document
Exhibit 101.PRE	Inline XBRL Taxonomy Extension Presentation Linkbase Document
Exhibit 104	The cover page from this Quarterly Report on Form 10-Q for the quarter ended October 1, 2023, formatted in Inline XBRL and contained in Exhibit 101.INS

16

SIGNATURES 

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

NATIONAL PRESTO INDUSTRIES, INC.

/s/ Maryjo Cohen

Maryjo Cohen, Chair of the Board,

President, Chief Executive Officer

(Principal Executive Officer), Director

/s/ David J. Peuse

David J. Peuse,  Director of Financial Reporting and Treasurer, (Principal

Financial Officer) 

Date: November 13, 2023

17

EX-31.1

EXHIBIT 31.1 

CERTIFICATION PURSUANT TO 

18 U.S.C. SECTION 1350, 

AS ADOPTED PURSUANT TO 

SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002 

I, Maryjo Cohen, certify that: 

1.  I have reviewed this quarterly report on Form 10-Q of National Presto Industries, Inc.;

2.    Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.    Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.    The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a)    designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b)    designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c)    evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d)    disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.    The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a)    all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b)    any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: November 13, 2023	/S/	Maryjo Cohen
		Maryjo Cohen
		Chief Executive Officer

EX-31.2

EXHIBIT 31.2

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, David J. Peuse, certify that:

1.  I have reviewed this quarterly report on Form 10-Q of National Presto Industries, Inc.;

2.    Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.    Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.    The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a)    designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b)    designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c)    evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d)    disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.    The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a)    all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b)    any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: November 13, 2023	/S/	David J. Peuse
		David J. Peuse
		Treasurer

EX-32.1

EXHIBIT 32.1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

Pursuant to 18 U.S.C. §1350 (as adopted pursuant to §906 of the Sarbanes-Oxley Act of 2002), I, the undersigned Chief Executive Officer of National Presto Industries, Inc. (the “Company”), hereby certify that the Quarterly Report on Form 10-Q of the Company for the quarterly period ended October 1, 2023 (the “Report”) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 and that information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

A signed original of this written statement required by Section 906 has been provided to the Company and will be retained by the Company and furnished to the SEC or its staff upon request.

Date: November 13, 2023	/S/	Maryjo Cohen
		Maryjo Cohen,
		Chief Executive Officer

EX-32.2

EXHIBIT 32.2

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

Pursuant to 18 U.S.C. §1350 (as adopted pursuant to §906 of the Sarbanes-Oxley Act of 2002), I, the undersigned Treasurer of National Presto Industries, Inc. (the “Company”), hereby certify that the Quarterly Report on Form 10-Q of the Company for the quarterly period ended October 1, 2023 (the “Report”) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 and that information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

A signed original of this written statement required by Section 906 has been provided to the Company and will be retained by the Company and furnished to the SEC or its staff upon request.

Date: November 13, 2023	/S/	David J. Peuse
		David J. Peuse
		Treasurer

XML

Document And Entity Information - shares	9 Months Ended
	Oct. 01, 2023	Nov. 13, 2023
Document Information [Line Items]
Entity Central Index Key	0000080172
Entity Registrant Name	NATIONAL PRESTO INDUSTRIES INC
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Document Fiscal Period Focus	Q3
Document Fiscal Year Focus	2023
Document Type	10-Q
Document Quarterly Report	true
Document Period End Date	Oct. 01, 2023
Document Transition Report	false
Entity File Number	1-2451
Entity Incorporation, State or Country Code	WI
Entity Tax Identification Number	39-0494170
Entity Address, Address Line One	3925 North Hastings Way
Entity Address, City or Town	Eau Claire
Entity Address, State or Province	WI
Entity Address, Postal Zip Code	54703-3703
City Area Code	715
Local Phone Number	839-2121
Title of 12(b) Security	Common Stock, $1 par value
Trading Symbol	NPK
Security Exchange Name	NYSE
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Accelerated Filer
Entity Small Business	false
Entity Emerging Growth Company	false
Entity Shell Company	false
Entity Common Stock, Shares Outstanding		7,082,407

XML

Condensed Consolidated Balance Sheets (Current Period Unaudited) - USD ($) $ in Thousands	Oct. 01, 2023	Dec. 31, 2022
CURRENT ASSETS:
Cash and cash equivalents	$ 70,411	$ 70,711
Marketable securities	24,966	24,863
Accounts receivable, net	49,142	71,024
Inventories:
Finished goods	46,742	36,249
Work in process	122,580	105,564
Raw materials	13,609	10,324
Inventory, net	182,931	152,137
Notes receivable, current	1,608	2,226
Other current assets	4,742	5,671
Total current assets	333,800	326,632
PROPERTY, PLANT AND EQUIPMENT	106,966	105,425
Less allowance for depreciation	66,368	63,634
Property, plant and equipment, net	40,598	41,791
GOODWILL	19,433	18,573
INTANGIBLE ASSETS, net	5,670	6,926
RIGHT-OF-USE LEASE ASSETS	10,547	10,731
DEFERRED INCOME TAXES	4,638	5,506
OTHER ASSETS	1,283	1,688
Assets	415,969	411,847
CURRENT LIABILITIES:
Accounts payable	44,361	34,604
Federal and state income taxes	2,105	2,552
Lease liabilities	676	577
Accrued liabilities	16,274	15,908
Total current liabilities	63,416	53,641
LEASE LIABILITIES - NON-CURRENT	9,871	10,154
Total liabilities	73,287	63,795
STOCKHOLDERS' EQUITY
Common stock, $1 par value: Authorized: 12,000,000 shares Issued: 7,440,518 shares (	7,441	7,441
Paid-in capital	15,788	14,799
Retained earnings	331,087	338,071
Accumulated other comprehensive loss	(75)	(103)
Stockholders' Equity before Treasury Stock	354,241	360,208
Treasury stock, at cost	11,559	12,156
Total stockholders' equity	342,682	348,052
Liabilities and Equity	$ 415,969	$ 411,847

XML

Condensed Consolidated Balance Sheets (Current Period Unaudited) (Parentheticals) - $ / shares	Oct. 01, 2023	Dec. 31, 2022
Common stock, par value (in dollars per share)	$ 1	$ 1
Common stock, authorized (in shares)	12,000,000	12,000,000
Common stock, issued (in shares)	7,440,518	7,440,518

