What changed in this filing

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Item 1. Financial Statements

2023-11-07 compared with 2023-08-08 · 117 added, 71 removed, 375 unchanged (33% of the section changed)

3 unchanged sentences

Three Months Ended

Six Months Ended

Nine Months Ended

September 30, 2023

October 1, 2022

September 30, 2023

October 1, 2022

$ 206,468,838

9 unchanged sentences

( 4,257,468 )

( 3,168,333 )

Selling general and administrative expenses

6 unchanged sentences

( 1,067,779 )

Other income (expense)

( 2,574,890 )

( 1,583,894 )

Other (expense) income

Income from continuing operations before income taxes

2 unchanged sentences

( 1,678,698 )

( 3,498,365 )

Net income from continuing operations

11 unchanged sentences

Three Months Ended

Six Months Ended

Nine Months Ended

September 30, 2023

October 1, 2022

September 30, 2023

October 1, 2022

Other comprehensive (loss) income:

1 unchanged sentence

( 1,387,274 )

Change in fair value of interest rate swap, net of tax (benefit) cost of:

( 2,358,170 )

Change in fair value of interest rate swap, net of tax cost of:

2023 - $0 and $(274,957) respectively;

1 unchanged sentence

( 1,449,754 )

Change in pension and postretirement benefit costs, net of taxes of:

1 unchanged sentence

2022 - $92,235 and $276,705 respectively

Total other comprehensive (loss) income

( 1,350,439 )

( 1,038,873 )

Total other comprehensive income (loss)

Comprehensive income

2 unchanged sentences

CONDENSED CONSOLIDATED BALANCE SHEETS

September 30, 2023

December 31, 2022

22 unchanged sentences

CONDENSED CONSOLIDATED BALANCE SHEETS

September 30, 2023

December 31, 2022

24 unchanged sentences

50,000,000 shares

9,072,761 shares at 2023 and 9,056,421 shares at 2022

6,238,316 shares at 2023 and 6,221,976 shares at 2022

9,086,096 shares in 2023 and 9,056,421 shares in 2022

6,238,413 shares in 2023 and 6,221,976 shares in 2022

Treasury Stock:

2,834,445 shares at 2023 and 2,834,445 shares at 2022

2,847,683 shares in 2023 and 2,834,445 shares in 2022

( 22,790,230 )

19 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

Six Months Ended

Nine Months Ended

September 30, 2023

October 1, 2022

Operating Activities

1 unchanged sentence

Income from continuing operations

Adjustments to reconcile net income to net cash (used in) provided by operating activities:

Adjustments to reconcile net income to net cash provided by (used in)

operating activities:

Depreciation and amortization

Unrecognized pension and postretirement benefits

Loss on sale of equipment and other assets

Loss (Gain) on sale of equipment and other assets

Provision for doubtful accounts

8 unchanged sentences

Accrued compensation

( 1,711,069 )

Other accrued expenses

( 1,046,094 )

( 1,812,968 )

Net cash provided by (used in) operating activities

( 2,502,862 )

Investing Activities

Business Acquisition

Issuance of Notes Receivable

Payments received from notes receivable

4 unchanged sentences

Net cash (used in) provided by investing activities

( 3,000,581 )

Financing Activities

2 unchanged sentences

( 5,688,866 )

Principal payments on short-term borrowing (revolver)

Principal payments on short-term borrowings (revolver)

( 1,000,000 )

Proceeds from short term borrowings (revolver)

6 unchanged sentences

( 2,054,875 )

Net cash (used in) provided by financing activities

Net cash used in financing activities

( 16,859,064 )

12 unchanged sentences

( 1,608,530 )

¹ includes cash from assets held for sale of $0.1 million as of July 2, 2022

¹ includes cash from assets held for sale of $0.4 million as of October 1, 2022

See accompanying notes

1 unchanged sentence

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

September 30, 2023

Note A – Basis of Presentation

7 unchanged sentences

The Company’s fiscal year is a 52-53-week fiscal year ending on the Saturday nearest to December 31.

References to 2022 or the 2022 fiscal year mean the 52-week period ended on December 31, 2022, and references to 2023 or the 2023 fiscal year mean the 52-week period ending on December 30, 2023.