XML

Consolidated Statements of Comprehensive Income (Unaudited) - USD ($) shares in Thousands, $ in Thousands	3 Months Ended		9 Months Ended
	Oct. 01, 2023	Oct. 02, 2022	Oct. 01, 2023	Oct. 02, 2022
Net sales	$ 83,141	$ 69,683	$ 242,496	$ 207,575
Cost of sales	67,742	52,621	195,697	165,764
Gross profit	15,399	17,062	46,799	41,811
Selling and general expenses	7,904	6,486	23,804	20,181
Intangibles amortization	427	78	1,257	186
Operating profit	7,068	10,498	21,738	21,444
Other income	1,775	1,085	5,502	2,529
Earnings before provision for income taxes	8,843	11,583	27,240	23,973
Provision for income taxes	1,824	2,656	5,840	5,447
Net earnings	$ 7,019	$ 8,927	$ 21,400	$ 18,526
Weighted average shares outstanding:
Basic and diluted (in shares)	7,108	7,083	7,104	7,079
Net Earnings per share:
Basic and diluted (in dollars per share)	$ 0.99	$ 1.26	$ 3.01	$ 2.62
Comprehensive income:
Net earnings	$ 7,019	$ 8,927	$ 21,400	$ 18,526
Other comprehensive income (loss), net of tax:
Unrealized gain on available-for-sale securities, net of tax	20	(89)	28	(176)
Comprehensive income	$ 7,039	$ 8,838	$ 21,428	$ 18,350
Cash dividends declared and paid per common share (in dollars per share)	$ 0	$ 0	$ 4	$ 4.5

XML

Consolidated Statements of Cash Flows (Unaudited) - USD ($)	9 Months Ended
	Oct. 01, 2023	Oct. 02, 2022
Cash flows from operating activities:
Net earnings	$ 21,400,000	$ 18,526,000
Adjustments to reconcile net earnings to net cash provided by operating activities:
Provision for depreciation	2,887,000	1,974,000
Intangibles amortization	1,257,000	186,000
Non-cash retirement plan expense	672,000	620,000
Proceeds from insurance claim	527,000	89,000
Gain on bargain purchase	0	(492,000)
Other	628,000	492,000
Changes in operating accounts:
Accounts receivable, net	22,317,000	9,522,000
Inventories	(31,756,000)	(32,030,000)
Other assets and current assets	1,335,000	243,000
Accounts payable and accrued liabilities	10,123,000	(2,277,000)
Federal and state income taxes	(600,000)	(133,000)
Net cash provided by (used in) operating activities	28,790,000	(3,280,000)
Cash flows from investing activities:
Marketable securities purchased	(42,195,000)	(12,575,000)
Marketable securities - maturities and sales	42,127,000	2,832,000
Proceeds from note receivable	627,000	76,000
Acquisition of business, net cash required	0	(3,125,000)
Purchase of property, plant and equipment	(1,693,000)	(522,000)
Net used in investing activities	(1,134,000)	(13,314,000)
Cash flows from financing activities:
Dividends paid	(28,385,000)	(31,827,000)
Proceeds from sale of treasury stock	429,000	436,000
Other	0	(36,000)
Net cash used in financing activities	(27,956,000)	(31,427,000)
Net decrease in cash and cash equivalents	(300,000)	(48,021,000)
Cash and cash equivalents at beginning of period	70,711,000	109,805,000
Cash and cash equivalents at end of period	$ 70,411,000	$ 61,784,000

XML

Consolidated Statements Of Stockholders' Equity (Unaudited) - USD ($) shares in Thousands, $ in Thousands	Common Stock [Member]	Additional Paid-in Capital [Member]	Retained Earnings [Member]	AOCI Attributable to Parent [Member]	Treasury Stock, Common [Member]	Total
Balance (in shares) at Dec. 31, 2021	7,042
Balance at Dec. 31, 2021	$ 7,441	$ 13,743	$ 349,198	$ 20	$ (12,779)	$ 357,623
Net earnings			18,526			18,526
Unrealized loss on available-for-sale securities, net of tax				(176)		(176)
Other (in shares)	18
Other		842	0		537	1,379
Dividends			(31,827)			(31,827)
Unrealized gain on available-for-sale securities, net of tax				(176)		(176)
Balance (in shares) at Oct. 02, 2022	7,060
Balance at Oct. 02, 2022	$ 7,441	14,585	335,897	(156)	(12,242)	345,525
Balance (in shares) at Jul. 03, 2022	7,057
Balance at Jul. 03, 2022	$ 7,441	14,374	326,970	(67)	(12,346)	336,372
Net earnings			8,927			8,927
Unrealized loss on available-for-sale securities, net of tax				(89)		(89)
Other (in shares)	3
Other		211	0		104	315
Unrealized gain on available-for-sale securities, net of tax				(89)		(89)
Balance (in shares) at Oct. 02, 2022	7,060
Balance at Oct. 02, 2022	$ 7,441	14,585	335,897	(156)	(12,242)	345,525
Balance (in shares) at Dec. 31, 2022	7,063
Balance at Dec. 31, 2022	$ 7,441	14,798	338,072	(103)	(12,156)	348,052
Net earnings			21,400			21,400
Unrealized loss on available-for-sale securities, net of tax				28		28
Other (in shares)	19
Other		990	0		597	1,587
Dividends			(28,385)			(28,385)
Unrealized gain on available-for-sale securities, net of tax				28		28
Balance (in shares) at Oct. 01, 2023	7,082
Balance at Oct. 01, 2023	$ 7,441	15,788	331,087	(75)	(11,559)	342,682
Balance (in shares) at Jul. 02, 2023	7,079
Balance at Jul. 02, 2023	$ 7,441	15,540	324,068	(95)	(11,658)	335,296
Net earnings			7,019			7,019
Unrealized loss on available-for-sale securities, net of tax				20		20
Other (in shares)	3
Other		248	0		99	347
Unrealized gain on available-for-sale securities, net of tax				20		20
Balance (in shares) at Oct. 01, 2023	7,082
Balance at Oct. 01, 2023	$ 7,441	$ 15,788	$ 331,087	$ (75)	$ (11,559)	$ 342,682

XML

Consolidated Statements Of Stockholders' Equity (Unaudited) (Parentheticals) - $ / shares	9 Months Ended
	Oct. 01, 2023	Oct. 02, 2022
Regular dividends per share (in dollars per share)	$ 1	$ 1
Extra dividends per share (in dollars per share)	$ 3	$ 3.5

XML

Note A - Basis of Presentation

9 Months Ended

Oct. 01, 2023

Notes to Financial Statements

Organization, Consolidation and Presentation of Financial Statements Disclosure [Text Block]

NOTE A – BASIS OF PRESENTATION 

The condensed consolidated interim financial statements included herein are unaudited and have been prepared by the Company pursuant to the rules and regulations of the United States Securities and Exchange Commission (“SEC”). In the opinion of management of the Company, the consolidated interim financial statements reflect all of the adjustments which were of a normal recurring nature necessary for a fair presentation of the results of the interim periods.  The condensed consolidated balance sheet as of  December 31, 2022 is summarized from audited consolidated financial statements, but does not include all the disclosures contained therein and should be read in conjunction with the 2022 Annual Report on Form 10-K.  Interim results for the period are not indicative of those for the year.

XML

Note B - General

9 Months Ended

Oct. 01, 2023

Notes to Financial Statements

Unusual or Infrequent Items, or Both, Disclosure [Text Block]

NOTE B – GENERAL

As of the end of the quarter ending October 1, 2023, few of the after-effects of the government responses to the COVID-19 virus remain beyond inflation, labor shortages and the general attitude towards work. The extent to which these after-effects impact the Company’s business for the remainder of 2023 and beyond will depend on future developments that are highly uncertain and cannot be predicted.

XML

Note C - Revenues

9 Months Ended

Oct. 01, 2023

Notes to Financial Statements

Revenue from Contract with Customer [Text Block]

NOTE C – REVENUES

The Company’s revenues are derived from short-term contracts and programs that are typically completed within 3 to 36 months and are recognized in accordance with Financial Accounting Standard Board (“FASB”) Accounting Standard Codification (“ASC”) Topic 606, Revenue from Contracts with Customers. The Company’s contracts generally contain one or more performance obligations: the physical delivery of distinct ordered product or products.  The Company provides an assurance type product warranty on its products to the original owner.  In addition, for the Housewares/Small Appliances segment, the Company estimates returns of seasonal products and returns of newly introduced products sold with a return privilege.  Stand-alone selling prices are set forth in each contract and are used to allocate revenue to the corresponding performance obligations.  For the Housewares/Small Appliances segment, contracts include variable consideration, as the prices are subject to customer allowances, which principally consist of allowances for cooperative advertising, defective product, and trade discounts.  Customer allowances are generally allocated to the performance obligations based on budgeted rates agreed upon with customers, as well as historical experience, and yield the Company’s best estimate of the expected value for the variable consideration.

The Company's contracts in the Defense segment are primarily with the U.S. Department of Defense (DOD) and DOD prime contractors. As a consequence, this segment's business essentially depends on the product needs and governmental funding of the DOD. Substantially all of the work performed by the Defense segment directly or indirectly for the DOD is performed on a fixed-price basis. Under fixed-price contracts, the price paid to the contractor is usually awarded based on competition at the outset of the contract and therefore, with the exception of limited escalation provisions on specific materials, is generally not subject to any adjustments reflecting the actual costs incurred by the contractor.

For the Housewares/Small Appliance segment, revenue is generally recognized as the completed, ordered product is shipped to the customer from the Company’s warehouses.  For the relatively few situations in which revenue should be recognized when product is received by the customer, the Company adjusts revenue accordingly.  For the Defense segment, revenue is primarily recognized when the customer has legal title and formally documents that it has accepted the products.    In some situations, the customer may obtain legal title and accept the products at the Company’s facilities, arranging for transportation at a later date, typically in one to four weeks.  The Company does not consider the short-term storage of the customer owned products to be a material performance obligation, and no part of the transaction price is allocated to it. There are also certain termination clauses in Defense segment contracts that may give rise to an over-time pattern of recognition of revenue in the absence of alternative use of the product.

The timing of revenue recognition, billings, and cash collections results in billed accounts receivable, and customer advances and deposits (contract liabilities) on the Company’s Condensed Consolidated Balance Sheets. For the Defense segment, the Company occasionally receives advances or deposits from certain customers before revenue is recognized, resulting in contract liabilities.  These advances or deposits do not represent a significant financing component.  As of October 1, 2023 and December 31, 2022, $2,975,000 and $4,434,000, respectively, of contract liabilities were included in Accounts Payable on the Company’s Condensed Consolidated Balance Sheets.  The Company recognized revenue of $285,000 during the nine month period ended October 1, 2023 that was included in the Defense segment contract liability at the beginning of that period. The Company monitors its estimates of variable consideration, which includes customer allowances for cooperative advertising, defective product, trade discounts, and returns of seasonal and newly introduced product, all of which pertain to the Housewares/Small Appliances segment, and periodically makes cumulative adjustments to the carrying amounts of these contract liabilities as appropriate.  During the three and nine month periods ended October 1, 2023, the Company made a cumulative adjustment increasing customer allowances by $775,000. There were no material adjustments to the aforementioned estimates during the three and nine month periods ended October 2, 2022.  There were no amounts of revenue recognized during the same periods related to performance obligations satisfied in a previous period.  The portion of contract transaction prices allocated to unsatisfied performance obligations, also known as the contract backlog, in the Company’s Defense segment were $554,865,000 and $505,069,000 as of October 1, 2023 and December 31, 2022, respectively.  The Company anticipates that the unsatisfied performance obligations (contract backlog) will be fulfilled in an 18 to 36-month period.  The performance obligations in the Housewares/Small Appliances segment have original expected durations of less than one year.

The Company’s principal sources of revenue are derived from three segments: Housewares/Small Appliance, Defense, and Safety, as shown in Note E. Management utilizes the performance measures by segment to evaluate the financial performance of and make operating decisions for the Company.

XML

Note D - Earnings Per Share

9 Months Ended

Oct. 01, 2023

Notes to Financial Statements

Earnings Per Share [Text Block]

NOTE D – EARNINGS PER SHARE 

Basic earnings per share is based on the weighted average number of common shares and participating securities outstanding during the period.  Diluted earnings per share also includes the dilutive effect of additional potential common shares issuable.  Unvested stock awards, which contain non-forfeitable rights to dividends whether paid or unpaid (“participating securities”), are included in the number of shares outstanding for both basic and diluted earnings per share calculations. 

XML

Note E - Business Segments

9 Months Ended

Oct. 01, 2023

Notes to Financial Statements

Segment Reporting Disclosure [Text Block]

NOTE E – BUSINESS SEGMENTS 

In the following summary, operating profit represents earnings before other income and income taxes.  The Company's segments operate discretely from each other with no shared owned or leased manufacturing facilities.  Costs associated with corporate activities (such as cash and marketable securities management) and the assets associated with such activities are included within the Housewares/Small Appliances segment for all periods presented. 