References to 2022, the 2022 fiscal year or fiscal 2022 mean the 52-week period ended on December 31, 2022, and references to 2023, the 2023 fiscal year or fiscal 2023 mean the 52-week period ending on December 30, 2023.

In a 52-week fiscal year, each quarter has 13 weeks.

References to the second quarter of 2022, the second fiscal quarter of 2022 or the three months ended July 2, 2022, mean the period from April 3, 2022 to July 2, 2022.

References to the second quarter of 2023, the second fiscal quarter of 2023 or the three months ended July 1, 2023, mean the 13-week period from April 2, 2023 to July 1, 2023.

References to the first six months of 2022 or the six months ended July 2, 2022 mean the period from January 2, 2022 to July 2, 2022.

References to the first six months of 2023 or the six months ended July 1, 2023 mean the period from January 1, 2023 to July 1, 2023.

References to the third quarter of 2022, the third fiscal quarter of 2022, the third quarter of fiscal 2022 or the three months ended October 1, 2022, mean the period from July 3, 2022 to October 1, 2022.

References to the third quarter of 2023, the third fiscal quarter of 2023, the third fiscal quarter of 2023 or the three months ended September 30, 2023, mean the 13-week period from July 2, 2023 to September 30, 2023.

References to the first nine months of 2022, the first nine months of fiscal 2022 or the nine months ended October 1, 2022 mean the period from January 2, 2022 to October 1, 2022.

References to the first nine months of 2023, the first nine months of fiscal 2023 or the nine months ended September 30, 2023 mean the period from January 1, 2023 to September 30, 2023.

Certain amounts in the 2022 financial statements have been reclassified to conform with the 2023 presentation with no impact or change to previously reported net income or shareholders’ equity.

3 unchanged sentences

We believe that the sale of the Diversified Products segment has allowed management to focus on our core capabilities and offerings.

The former Diversified Products segment met the criteria to be held for sale and furthermore, we determined that the assets held for sale qualify for discontinued operations.

As such, the financial results of the Diversified Products segment are reflected in our unaudited condensed consolidated statement of operations as discontinued operations for the prior period presented.

The results of the former Diversified Products segment are not reflected in the unaudited condensed consolidated statements of income for the three and six months ended July 1, 2023 because dispositions of the businesses that comprised that segment were completed prior to the start of the period.

The former Diversified Products segment met the criteria to be held for sale and furthermore, we determined that the assets held for sale qualified for discontinued operations.

As such, the financial results of the Diversified Products segment are reflected in our unaudited condensed consolidated statements of income as discontinued operations for the prior periods presented.

The results of the former Diversified Products segment are not reflected in the unaudited condensed consolidated statements of income for the three and nine months ended September 30, 2023 because dispositions of the businesses that comprised that segment were completed prior to the start of the period.

Summarized Financial Information of Discontinued Operations

1 unchanged sentence

Three Months Ended

Six Months Ended

Nine Months Ended

September 30, 2023

October 1, 2022

September 30, 2023

October 1, 2022

Cost of products sold

2 unchanged sentences

Selling, general and administrative expenses

Operating income (loss)

Operating income

Interest expense

Gain (Loss) from discontinued operations before income taxes

Income tax (expense) benefit

Income (loss) from discontinued operations, net of tax

Gain from discontinued operations before income taxes

Income tax expense

Income from discontinued operations, net of tax

Note C – Earnings Per Share

1 unchanged sentence

Three Months Ended

Six Months Ended

Nine Months Ended

September 30, 2023

October 1, 2022

September 30, 2023

October 1, 2022

Weighted average shares outstanding

4 unchanged sentences

Inventories from continuing operations consist of the following components:

September 30, 2023

December 31, 2022

4 unchanged sentences

Note E - Goodwill

The aggregate carrying amount of goodwill from continuing operations is approximately $ 70.8 million as of July 1, 2023 and includes the write-off of approximately $ 0.5 million of goodwill associated with the closure of Associated Toolmakers Ltd.

The aggregate carrying amount of goodwill from continuing operations is approximately $ 70.8 million as of September 30, 2023 and includes the write-off of approximately $ 0.5 million of goodwill associated with the closure of Associated Toolmakers, Ltd.

in the second quarter of 2023.

1 unchanged sentence

in the second quarter of 2023.

See Note O – Business Acquisitions for further details.