	(in thousands)
	Housewares / Small Appliances		Defense		Safety			Total
Quarter ended October 1, 2023
External net sales	$	21,545	$	61,311	$	285		$	83,141
Gross profit (loss)		3,920		12,740		(1,261	)		15,399
Operating profit (loss)		760		9,085		(2,777	)		7,068
Total assets		182,221		225,636		8,112			415,969
Depreciation and amortization		262		842		89			1,193
Capital expenditures		216		554		97			867
Quarter ended October 2, 2022
External net sales	$	27,120	$	42,347	$	216		$	69,683
Gross profit (loss)		8,787		8,846		(571	)		17,062
Operating profit (loss)		6,083		6,268		(1,853	)		10,498
Total assets		215,752		175,966		15,725			407,443
Depreciation and amortization		504		747		143			1,394
Capital expenditures		100		194		924			1,218

	(in thousands)
	Housewares / Small Appliances		Defense		Safety			Total
Nine Months Ended October 1, 2023
External net sales	$	61,533	$	179,874	$	1,089		$	242,496
Gross profit (loss)		12,814		36,992		(3,007	)		46,799
Operating profit (loss)		2,957		26,720		(7,939	)		21,738
Total assets		182,221		225,636		8,112			415,969
Depreciation and amortization		769		3,060		315			4,144
Capital expenditures		444		1,074		175			1,693
Nine Months Ended October 2, 2022
External net sales	$	72,267	$	134,828		480		$	207,575
Gross profit (loss)		14,020		28,941		(1,150	)		41,811
Operating profit (loss)		5,151		20,900		(4,607	)		21,444
Total assets		215,752		175,966		15,725			407,443
Depreciation and amortization		766		1,136		258			2,160
Capital expenditures		177		286		927			1,390

XML

Note F - Fair Value of Financial Instruments

9 Months Ended

Oct. 01, 2023

Notes to Financial Statements

Fair Value Disclosures [Text Block]

NOTE F - FAIR VALUE OF FINANCIAL INSTRUMENTS

The Company utilizes the methods of fair value as described in FASB ASC 820, Fair Value Measurements and Disclosures, to value its financial assets and liabilities. ASC 820 utilizes a three-tier fair value hierarchy which prioritizes the inputs used in measuring fair value. These tiers include: Level 1, defined as observable inputs such as quoted prices in active markets; Level 2, defined as inputs other than quoted prices in active markets that are either directly or indirectly observable; and Level 3, defined as unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions.

The carrying amounts for cash and cash equivalents, accounts receivable, notes receivable, accounts payable, and accrued liabilities approximate fair value due to the immediate or short-term maturity of these financial instruments.  See Note G for fair value information on marketable securities.

XML

Note G - Cash, Cash Equivalents And Marketable Securities

9 Months Ended

Oct. 01, 2023

Notes to Financial Statements

Cash, Cash Equivalents, and Marketable Securities [Text Block]

NOTE G - CASH, CASH EQUIVALENTS AND MARKETABLE SECURITIES 

The Company considers all highly liquid marketable securities with an original maturity of three months or less to be cash equivalents.  Cash equivalents include money market funds.  The Company deposits its cash in high quality financial institutions.  The balances, at times, may exceed federally insured limits.  Money market funds are reported at fair value determined using quoted prices in active markets for identical securities (Level 1, as defined by FASB ASC 820).

The Company has classified all marketable securities as available-for-sale which requires the securities to be reported at estimated fair value, with unrealized gains and losses, net of tax, reported as a separate component of stockholders' equity.  Highly liquid, tax-exempt variable rate demand notes with put options exercisable in three months or less are classified as marketable securities.

At October 1, 2023 and December 31, 2022, cost for marketable securities was determined using the specific identification method.  A summary of the amortized costs and fair values of the Company’s marketable securities at the end of the periods presented is shown in the following table.  All of the Company’s marketable securities are classified as Level 2, as defined by FASB ASC 820, with fair values determined using significant other observable inputs, which include quoted prices in markets that are not active, quoted prices of similar securities, recently executed transactions, broker quotations, and other inputs that are observable.

	(In Thousands)
	MARKETABLE SECURITIES
	Amortized Cost		Fair Value		Gross Unrealized Gains		Gross Unrealized Losses
October 1, 2023
Fixed Rate Municipal Bonds	$	2,091	$	2,087	$	-	$	4
Certificates of Deposit		18,791		18,700		.		91
Variable Rate Demand Notes		4,179		4,179		-		-
Total Marketable Securities	$	25,061	$	24,966	$	-	$	95
December 31, 2022
Fixed Rate Municipal Bonds	$	11,460	$	11,405	$	-	$	58
Certificates of Deposit		9,895		9,820		22		94
Variable Rate Demand Notes		3,638		3,638		-		-
Total Marketable Securities	$	24,993	$	24,863	$	22	$	152

Proceeds from maturities and sales of available-for-sale securities totaled $3,961,000 and $195,000 for the three month periods ended October 1, 2023 and October 2, 2022, respectively, and totaled $42,127,000 and $2,832,000 for the nine month periods then ended, respectively.  There were no gross gains or losses related to sales of marketable securities during the same periods.  Net unrealized gain (loss) included in other comprehensive income were $25,000 and $(86,000) before taxes for the three month periods ended October 1, 2023 and October 2, 2022, respectively, and were a net unrealized gain (loss) of $35,000 and $(197,000) before taxes for the nine month periods then ended, respectively. No unrealized gains or losses were reclassified out of accumulated other comprehensive income during the same periods.

The contractual maturities of the marketable securities held at October 1, 2023 are as follows: $15,425,000 within one year; $6,964,000 beyond one year to five years; and $2,672,000 beyond five years to ten years. All of the instruments in the beyond five year range are variable rate demand notes which can be tendered for cash at par plus interest within seven days.  Despite the stated contractual maturity date, to the extent a tender is not honored, the notes become immediately due and payable.

XML

Note H - Other Assets

9 Months Ended

Oct. 01, 2023

Notes to Financial Statements

Other Assets Disclosure [Text Block]

NOTE H – OTHER ASSETS

Other Assets includes prepayments that are made from time to time by the Company for certain materials used in the manufacturing process in the Housewares/Small Appliances segment.  The Company expects to utilize the prepayments and related materials over an estimated period of two years.  As of October 1, 2023 and December 31, 2022, $4,171,000 and $7,065,000 of such prepayments, respectively, remained unused and outstanding.  At  October 1, 2023 and December 31, 2022, $2,888,000 and $5,377,000 of those payments, respectively were included in Other Current Assets, representing the Company’s best estimate of the expected utilization of the prepayments and related materials during the twelve-month periods following those dates.

XML

Note I - Leases

9 Months Ended

Oct. 01, 2023

Notes to Financial Statements

Lessee, Operating Leases [Text Block]

NOTE I – LEASES

The Company accounts for leases under ASC Topic 842, Leases.  The Company’s leasing activities include roles as both lessee and lessor.  As lessee, the Company’s primary leasing activities include buildings and structures to support its manufacturing operations at one location in its Defense segment, buildings and structures to support its Safety segment, and warehouse space and equipment to support its distribution center operations in its Housewares/Small Appliances segment.  As lessor, the Company’s primary leasing activity is comprised of manufacturing and office space located adjacent to its corporate offices.  All of the Company’s leases are classified as operating leases.