No impairment was recognized in the second quarter of 2023.

The Company tests its reporting units for impairment annually in December, or more frequently if events or circumstances indicate it is more likely than not that the fair value of a reporting unit is less than its carrying amount.

See Note O – Business Acquisition for further details.

No impairment was recognized in the third quarter of 2023.

The Company evaluates its reporting units for impairment annually in December, or more frequently if events or circumstances indicate it is more likely than not that the fair value of a reporting unit is less than its carrying amount.

Such events and circumstances could include, among other things, increased competition or unexpected loss of market share, significant adverse changes in the markets in which the Company operates, or unexpected business disruptions.

16 unchanged sentences

All options to extend, when it is reasonably certain the option will be exercised, have been included in the calculation of the ROU asset and lease liability.

Currently, the Company has twenty-one operating leases with a lease liability of $ 16.6 million and four finance leases with a lease liability of $ 1.0 million as of July 1, 2023.

Currently, the Company has twenty-one operating leases with a lease liability of $ 15.8 million and four finance leases with a lease liability of $ 0.9 million as of September 30, 2023.

The terms and conditions of the leases are determined by the individual agreements.

20 unchanged sentences

Currently, the commitment fee is 0.30 %.

As of July 1, 2023, the Company has not borrowed any funds on the revolving commitment portion of the credit facility.

The term loan bears interest at a variable rate based on the SOFR rate plus an applicable margin of 1.875 % to 2.625 %, depending on the Company’s senior net leverage ratio.

Borrowings under the revolving portion bear interest at a variable rate based on, at the Company’s election, a base rate plus an applicable margin of 0.875 % to 1.625 % or the SOFR rate plus an applicable margin of 1.875% to 2.625%, with such margins determined based on the Company’s senior net leverage ratio.

As of September 30, 2023, the Company has not borrowed any funds on the revolving commitment portion of the credit facility.

The term loan bears interest at a variable rate based on the term secured overnight financing rate (“SOFR”), plus an adjustment of ten basis points, plus an applicable margin of 1.875 % to 2.625 %, depending on the Company’s senior net leverage ratio.

Borrowings under the revolving portion bear interest at a variable rate based on, at the Company’s election, a base rate plus an applicable margin of 0.875 % to 1.625 % or term SOFR, plus an adjustment of ten basis points, plus an applicable margin of 1.875% to 2.625%, with such margins determined based on the Company’s senior net leverage ratio.

The Company’s obligations under the Credit Agreement are secured by a lien on certain of the Company’s and its subsidiaries’ assets pursuant to a Pledge and Security Agreement , dated as of June 16, 2023, with TD Bank N.A., as administrative agent.

1 unchanged sentence

In addition, the Company is required to maintain a fixed charge coverage ratio to be not less than 1.25 to 1.

The Company was in compliance with all its covenants under the Credit Agreement on July 1, 2023, and through the date of filing this Form 10-Q.

The Company was in compliance with all its covenants under the Credit Agreement on September 30, 2023, and through the date of filing this Form 10-Q.

Note H - Stock Options and Awards

5 unchanged sentences

Under the 2020 Plan, non-qualified stock options granted to participants will have exercise prices determined by the Compensation Committee of the Board.

During the first six months of fiscal 2023 and 2022, the Company granted 64,500 and 43,300 stock awards, respectively, that were subject to the meeting of performance measurements or time based.

For the first six months of fiscal years 2023 and 2022, the Company used fair market value to determine the associated expense with stock awards.

During the first nine months of fiscal 2023 and 2022, the Company granted stock awards with respect to 79,500 and 43,300 shares of Company common stock respectively, that were subject to the meeting of performance measurements or time based.

For the first nine months of fiscal years 2023 and 2022, the Company used fair market value to determine the associated expense with stock awards.

The 2020 Plan also permits the issuance of Stock Appreciation Rights (“SARs”).

The SARs are in the form of an option with a cashless exercise price equal to the difference between the fair value of the Company’s common stock at the date of grant and the fair value as of the exercise date resulting in the issuance of the Company’s common stock.

During the first six months of fiscal 2023 and 2022 the Company did not issue any SARs.

Stock-based compensation (income) expense, including forfeitures, in connection with SARs and stock awards previously granted to employees was approximately $ 21,000 and $ 136,000 in the second quarter of 2023 and the second quarter of 2022, respectively, and was approximately $( 163,000 ) and $ 250,000 in the first six months of fiscal years 2023 and 2022, respectively.

As of July 1, 2023, there were 898,105 shares of Company common stock reserved and available for future grant under the 2020 Plan.

During the first nine months of fiscal 2023 and 2022 the Company did not issue any SARs.

Stock-based compensation (income) expense, including forfeitures, in connection with SARs and stock awards previously granted to employees was approximately $ 5,000 and $ 131,000 in the third quarter of 2023 and the third quarter of 2022, respectively, and was approximately $( 158,000 ) and $ 381,000 in the first nine months of fiscal years 2023 and 2022, respectively.

As of September 30, 2023, there were 889,992 shares of Company common stock reserved and available for future grant under the 2020 Plan.

The following tables set forth the outstanding SARs for the period specified:

Six Months Ended

Nine Months Ended

September 30, 2023

December 31, 2022

5 unchanged sentences

Range of Exercise Prices

Outstanding as of July 1, 2023

Outstanding as of September 30, 2023

Weighted Average Remaining Contractual Life

Weighted Average Exercise Price

Exercisable as of July 1, 2023

Exercisable as of September 30, 2023

Weighted Average Remaining Contractual Life

2 unchanged sentences

The following tables set forth the outstanding stock awards for the period specified:

Six Months Ended

Nine Months Ended

September 30, 2023

December 31, 2022

1 unchanged sentence

Outstanding at end of period

As of July 1, 2023, outstanding SARs and stock awards had an intrinsic value of $ 1,543,077 .

As of September 30, 2023, outstanding SARs and stock awards had an intrinsic value of $ 1,562,715 .

Note I – Share Repurchase Program

On May 2, 2018, the Company announced that the Board of Directors of the Company had authorized a new program to repurchase up to 200,000 shares of the Company’s common stock.

On August 21, 2023, the Company announced that the Board of Directors of the Company had approved a new share repurchase program authorizing the Company to repurchase up to 200,000 shares of the Company’s common stock through August 20, 2028.

The Company’s share repurchase program does not obligate it to acquire the Company’s common stock at any specific cost per share.

Under this program, shares may be repurchased in privately negotiated and/or open market transactions, including under plans complying with Rule 10b5-1 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”).

Below is a summary of the Company’s shares repurchased during the second quarter of 2023.

Below is a summary of the Company’s shares repurchased during the third quarter of 2023 under the prior share repurchase program.

Total Number of Shares Purchased

2 unchanged sentences

Maximum Number of Shares that may yet be Purchased Under the Plans or Programs

Balance as of April 1, 2023

April 2, 2023 – July 1, 2023

Balance as of July 1, 2023

July 2, 2023 – September 30, 2023

Balance as of September 30, 2023

Below is a summary of the Company’s shares repurchased during the third quarter of 2023 under the new share repurchase program.

Total Number of Shares Purchased

Average Price Paid Per Share

Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs

Maximum Number of Shares that may yet be Purchased Under the Plans or Programs

Balance as of July 1, 2023

July 2, 2023 – September 30, 2023

Balance as of September 30, 2023

Note J – Revenue Recognition

The Company’s revenues result from the sale of goods and services and reflect the consideration to which the Company expects to be entitled.

The Company records revenues in accordance with FASB Accounting Standards Codification (“ASC”) Topic 606, “Revenue from Contracts with Customers”.

The Company has defined purchase orders as contracts in accordance with ASC Topic 606.

The Company records revenues in accordance with FASB Accounting Standards Codification (“ASC”) Topic 606, “Revenue from Contracts with Customers.” The Company has defined purchase orders as contracts in accordance with ASC Topic 606.

For its customer contracts, the Company identifies its performance obligations, which are delivering goods or services, determines the transaction price, allocates the contract transaction price to the performance obligations (when applicable), and recognizes the revenue when (or as) the performance obligation is transferred to the customer.

11 unchanged sentences

income tax examinations by foreign tax authorities for years prior to 2016.

The total amount of unrecognized tax benefits could increase or decrease within the next 12 months for several reasons, including the closure of federal, state, and foreign tax years by expiration of the statute of limitations and the recognition and measurement considerations under FASB ASC Topic 740, “Income Taxes.” There have been no significant changes to the value of unrecognized tax benefits during the six months ended July 1, 2023.