The Company’s leases as lessee in its Defense segment provide for variable lease payments that are based on changes in the Consumer Price Index.  As lessor, the Company’s primary lease also provides for variable lease payments that are based on changes in the Consumer Price Index, as well as on increases in costs of insurance, real estate taxes, and utilities related to the leased space. Generally, all of the Company’s lease contracts include options for extensions and early terminations.  The majority of lease terms of the Company’s lease contracts recognized on the balance sheet reflect extension options, while none reflect early termination options.

The Company has determined that the rates implicit in its leases are not readily determinable and therefore, estimates its incremental borrowing rates utilizing quotes from financial institutions for real estate and equipment, as applicable, over periods of time similar to the terms of its leases. The Company has entered into various short-term (12 months or less) leases as lessee and has elected a non-recognition accounting policy, as permitted by ASC Topic 842.

	Three Months Ended		Three Months Ended		Nine Months Ended		Nine Months Ended
Summary of Lease Cost (in thousands)	October 1, 2023		October 2, 2022		October 1, 2023		October 2, 2022
Operating lease cost	$	302	$	284	$	893	$	784
Short-term and variable lease cost		37		79		155		158
Total lease cost	$	339	$	363	$	1,048	$	942

Operating cash used for operating leases was $339,000 and $1,048,000 for the three and nine months ended October 1, 2023, respectively, and $363,000 and $942,000 for the three and  nine months ended October 2, 2022, respectively.  The weighted-average remaining lease term was 19.8 years, and the weighted-average discount rate was 4.6% as of October 1, 2023.

Maturities of operating lease liabilities are as follows:

Years ending December 31:	(In thousands)
2023 (remaining three months)	$	247
2024		981
2025		855
2026		782
2027		782
Thereafter		13,475
Total lease payments	$	17,122
Less: future interest expense		6,575
Lease liabilities	$	10,547

Lease income from operating lease payments was $551,000 and $514,000 for the quarters ended October 1, 2023 and October 2, 2022, respectively, and $1,653,000 and $1,552,000 for the nine months then ended, respectively.  Undiscounted cash flows provided by lease payments are expected as follows:

Years ending December 31:	(In thousands)
2023 (remaining three months)	$	551
2024		2,186
2025		2,186
2026		2,186
2027		2,186
Thereafter		15,302
Total lease payments	$	24,597

The Company considers risk associated with the residual value of its leased real property to be low, given the nature of the long-term lease agreement, the Company’s ability to control the maintenance of the property, and the creditworthiness of the lessee.  The residual value risk is further mitigated by the long-lived nature of the property, and the propensity of such assets to hold their value or, in some cases, appreciate in value.

XML

Note J - Commitments and Contingencies

9 Months Ended

Oct. 01, 2023

Notes to Financial Statements

Commitments and Contingencies Disclosure [Text Block]

NOTE J – COMMITMENTS AND CONTINGENCIES

The Company is involved in largely routine litigation incidental to its business.  Management believes the ultimate outcome of the litigation will not have a material effect on the Company's consolidated financial position, liquidity, or results of operations. 

In the state of Mississippi, inventory that is shipped out of state that is held in a licensed Free Port Warehouse is exempt from personal property taxes.  One of the Company's subsidiaries operates in Hinds County, Mississippi.  That subsidiary has submitted its Hinds County Free Port Warehouse tax filing for approximately 40 years.  Each year, the county then assessed the subsidiary in accordance with the Company's filing.  However, in June 2020, the Hinds County tax assessor notified the Company that the county had no record of a Free Port Warehouse License and issued an assessment totaling $2,506,000, reflecting personal property tax going back seven years.  The Company is vigorously fighting the assessment, and does not consider the ultimate payment of the taxes to be probable.  Accordingly, as prescribed by ASC 450 - Contingencies, no accrual has been recorded on the Company's consolidated financial statements as of October 1, 2023.

XML

Note K - Recently Issued Or Adopted Accounting Pronouncements

9 Months Ended

Oct. 01, 2023

Notes to Financial Statements

Accounting Standards Update and Change in Accounting Principle [Text Block]

NOTE K – RECENTLY ISSUED OR ADOPTED ACCOUNTING PRONOUNCEMENTS

The Company assesses the impacts of adopting recently issued accounting standards by the Financial Accounting Standards Board on the Company's financial statements, and updates previous assessments, as necessary, from the Company's Quarterly Report on Form 10-Q for the fiscal quarter ended July 2, 2023.  There were no new accounting standards issued or adopted in the quarter ended October 1, 2023 that would have a material impact on the Company's consolidated financial statements.

XML

Note L - Business Acquisitions

9 Months Ended

Oct. 01, 2023

Notes to Financial Statements

Business Combination Disclosure [Text Block]

NOTE L – BUSINESS ACQUISITIONS

On July 29, 2022, the Company’s wholly owned subsidiary, UESCO, Inc., purchased with cash on hand of $3,125,000 certain assets and assumed certain liabilities of Knox Safety, Inc., a company formed in 2019 with operations in Illinois and North Carolina. In addition, upon closing the Company paid a deposit of $500,000 and, subsequently in the first fiscal quarter of 2023, an additional deposit of $1,000,000 to a vendor that had previously been a supplier of Knox Safety. Knox Safety is a startup company that designs and sells carbon monoxide detectors for residential use, the acquisition of which should complement the product lines currently offered by the Company’s Safety segment. Subsequent to the acquisition of Knox Safety, UESCO legally adopted the corporate name Rely Innovations, Inc.

The acquisition was accounted for under the acquisition method of accounting with the Company treated as the acquiring entity. Accordingly, the consideration paid by the Company to complete the acquisition has been recorded to the assets acquired and liabilities assumed based upon their estimated fair values as of the date of acquisition. The carrying values for current assets and liabilities were deemed to approximate their fair values due to the short-term nature of these assets and liabilities. The following table shows the amounts recorded as of their acquisition date.

	(in thousands)
Accounts receivable		1,832
Inventories		1,274
Other current assets		7
Property, plant and equipment		868
Intangible assets		290
Right-of-Use Lease Assets		1,126
Total assets acquired		5,397
Less: Current liabilities assumed		(776)
Less: Lease Liability - Noncurrent		(1,004)
Net assets acquired	$	3,617

The acquired intangibles primarily included trademarks and safety certifications that will be amortized over a period of two years. Due to its startup nature and history of operating losses, the acquisition of Knox Safety resulted in a bargain purchase gain of $492,000, which was included with Selling and general expenses in the Consolidated Statements of Comprehensive Income for the quarter ended October 2, 2022. There was no material tax impact from the acquisition on the Company’s Consolidated Financial Statements. 

On October 26, 2022, the Company’s wholly owned subsidiary, National Defense Corporation, and newly formed subsidiary Woodlawn Manufacturing, LLC, acquired with cash on hand of $21,558,000 the equity interests of Woodlawn Manufacturing, Ltd. Woodlawn Manufacturing, Ltd, is a high volume manufacturer of precision metal parts and assemblies primarily for the defense and aerospace industry.

The acquisition was accounted for under the acquisition method of accounting with the Company treated as the acquiring entity. Accordingly, the consideration paid by the Company to complete the acquisition has been recorded to the assets acquired and liabilities assumed based upon their estimated fair values as of the date of acquisition. The carrying values for current assets and liabilities were deemed to approximate their fair values due to the short-term nature of these assets and liabilities. The following table shows the amounts recorded as of their acquisition date. During the quarter ended April 2, 2023, $860,000 of additional deferred tax liabilities were identified that would have existed as of the date of acquisition.  Accordingly, both Goodwill and Deferred tax liability balances were increased during that quarter.  The table below reflects those adjustments.

	(in thousands)
Accounts receivable		2,136
Inventories		2,309
Other current assets		130
Property, plant and equipment		6,400
Intangible assets		6,058
Goodwill		7,948
Total assets acquired		24,981
Less: Current liabilities assumed		(1,084	)
Less: Deferred tax liability		(2,339	)
Net assets acquired	$	21,558

The acquired intangible assets primarily include customer contracts and will be amortized over a period of four years. The amount of goodwill recorded reflects expected earning potential and synergies with other operations in the Defense segment. The recorded goodwill is not deductible for income tax purposes. 

The following pro forma condensed consolidated results of operations has been prepared as if the acquisitions had occurred as of January 1, 2022.

	(unaudited)		(unaudited)
	(in thousands, except per share data)		(in thousands, except per share data)
	Three Months Ended		Nine Months Ended
	October 2, 2022		October 2, 2022
Net sales	$	76,778	$	224,881
Net earnings		8,967		17,462
Net earnings per share (basic and diluted)	$	1.27	$	2.47
Weighted average shares outstanding (basic and diluted)		7,083		7,079

The unaudited pro forma financial information presented above is not intended to represent or be indicative of what would have occurred if the transactions had taken place on the dates presented and is not indicative of what the Company’s actual results of operations would have been had the acquisition been completed at the beginning of the periods indicated above.  The pro forma combined results reflect one-time costs to fully merge and operate the combined organization more efficiently, but do not reflect anticipated synergies expected to result from the combination and should not be relied upon as being indicative of the future results that the Company will experience.

XML

Note M - Subsequent Event

9 Months Ended

Oct. 01, 2023

Notes to Financial Statements

Subsequent Events [Text Block]

NOTE M - SUBSEQUENT EVENT

The Company has evaluated subsequent events through the filing of this Form 10-Q, and determined that there have been no events that have occurred that would require adjustments to the disclosures in the Company’s consolidated financial statements.

XML

Insider Trading Arrangements

3 Months Ended

9 Months Ended

Oct. 01, 2023

shares

Oct. 01, 2023

shares

Insider Trading Arr Line Items

Material Terms of Trading Arrangement [Text Block]

Item  5. Other Information

Insider Trading Arrangement

During the fiscal quarter ended October 1, 2023, the following officer (as defined in Rule 16a-1(f) under the Securities Exchange Act of 1934) of the Company adopted a “non-Rule 10b5-1 trading arrangement” as defined in Regulation S-K Item 408:

David Peuse, Treasurer and Director of Financial Reporting, adopted a trading arrangement on August 17, 2023 providing for the one-time sale of 193 shares of the Company’s common stock. The duration of the trading arrangement was until the sale was completed.

No other officers or directors, as defined in Rule 16a-1(f), adopted or terminated a “Rule 10b5-1 trading arrangement” or a “non-Rule 10b5-1 trading arrangement,” as defined in Regulation S-K Item 408, during the last fiscal quarter.

Trading Arrangement, Individual Name

David Peuse

Trading Arrangement, Individual Title

Treasurer and Director of Financial Reporting

Trading Arrangement Adoption Date

August 17, 2023

Trading Arrangement, Securities Aggregate Available Amount

193

193

Rule 10b5-1 Arrangement Adopted [Flag]

false

Non-Rule 10b5-1 Arrangement Adopted [Flag]

false

Rule 10b5-1 Arrangement Terminated [Flag]

false

Non-Rule 10b5-1 Arrangement Terminated [Flag]

false

XML

Note E - Business Segments (Tables)

9 Months Ended

Oct. 01, 2023

Notes Tables

Schedule of Segment Reporting Information, by Segment [Table Text Block]

	(in thousands)
	Housewares / Small Appliances		Defense		Safety			Total
Quarter ended October 1, 2023
External net sales	$	21,545	$	61,311	$	285		$	83,141
Gross profit (loss)		3,920		12,740		(1,261	)		15,399
Operating profit (loss)		760		9,085		(2,777	)		7,068
Total assets		182,221		225,636		8,112			415,969
Depreciation and amortization		262		842		89			1,193
Capital expenditures		216		554		97			867
Quarter ended October 2, 2022
External net sales	$	27,120	$	42,347	$	216		$	69,683
Gross profit (loss)		8,787		8,846		(571	)		17,062
Operating profit (loss)		6,083		6,268		(1,853	)		10,498
Total assets		215,752		175,966		15,725			407,443
Depreciation and amortization		504		747		143			1,394
Capital expenditures		100		194		924			1,218

	(in thousands)
	Housewares / Small Appliances		Defense		Safety			Total
Nine Months Ended October 1, 2023
External net sales	$	61,533	$	179,874	$	1,089		$	242,496
Gross profit (loss)		12,814		36,992		(3,007	)		46,799
Operating profit (loss)		2,957		26,720		(7,939	)		21,738
Total assets		182,221		225,636		8,112			415,969
Depreciation and amortization		769		3,060		315			4,144
Capital expenditures		444		1,074		175			1,693
Nine Months Ended October 2, 2022
External net sales	$	72,267	$	134,828		480		$	207,575
Gross profit (loss)		14,020		28,941		(1,150	)		41,811
Operating profit (loss)		5,151		20,900		(4,607	)		21,444
Total assets		215,752		175,966		15,725			407,443
Depreciation and amortization		766		1,136		258			2,160
Capital expenditures		177		286		927			1,390

XML

Note G - Cash, Cash Equivalents And Marketable Securities (Tables)

9 Months Ended

Oct. 01, 2023

Notes Tables

Schedule of Available-for-Sale Securities Reconciliation [Table Text Block]

	(In Thousands)
	MARKETABLE SECURITIES
	Amortized Cost		Fair Value		Gross Unrealized Gains		Gross Unrealized Losses
October 1, 2023
Fixed Rate Municipal Bonds	$	2,091	$	2,087	$	-	$	4
Certificates of Deposit		18,791		18,700		.		91
Variable Rate Demand Notes		4,179		4,179		-		-
Total Marketable Securities	$	25,061	$	24,966	$	-	$	95
December 31, 2022
Fixed Rate Municipal Bonds	$	11,460	$	11,405	$	-	$	58
Certificates of Deposit		9,895		9,820		22		94
Variable Rate Demand Notes		3,638		3,638		-		-
Total Marketable Securities	$	24,993	$	24,863	$	22	$	152

XML

Note I - Leases (Tables)

9 Months Ended

Oct. 01, 2023

Notes Tables

Lease, Cost [Table Text Block]

	Three Months Ended		Three Months Ended		Nine Months Ended		Nine Months Ended
Summary of Lease Cost (in thousands)	October 1, 2023		October 2, 2022		October 1, 2023		October 2, 2022
Operating lease cost	$	302	$	284	$	893	$	784
Short-term and variable lease cost		37		79		155		158
Total lease cost	$	339	$	363	$	1,048	$	942

Lessee, Operating Lease, Liability, to be Paid, Maturity [Table Text Block]

Years ending December 31:	(In thousands)
2023 (remaining three months)	$	247
2024		981
2025		855
2026		782
2027		782
Thereafter		13,475
Total lease payments	$	17,122
Less: future interest expense		6,575
Lease liabilities	$	10,547

Operating Lease, Lease Income [Table Text Block]

Years ending December 31:	(In thousands)
2023 (remaining three months)	$	551
2024		2,186
2025		2,186
2026		2,186
2027		2,186
Thereafter		15,302
Total lease payments	$	24,597

XML

Note L - Business Acquisitions (Tables)

9 Months Ended

Oct. 01, 2023

Notes Tables

Schedule of Recognized Identified Assets Acquired and Liabilities Assumed [Table Text Block]

	(in thousands)
Accounts receivable		1,832
Inventories		1,274
Other current assets		7
Property, plant and equipment		868
Intangible assets		290
Right-of-Use Lease Assets		1,126
Total assets acquired		5,397
Less: Current liabilities assumed		(776)
Less: Lease Liability - Noncurrent		(1,004)
Net assets acquired	$	3,617

	(in thousands)
Accounts receivable		2,136
Inventories		2,309
Other current assets		130
Property, plant and equipment		6,400
Intangible assets		6,058
Goodwill		7,948
Total assets acquired		24,981
Less: Current liabilities assumed		(1,084	)
Less: Deferred tax liability		(2,339	)
Net assets acquired	$	21,558

Business Acquisition, Pro Forma Information [Table Text Block]

	(unaudited)		(unaudited)
	(in thousands, except per share data)		(in thousands, except per share data)
	Three Months Ended		Nine Months Ended
	October 2, 2022		October 2, 2022
Net sales	$	76,778	$	224,881
Net earnings		8,967		17,462
Net earnings per share (basic and diluted)	$	1.27	$	2.47
Weighted average shares outstanding (basic and diluted)		7,083		7,079

XML

Note C - Revenues 1 (Details Textual)	3 Months Ended		9 Months Ended
	Oct. 01, 2023 USD ($)	Oct. 02, 2022 USD ($)	Oct. 01, 2023 USD ($)	Oct. 02, 2022 USD ($)	Dec. 31, 2022 USD ($)
Number of Operating Segments			3
Defense [Member]
Contract with Customer, Liability, Current	$ 2,975,000		$ 2,975,000		$ 4,434,000
Contract with Customer, Liability, Revenue Recognized			285,000
Contract with Customer, Performance Obligation Satisfied in Previous Period	775,000	$ 0	775,000	$ 0
Revenue, Remaining Performance Obligation, Amount	$ 554,865,000		$ 554,865,000		$ 505,069,000
Minimum [Member]
Revenue Contract Period (Month)			3 months
Maximum [Member]
Revenue Contract Period (Month)			36 years

XML

Note C - Revenues 2 (Details Textual) - Defense [Member] - Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2023-10-02	Oct. 01, 2023
Minimum [Member]
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Period (Month)	18 months
Maximum [Member]
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Period (Month)	36 years

XML

Note E - Business Segments - Segment Information (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Oct. 01, 2023	Oct. 02, 2022	Oct. 01, 2023	Oct. 02, 2022	Dec. 31, 2022
External net sales	$ 83,141	$ 69,683	$ 242,496	$ 207,575
Gross profit (loss)	15,399	17,062	46,799	41,811
Operating profit (loss)	7,068	10,498	21,738	21,444
Total assets	415,969	407,443	415,969	407,443	$ 411,847
Depreciation and amortization	1,193	1,394	4,144	2,160
Capital expenditures	867	1,218	1,693	1,390
Housewares/Small Appliances [Member] | Operating Segments [Member]
External net sales	21,545	27,120	61,533	72,267
Gross profit (loss)	3,920	8,787	12,814	14,020
Operating profit (loss)	760	6,083	2,957	5,151
Total assets	182,221	215,752	182,221	215,752
Depreciation and amortization	262	504	769	766
Capital expenditures	216	100	444	177
Defense [Member] | Operating Segments [Member]
External net sales	61,311	42,347	179,874	134,828
Gross profit (loss)	12,740	8,846	36,992	28,941
Operating profit (loss)	9,085	6,268	26,720	20,900
Total assets	225,636	175,966	225,636	175,966
Depreciation and amortization	842	747	3,060	1,136
Capital expenditures	554	194	1,074	286
Safety [Member] | Operating Segments [Member]
External net sales	285	216	1,089	480
Gross profit (loss)	(1,261)	(571)	(3,007)	(1,150)
Operating profit (loss)	(2,777)	(1,853)	(7,939)	(4,607)
Total assets	8,112	15,725	8,112	15,725
Depreciation and amortization	89	143	315	258
Capital expenditures	$ 97	$ 924	$ 175	$ 927

XML

Note G - Cash, Cash Equivalents And Marketable Securities (Details Textual) - USD ($)	3 Months Ended		9 Months Ended
	Oct. 01, 2023	Oct. 02, 2022	Oct. 01, 2023	Oct. 02, 2022
Proceeds from Sale and Maturity of Debt Securities, Available-for-Sale	$ 3,961,000	$ 195,000	$ 42,127,000	$ 2,832,000
Debt Securities, Available-for-Sale, Realized Gain (Loss)	0	0
OCI, Debt Securities, Available-for-Sale, Unrealized Holding Gain (Loss), before Adjustment and Tax	25,000	(86,000)	35,000	(197,000)
Debt Securities, Available-for-Sale, Maturity, Allocated and Single Maturity Date, Rolling within One Year, Fair Value	15,425,000		15,425,000
Debt Securities, Available-for-Sale, Maturity, Allocated and Single Maturity Date, Rolling after One Through Five Years, Fair Value	6,964,000		6,964,000
Debt Securities, Available-for-Sale, Maturity, Allocated and Single Maturity Date, Rolling after 5 through 10 Years, Fair Value	2,672,000		2,672,000
AOCI Attributable to Parent [Member]
Other Comprehensive Income (Loss), Reclassification Adjustment from AOCI for Sale of Securities, before Tax	$ 0	$ 0	$ 0	$ 0

XML

Note G - Cash, Cash Equivalents And Marketable Securities - Summary of Marketable Securities (Details) - USD ($) $ in Thousands	Oct. 01, 2023	Dec. 31, 2022
Amortized Cost	$ 25,061	$ 24,993
Fair Value	24,966	24,863
Gross Unrealized Gains	0	22
Gross Unrealized Losses	95	152
Fixed Rate Municipal Bonds [Member]
Amortized Cost	2,091	11,460
Fair Value	2,087	11,405
Gross Unrealized Gains	0	0
Gross Unrealized Losses	4	58
Certificates of Deposit [Member]
Amortized Cost	18,791	9,895
Fair Value	18,700	9,820
Gross Unrealized Gains		22
Gross Unrealized Losses	91	94
Variable Rate Demand Obligation [Member]
Amortized Cost	4,179	3,638
Fair Value	4,179	3,638
Gross Unrealized Gains	0	0
Gross Unrealized Losses	$ 0	$ 0

XML

Note H - Other Assets (Details Textual) - USD ($)	9 Months Ended
	Oct. 01, 2023	Dec. 31, 2022
Expected Prepayment Utilization Period (Year)	2 years
Other Current Assets [Member]
Materials, Supplies, and Other	$ 2,888,000	$ 5,377,000
Housewares/Small Appliances [Member]
Materials, Supplies, and Other	$ 4,171,000	$ 7,065,000

XML

Note I - Leases (Details Textual) - USD ($)	3 Months Ended		9 Months Ended
	Oct. 01, 2023	Oct. 02, 2022	Oct. 01, 2023	Oct. 02, 2022
Operating Lease, Payments	$ 339,000	$ 363,000	$ 1,048,000	$ 942,000
Operating Lease, Weighted Average Remaining Lease Term (Year)	19 years 9 months 18 days		19 years 9 months 18 days
Operating Lease, Weighted Average Discount Rate, Percent	4.60%		4.60%
Operating Lease, Lease Income, Lease Payments	$ 551,000	$ 514,000	$ 1,653,000	$ 1,552,000

XML

Note I - Leases - Lease Cost (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Oct. 01, 2023	Oct. 02, 2022	Oct. 01, 2023	Oct. 02, 2022
Operating lease cost	$ 302	$ 284	$ 893	$ 784
Short-term and variable lease cost	37	79	155	158
Total lease cost	$ 339	$ 363	$ 1,048	$ 942

XML

Note I - Leases - Lease Maturities (Details) $ in Thousands	Oct. 01, 2023 USD ($)
2023 (remaining three months)	$ 247
2024	981
2025	855
2026	782
2027	782
Thereafter	13,475
Total lease payments	17,122
Less: future interest expense	6,575
Lease liabilities	$ 10,547

XML

Note I - Leases - Operating Lease Income (Details) $ in Thousands	Oct. 01, 2023 USD ($)
2023 (remaining three months)	$ 551
2024	2,186
2025	2,186
2026	2,186
2027	2,186
Thereafter	15,302
Total lease payments	$ 24,597

XML

Note J - Commitments and Contingencies (Details Textual) - Property Tax Assessment [Member] - USD ($)	1 Months Ended
	Jun. 30, 2020	Oct. 01, 2023
Loss Contingency, Damages Sought, Value	$ 2,506,000
Loss Contingency Accrual, Ending Balance		$ 0

XML

Note L - Business Acquisitions (Details Textual) - USD ($)			3 Months Ended	9 Months Ended
	Oct. 26, 2022	Jul. 29, 2022	Apr. 02, 2023	Oct. 01, 2023	Oct. 02, 2022
Business Combination, Bargain Purchase, Gain Recognized, Amount				$ (0)	$ 492,000
Knox Safety, Inc [Member]
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Cash and Equivalents		$ 3,125,000
Deposits, Business Acquisition		500,000	$ 1,000,000
Knox Safety, Inc [Member] | Selling, General and Administrative Expenses [Member]
Business Combination, Bargain Purchase, Gain Recognized, Amount		$ 492,000
Knox Safety, Inc [Member] | Trademarks and Safety Certifications [Member]
Acquired Finite-Lived Intangible Assets, Weighted Average Useful Life (Year)		2 years
Woodlawn Manufacturing, Ltd [Member]
Payments to Acquire Businesses, Gross	$ 21,558,000
Deferred Tax Liabilities, Net			$ 860,000
Woodlawn Manufacturing, Ltd [Member] | Trademarks and Safety Certifications [Member]
Acquired Finite-Lived Intangible Assets, Weighted Average Useful Life (Year)	4 years

XML

Note L - Business Acquisition - Assets Acquired and Liabilities Assumed (Details) - USD ($) $ in Thousands	Oct. 01, 2023	Dec. 31, 2022	Oct. 26, 2022	Jul. 29, 2022
Accounts receivable			$ 2,136
Inventories			2,309
Intangible assets			6,058
GOODWILL	$ 19,433	$ 18,573
Less: Deferred tax liability			(2,339)
Knox Safety, Inc [Member]
Accounts receivable				$ 1,832
Inventories				1,274
Intangible assets				290
Right-of-Use Lease Assets				1,126
Less: Lease Liability - Noncurrent				(1,004)
OneEvent Technologies, Inc. [Member]
Other current assets			130	7
Property, plant and equipment			6,400	868
Total assets acquired			24,981	5,397
Less: Current liabilities assumed			(1,084)	(776)
Net assets acquired			21,558	$ 3,617
GOODWILL			$ 7,948

XML

Note L - Business Combination - Schedule of Pro Forma Results of Operations (Details) - Knox Safety, Inc [Member] - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands	3 Months Ended	9 Months Ended
	Oct. 02, 2022	Oct. 02, 2022
Net sales	$ 76,778	$ 224,881
Net earnings	$ 8,967	$ 17,462
Net earnings per share (basic and diluted) (in dollars per share)	$ 1.27	$ 2.47
Weighted average shares outstanding (basic and diluted) (in shares)	7,083	7,079