The Company believes that it is reasonably possible that the total amount of unrecognized tax benefits will not increase or decrease significantly over the next twelve months.

6 unchanged sentences

The Company also provides health care and life insurance for retired salaried employees in the United States who meet specific eligibility requirements.

Significant disclosures relating to these benefit plans for the first three months and first six months 2023 and 2022 are as follows:

Significant disclosures relating to these benefit plans for the first three months and first nine months 2023 and 2022 are as follows:

Pension Benefits

Three Months Ended

Six Months Ended

Nine Months Ended

September 30, 2023

October 1, 2022

September 30, 2023

October 1, 2022

Interest cost

11 unchanged sentences

Three Months Ended

Six Months Ended

Nine Months Ended

September 30, 2023

October 1, 2022

September 30, 2023

October 1, 2022

Interest cost

5 unchanged sentences

In fiscal year 2023, the Company expects to contribute approximately $ 1,300,000 into its pension plans and approximately $ 50,000 into its postretirement plan.

As of July 1, 2023, the Company has contributed $ 164,000 to its pension plans, has contributed $ 28,000 to its postretirement plan, and expects to make the remaining contributions as required during the remainder of the fiscal year.

As of September 30, 2023, the Company has contributed $ 800,000 to its pension plans, has contributed $ 32,000 to its postretirement plan, and expects to make the remaining contributions as required during the remainder of the fiscal year.

The Company has a contributory savings plan under Section 401(k) of the Internal Revenue Code (the “401(k) Plan”) covering substantially all U.S.

4 unchanged sentences

Three Months Ended

Six Months Ended

Nine Months Ended

September 30, 2023

October 1, 2022

September 30, 2023

October 1, 2022

Regular matching contribution

2 unchanged sentences

Total contributions for the period

The non-discretionary contribution of $ 328,953 made in the six months ended July 1, 2023, was accrued for, and expensed in the prior fiscal year.

The non-discretionary contribution of $ 328,953 made in the nine months ended September 30, 2023, was accrued for, and expensed in the prior fiscal year.

Effective January 1, 2023, the non-discretionary contributions are being contributed on a weekly basis.

5 unchanged sentences

The Company has established credit limits for customers and monitors their balances to mitigate the risk of loss.

As of July 1, 2023, there were two significant concentrations of credit risk with two customers, who had receivables representing 12 % and 13 % of our net accounts receivable.

As of September 30, 2023, there was one significant concentration of credit risk with a customer, who had receivables representing 12 % of our net accounts receivable.

One single customer represented 14 % of the Company’s net accounts receivable as of December 31, 2022.

2 unchanged sentences

Interest Rate Risk

The Company’s exposure to the risk of changes in market interest rates relates primarily to the Company’s debt, which bears interest at variable rates based on the SOFR rate plus an applicable margin of 1.875 % to 2.625 %, depending on the Company’s senior net leverage ratio.

The Company’s exposure to the risk of changes in market interest rates relates primarily to the Company’s debt, which bears interest at variable rates based on term SOFR, plus an adjustment of ten basis points, plus an applicable margin of 1.87 5% to 2.62 5%, depending on the Company’s senior net leverage ratio.

Currency Exchange Rate Risk

3 unchanged sentences

Note O – Business Acquisition

On June 29, 2023 the Company acquired certain assets, including accounts receivable, inventories, furniture, fixtures and equipment, intellectual property rights, rights existing under all sales and purchase agreements, and assumed certain liabilities of Sureflex, Inc.

On June 29, 2023, the Company acquired certain assets, including accounts receivable, inventories, furniture, fixtures and equipment, intellectual property rights, and rights existing under all sales and purchase agreements, and assumed certain liabilities of Sureflex, Inc.

(“Sureflex”).

2 unchanged sentences

We expect that Sureflex, which manufactures tractor-trailer electrical connection cable assemblies, will enable the Company to manufacture electrical products and become more competitive with respect to cost and quality.

The acquisition of Sureflex was accounted for under Business Combinations (Topic 805).

The acquisition of Sureflex was accounted for under Business Combinations (ASC Topic 805).

The acquired business is included in the consolidated operating results of the Company from the effective date of the acquisition.

2 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements