CRAWFORD UNITED Corp - Quarter Report: 2018 September (Form 10-Q)

 

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		(Unaudited)
		September 30, 2018				December 31, 2017
ASSETS
CURRENT ASSETS:
Cash and Cash Equivalents		$	3,891,692			$	2,444,110
Accounts receivable less allowance for doubtful accounts			13,151,816				9,011,677
Costs and estimated earnings in excess of billing			1,825,715				1,605,991
Inventories-less allowance for obsolete inventory			5,142,522				3,903,481
Prepaid Expenses and other current assets			498,444				265,456
Total Current Assets			24,510,189				17,230,715
PROPERTY, PLANT AND EQUIPMENT:
Land and Improvements			257,205				235,179
Buildings and Leasehold Improvements			1,525,194				2,239,763
Machinery and Equipment			13,488,275				5,091,360
Total Property, Plant and Equipment			15,270,674				7,566,302
Less accumulated depreciation			1,612,569				4,242,913
Property, Plant and Equipment, Net			13,658,105				3,323,389
OTHER ASSETS:
Goodwill			7,026,045				2,255,912
Intangibles, net of accumulated amortization			4,425,793				1,896,399
Deferred income taxes-less valuation allowance			1,687,277				2,173,892
Other non-current assets			95,263				3,250
Total Non-Current Other Assets			13,234,378				6,329,453
Total Assets		$	51,402,672			$	26,883,557

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		(Unaudited)
		September 30, 2018				December 31, 2017
LIABILITIES AND STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES:
Convertible notes payable - related party		$	200,000			$	200,000
Notes payable - related party			432,910				352,727
Bank Debt – Current			1,333,333				500,000
Leases payable			15,973				55,735
Accounts payable			4,989,595				2,112,695
Unearned revenue			6,384,479				2,601,355
Accrued payroll and related expenses			1,214,631				723,053
Accrued expenses			1,718,906				1,340,465
Accrued income taxes			711,457				108,576
Total Current Liabilities			17,001,284				7,994,606
LONG-TERM LIABILITIES:
Notes payable - related party			3,312,711				3,651,765
Seller Note			9,000,000				-
Bank Debt			10,798,973				4,732,550
Leases payable			5,239				106,855
Total Long-Term Liabilities			23,116,923				8,491,170
STOCKHOLDERS' EQUITY
Preferred shares, no par value - 1,000,000 shares authorized, no shares issued and outstanding
Common shares, no par value
Class A common shares - 10,000,000 shares authorized, 2,123,806 shares issued and outstanding at September 30, 2018 and 2,130,681 shares issued and outstanding at December 31, 2017			2,508,534				2,246,367
Class B common shares - 2,500,000 shares authorized, 596,848 shares issued and outstanding at September 30, 2018 and 779,283 shares at December 31, 2017, respectively			710,272				710,272
Contributed capital			1,741,901				1,741,901
Treasury shares			(1,905,780	)			(264,841	)
Class A common shares - 37,208 shares held at September 30, 2018 and 15,795 shares held at December 31, 2017, respectively
Class B common shares – 182,435 shares held at September 30, 2018 and 5,667 shares held at December 31, 2017, respectively
Retained earnings			8,229,538				5,964,082
Total Stockholders' Equity			11,284,465				10,397,781
Total Liabilities and Stockholders' Equity		$	51,402,672			$	26,883,557

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		Three Months Ended September 30,								Nine Months Ended September 30,
		2018				2017				2018				2017
Total Sales		$	19,771,137			$	10,892,868			$	45,243,029			$	21,459,809
Cost of Sales			15,320,915				7,858,489				34,287,788				14,018,770
Gross Profit			4,450,222				3,034,379				10,955,241				7,441,039
Operating Expenses:
Product development costs			-				159,791				220,418				556,947
Selling, general and administrative expenses			1,978,943				1,460,126				5,803,514				3,894,809
Operating Income			2,471,279				1,414,462				4,931,309				2,989,283
Other (Income) and Expenses:
Interest charges			286,684				116,992				453,372				231,879
Loss on sale of business			-				-				1,160,574				-
Other (income) expense, net			97,412				3,167				205,678				262,938
Total Other (Income) and Expenses			384,096				120,159				1,819,624				494,817
Income before Provision for Income Taxes			2,087,183				1,294,303				3,111,685				2,494,466
Provision for Income Taxes			590,104				726,864				846,229				772,364
Net Income		$	1,497,079			$	567,439			$	2,265,456			$	1,722,102
Net Income Per Common Share - Basic		$	0.55			$	0.20			$	0.80			$	0.60
Net Income Per Common Share - Diluted		$	0.48			$	0.18			$	0.71			$	0.56
Weighted Average Shares of Common Stock Outstanding
Basic			2,720,654				2,888,502				2,826,347				2,882,278
Diluted			3,092,520				3,161,975				3,186,946				3,101,016

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		Nine Months Ended September 30,
		2018				2017
Cash Flows from Operating Activities
Net Income		$	2,265,456			$	1,722,102
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization			1,122,061				649,835
Loss (gain) on sale of operations			1,160,574				-
Non-cash professional service expense			-				7,884
Loss (gain) on disposal of assets			10,750				13,386
Deferred income taxes			-				693,398
Non-cash share-based compensation expense			262,167				129,832
Changes in assets and liabilities:
Decrease (Increase) in accounts receivable			(2,555,058	)			(2,728,471	)
Decrease (Increase) in inventories			(1,325,790	)			(43,467	)
Decrease (Increase) in costs and estimated earnings in excess of billings			(219,723	)			2,341,305
Decrease (Increase) in prepaid expenses & other assets			(387,039	)			(210,473	)
Increase (Decrease) in accounts payable			1,400,608				(858,488	)
Increase (Decrease) in accrued payroll and related expenses			391,161				182,826
Increase (Decrease) in accrued expenses			(253,853	)			317,368
Increase (Decrease) in accrued income taxes			602,881				61,933
Increase (Decrease) in unearned revenue			3,783,124				(611,598	)
Total adjustments			3,991,863				(54,730	)
Net Cash Provided by Operating Activities		$	6,257,319			$	1,667,372
Cash Flows from Investing Activities
Capital expenditures		$	(274,556	)		$	(177,941	)
Cash paid for acquisition, net			(20,209,583	)			(10,250,000	)
Net Cash (Used in) Investing Activities			(20,484,139	)			(10,427,941	)
Cash Flows from Financing Activities
Payments on related party notes			(258,870	)			(682,459	)
Payments on bank debt			(6,863,889	)			(1,775,000	)
Borrowings on seller note			9,000,000				-
Borrowings on bank debt			13,824,690				8,694,486
Payments on capital lease			(27,529	)			(53,350	)
Net Cash Provided by Financing Activities			15,674,402				6,183,677
Net Increase (decrease) in cash and cash equivalents			1,447,582				(2,576,892	)
Cash and cash equivalents at beginning of year			2,444,110				3,607,452
Cash and cash equivalents at end of year		$	3,891,692			$	1,030,560
Supplemental disclosures of cash flow information
Interest Paid		$	493,527			$	67,045
Income Taxes Paid		$	130,745			$	31,000
Non-cash proceeds received for Class A and Class B Common Shares in exchange for the sale of certain assets		$	1,640,939			$	-

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1.  BASIS OF PRESENTATION

 

The accompanying unaudited consolidated financial statements have been prepared in accordance with generally accepted accounting principles (GAAP) for interim financial information and with the instructions to Form 10-Q and Article 8 of Regulation S-X. Accordingly, they do not include all the information and footnotes required by generally accepted accounting principles for complete financial statements. The consolidated financial statements include the accounts of Hickok Incorporated and its wholly-owned subsidiaries (the “Company”). Significant intercompany transactions and balances have been eliminated in the financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three and nine- months ended September 30, 2018 are not necessarily indicative of the results that may be expected for the year ended December 31, 2018. For further information, refer to the consolidated financial statements and footnotes thereto included in the Company’s Transition Report on Form 10-KT for the year ended December 31, 2017. 

 

During the nine-month period ended September 30, 2018, there have been no changes to our significant accounting policies other than the adoption of the new standard for recognition of revenue from contracts with customers, as discussed in Note 2 below.

 

Reclassifications

Certain prior year amounts were reclassified to conform to the current year presentation, including transaction costs related to acquisitions that were reclassified from selling, general and administrative to other (income) expenses as these costs are not considered as operating costs. These reclassifications have no effect on the financial position or results of operations reported as of and for the periods presented.

  

 

 

2.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 

The Company’s Summary of Significant Accounting Policies is provided with the consolidated financial statements and footnotes thereto included in the Company’s Transition Report on Form 10-KT for the three-month transition period ended December 31, 2017.

 

Recently Adopted Accounting Standards
The Company did not incur any material impact to its financial condition or results of operations due to the adoption of any new accounting standards during the periods reported.

 

In May 2017, the Financial Accounting Standards Board (FASB), issued ASU 2017-09, "Compensation-Stock Compensation (Topic 718): Scope of Modification Accounting." ASU 2017-09 provides guidance about which changes to the terms or conditions of a share-based payment award require an entity to apply modification accounting. The amendments in this update should be applied prospectively to an award modified on or after the adoption date. The Company adopted this guidance January 1, 2018.  The adoption of this guidance did not have a material effect on our consolidated financial statements.

 

In August 2016, FASB issued ASU 2016-15, "Statement of Cash Flows (Topic 230), Classification of Certain Cash Receipts and Cash Payments." The amendments in this update provide guidance on eight specific cash flow issues, thereby reducing the diversity in practice in how certain transaction are classified in the consolidated statements of cash flows. This standard is effective for annual periods and interim periods for those annual periods beginning on or after December 15, 2017.  Early adoption is permitted. The Company adopted this guidance January 1, 2018. The adoption of this guidance did not have a material impact on our consolidated financial statements.

 

In March 2016, the Financial Accounting Standards Board (FASB) issued Accounting Standard Update (ASU 2016-09) a new standard that changes the accounting for certain aspects of share-based payments to employees. The new guidance requires excess tax benefits and tax deficiencies to be recorded in the income statement when the awards vest or are settled. In addition, cash flows related to excess tax benefits will no longer be separately classified as a financing activity apart from the other income tax cash flows. The standard also allows the Company to repurchase more of an employee’s shares for tax withholding purposes without triggering liability accounting, clarifies that all cash payments made on an employee’s behalf for withheld shares should be presented as a financing activity on our cash flow statements, and provides an accounting policy election to account for forfeitures as they occur. The Company adopted this standard effective October 1, 2017. The adoption of this new standard did not have a material impact on our consolidated financial statements.

  

 

In May 2014, the FASB issued its final standard on the recognition of revenue from contracts with customers. The standard, issued as Accounting Standards Update (ASU) 2014-09, outlines a single comprehensive model for entities to use in the accounting for revenue arising from contracts with customers and supersedes most current revenue recognition guidance, including industry specific guidance. The core principle of this model is that “an entity recognizes revenue to depict the transfer of promised goods or services to a customer in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods and services.” The Company adopted this new standard effective January 1, 2018.  The adoption of this standard did not have a material impact on our consolidated financial statements.   

 

Recently Issued Accounting Standards

 

In January 2017, FASB issued ASU 2017-04, "Intangibles-Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment." ASU 2017-04 eliminates the second step in the goodwill impairment test which requires an entity to determine the implied fair value of the reporting unit’s goodwill. Instead, an entity should perform its annual or interim goodwill impairment test by comparing the fair value of a reporting unit with its carrying value and recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value, not to exceed the total amount of goodwill allocated to the reporting unit. The standard, which should be applied prospectively, is effective for fiscal years and interim periods within those years beginning on or after December 15, 2019. Early adoption is permitted. We are evaluating the impact the adoption of this standard could have on our consolidated financial statements.

 

In June 2016, the FASB issued ASU 2016-13, Financial Instruments-Credit Losses. The standard requires a financial asset (including trade receivables) measured at amortized cost basis to be presented at the net amount expected to be collected. Thus, the income statement will reflect the measurement of credit losses for newly-recognized financial assets as well as the expected increases or decreases of expected credit losses that have taken place during the period. This standard is effective for fiscal years and interim periods within those fiscal years beginning on or after December 15, 2019 with early adoption permitted. We are evaluating the impact the adoption of this standard could have on our consolidated financial statements.

 

In February 2016, the FASB issued ASU 2016-02 “Leases (Topic 842),” a new standard related to leases to increase transparency and comparability among organizations by requiring the recognition of lease assets and lease liabilities on the balance sheet. Most prominent among the amendments is the recognition of assets and liabilities by lessees for those leases classified as operating leases under previous U.S. GAAP. Under the new standard, disclosures are required to meet the objective of enabling users of financial statements to assess the amount, timing, and uncertainty of cash flows arising from leases. The new standard requires a modified retrospective transition for capital or operating leases existing at or entered into after the beginning of the earliest comparative period presented in the financial statements, but it does not require transition accounting for leases that expire prior to the date of initial application. The new standard is effective for fiscal years and interim periods within those years, beginning on or after January 1, 2019, with early adoption permitted. We are evaluating the impact the adoption of this standard will have to our consolidated financial statements.

  

 

 3.  ACCOUNTS RECEIVABLE 

 

The Company establishes an allowance for doubtful accounts based upon factors surrounding the credit risk of specific customers, historical trends and other information. The reserve for doubtful accounts was $8,852 and $10,175 at September 30, 2018 and December 31, 2017, respectively.

 

 

 

4.  INVENTORY

Inventory is valued at the lower of cost (first-in, first-out) or market and consists of:

 

 

 

 

5. GOODWILL AND OTHER INTANGIBLE ASSETS, NET

 

Intangible assets relate to the purchase of businesses. Goodwill represents the excess of cost over the fair value of identifiable assets acquired. Goodwill is not amortized but is reviewed on an annual basis for impairment. Amortization of intangibles is being amortized on a straight-line basis over period ranging from one year to 15 years. Intangible assets are as follows:

 

  

Amortization of intangibles assets was: $470,606 and $338,162 for the nine months ended September 30, 2018 and 2017, respectively.

                               

 

 

6.  PROPERTY, PLANT AND EQUIPMENT, NET

 

Property, plant and equipment are recorded at cost and depreciated over their useful lives. Maintenance and repair costs are expenses as incurred. Property, plant and equipment are as follows:

 

 

Depreciation expense was $651,455 and $308,732 for the nine months ended September 30, 2018 and 2017, respectively.

 

 

 

7.  BANK DEBT 

 

The Company entered into a Credit Agreement on June 1, 2017 with JPMorgan Chase Bank, N.A. as lender, which was subsequently amended in connection with funding the acquisition of CAD Enterprises, Inc. (“CAD”) on July 5, 2018 (as amended, the “Credit Agreement”). As amended, the Credit Agreement is comprised of a revolving facility in the amount of $12,000,000, subject to a borrowing base (determined based on 80% of Eligible Accounts, plus 50% of Eligible Progress Billing Accounts, plus 50% of Eligible Inventory, minus Reserves, each as defined in the Credit Agreement) and a term A loan in the amount of $6,000,000. Outstanding borrowings on the term A loan are payable in consecutive monthly installments, which currently amount to $111,111 per month.  

 

The revolving facility under the Credit Agreement includes a $3 million sublimit for the issuance of letters of credit thereunder.  The Credit Agreement also provides for a separate credit line for borrowings of up to an aggregate of $1,000,000 for capital expenditures until July 5, 2019, at which time any outstanding capital expenditure borrowings will be converted into a term loan maturing at the earlier of five years after such conversion or the termination of the revolving credit facility.  Interest for borrowings under the revolving facility accrues at a per annum rate equal to Prime Rate or LIBOR plus applicable margins of (i) 0.00% for Prime Rate loans and (ii) 2.00% for LIBOR loans. The maturity date of the revolving facility is June 1, 2020. Interest for borrowings under the term A loan accrues at a per annum rate equal to Prime Rate or LIBOR plus applicable margins of (i) 0.25% for Prime Rate loans and (ii) 2.25% for LIBOR loans. The maturity date of the term A loan is December 1, 2022. The Credit Agreement includes a commitment fee on the unused portion of the revolving facility of 0.25% per annum payable quarterly. The obligations of the Company and other borrowers under the Credit Agreement are secured by a blanket lien on all the assets of the Company and its subsidiaries. The Credit Agreement also includes customary representations and warranties and applicable reporting requirements and covenants. The financial covenants under the amended Credit Agreement include a minimum fixed charge coverage ratio, a revised maximum senior funded debt to EBITDA ratio and a new maximum total funded debt to EBITDA ratio.

 

In connection with entering into the Credit Agreement in 2017, the Company made a one-time prepayment of a portion of the outstanding principal under promissory notes held by First Francis Company Inc. (“First Francis”), in the amount of $500,000.  First Francis is owned by Edward Crawford and Matthew Crawford, who serve on the Board of Directors of the Company.   

 

 

Bank debt balances consist of the following: 

 

 

 

 

 8. NOTES PAYABLE

 

Convertible Notes Payable

On December 30, 2011, management entered into a Convertible Loan Agreement (“Convertible Loan”) with Roundball, LLC (“Roundball”). The Convertible Loan provides approximately $467,000 of liquidity to meet on- going working capital requirements of the Company and allows $250,000 of borrowing on the agreement at the Company's discretion at an interest rate of 0.25%. Roundball, a major shareholder of the Company, is an affiliate of Steven Rosen and Matthew Crawford, Directors of the Company.

 

There have been several amendments to the original agreement over the years for the purpose of extending the existing terms of the Convertible Loan. On December 29, 2017, management entered into Amendment No. 6 of the Convertible Loan Agreement with Roundball. The amended Convertible Loan:

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Continues to provide approximately $467,000 of liquidity to meet on going working capital requirements;

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Continues to allow $250,000 of borrowing on the agreement at the Company's discretion at an interest rate of 0.34%; and

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Extends the due date of the loan agreement from December 30, 2017 to December 30, 2018.

The outstanding balance on the Convertible Loan as of September 30, 2018, and December 31, 2017 was $200,000.

 

As part of the Convertible Loan, the parties entered into a Warrant Agreement, dated December 30, 2012 (as amended to date, the “Warrant Agreement”), whereby the Company issued a warrant to Roundball to purchase, at its option, up to 100,000 shares of Class A Common Stock of the Company at an exercise price of $2.50 per share, subject to certain anti-dilution and other adjustments. The Warrant Agreement, as amended, expires December 30, 2018.

 

Notes Payable – Related Party

On July 1, 2016, the Company entered into two separate promissory notes with First Francis Company Inc. (“First Francis”) in connection with the acquisition of Federal Hose Manufacturing. In connection with acquisition of CAD effective July 1, 2018 and the amendment to the Credit Agreement on July 5, 2018, the Company and First Francis entered into an amendment to the Promissory Note dated July 1, 2016 with original principal in the amount of $2,000,000, and an amendment to the Promissory Note dated July 1, 2016 with original principal in the amount of $2,768,662 (as amended, the “Promissory Notes”), each issued by the Company to First Francis. The Promissory Notes each were amended to increase the interest rate from 4.0% per annum to 6.25% per annum. In addition, the Promissory Note with original principal amount of $2,768,662 was amended to provide a conversion option commencing July 5, 2019 which allows First Francis to convert the Promissory Note, in whole in part with respect to a maximum amount of $648,000, into shares of the Company’s Class B common stock at the price of $6.48 per share (subject to adjustment), subject to shareholder approval. First Francis is owned by Edward Crawford and Matthew Crawford, who serve on the Board of Directors of the Company. 

 

 

Notes payable – related party consists of the following:

 

 

 

Seller Note

Effective July 1, 2018, the Company completed the acquisition of all of the issued and outstanding shares of capital stock of CAD.  Upon the closing of the transaction, the CAD shares were transferred and assigned to the Company in consideration of the payment by the Company of an aggregate purchase price of $21 million, $12 million of which was payable in cash at closing, with the remainder paid in the form of a subordinated promissory note issued by the Company in favor of a Seller (the “Seller Note), which is subject to certain post-closing adjustments based on working capital, indebtedness and selling expenses, as specified in the Share Purchase Agreement entered into in connection with the acquisition (the “Share Purchase Agreement”).   The Seller Note bears interest at a rate of four percent (4%) per annum and is payable in full no later than June 30, 2023 (the “Maturity Date”).  The Maturity Date, with respect to any then-outstanding portion of the original principal amount which is subject to an indemnification claim by the Company (asserted in accordance with the terms of the Share Purchase Agreement) pending as of the date thereof, will be automatically extended until such time as any claim relating to such disputed amount is no longer pending, pursuant to the terms of the Seller Note and subject to additional conditions set forth therein and in the Share Purchase Agreement. The Company is not permitted to prepay any amounts due and owing under the Seller Note.  Payment of the Seller Note is secured by a second-priority security interest in the assets of the Company.   Interest accrued on the original principal amount becomes due and payable in arrears beginning September 30, 2018, and subsequent interest is due on the first day of each calendar quarter thereafter up to and including June 30, 2019.  The Company is required to make quarterly principal payments, the amount of which will be calculated based on a four (4) year amortization schedule, beginning on September 30, 2019 and continuing on the last day of each calendar quarter thereafter up to and including the Maturity Date.

 

 

 

9. EARNINGS PER COMMON SHARE 

 

The following table sets forth the computation of basic and diluted earnings per share.

 

 

 

 

10. ACQUISITIONS

 

Effective July 1, 2018, the Company completed the acquisition of all of the issued and outstanding shares of capital stock of CAD, pursuant to the Share Purchase Agreement.  Upon the closing of the transaction, the CAD shares were transferred and assigned to the Company in consideration of the payment by the Company of an aggregate purchase price of $21 million, $12 million of which was payable in cash at closing, with the remainder paid in the form of the Seller Note, which is subject to certain post-closing adjustments based on working capital, indebtedness and selling expenses, as specified in the Share Purchase Agreement. 

 

CAD manufactures high end components for the aerospace industry and has one operating location in Phoenix, Arizona. The purchase price was assigned to the book value of the net assets acquired with the excess over the book value assigned to intangible assets and goodwill and has been allocated to the following accounts:

 

 

 

The Company purchased certain assets and assumed certain liabilities of Air Enterprises Acquisition, LLC on June 1, 2017 for $10,250,000. The acquired business will continue to operate under the name Air Enterprises (“AE”). AE manufactures custom commercial air handling units under fixed price contracts. Its customers are typically in the health care, university, research, pharmaceutical and industrial manufacturing market segments, and span all across the United States and worldwide. AE has one operating location in Northeastern Ohio. The purchase price was assigned to the book value of the net assets acquired with the excess over the book value assigned to intangible assets and goodwill and has been allocated to the following accounts:

  

  

 

 

11. DISPOSITIONS  

 

Effective June 1, 2018, the Company completed the sale (the “Sale”) of certain assets comprising its Test and Measurement business segment (the “Test and Measurement Segment”) to Hickok Waekon, LLC, an Ohio limited liability company (“Buyer”), pursuant to an Asset Purchase Agreement (the “Purchase Agreement”) by and among Buyer, the Company, Supreme Electronics Corp., a Mississippi corporation and wholly-owned subsidiary of the Company (“Supreme”), Waekon Corporation, an Ohio corporation and wholly-owned subsidiary of the Company (“Waekon Corporation”), and Robert L. Bauman, who was a director of the Company. Prior to the effectiveness of the Sale, Supreme and Waekon Corporation owned certain of the assets used in the operation of the Test and Measurement Segment and were primarily responsible for the operation thereof.

 

Upon the closing of the Sale, all of the issued and outstanding shares of capital stock of the Company then-owned, directly or indirectly, by Mr. Bauman or his affiliate, equaling approximately 21,413 shares of Class A Common Stock of the Company and 176,768 shares of Class B Common Stock of the Company, were transferred and assigned to the Company. The shares constituted the consideration received by the Company in the Sale.  Based upon the share price at closing, the value of the proceeds received was approximately $1.6 million.  The net assets sold were approximately $2.7 million.  The Company recorded a loss on sale of approximately $1.2 million.

 

12. SEGMENT AND RELATED INFORMATION  

 

The Company operates the following reportable segments: 1) Commercial Air Handling, 2) Test and Measurement, 3) Industrial Hose, and 4) Aerospace.  The Company's management evaluates segment performance based primarily on operating income. Certain corporate costs are allocated to the segments and interest expense directly related to financing the acquisition of a business is allocated to that segment, respectively.  Intangible assets are allocated to each segment and the related amortization of these assets are recorded in selling, general and administrative expenses.

 

Commercial Air Handling:
This segment manufactures custom air handling units under fixed price contracts to customers in the health care, university, research, pharmaceutical and industrial manufacturing market segments, and across the United States and worldwide.

 

Test and Measurement:

This segment consists of diagnostic tools and equipment sold to the automotive industry and indicators and gauges sold primarily to companies in the aircraft and locomotive industries. These products are sold to original equipment manufacturers and to the aftermarket using a variety of distribution methods.   The Company completed the sale of certain assets comprising its Test and Measurement segment on June 1, 2018.  See Note 11, Dispositions, for additional details regarding the disposition of this segment.  The Company is currently reporting operational results for this segment as a result of a single customer relationship retained by the Company following the disposition.

 

 

Industrial Hose:
This segment consists primarily of flexible metal and silicone hose products designed and manufactured or distributed primarily to the trucking industry and other industrial end-users. These products are sold to original equipment manufacturers and to the aftermarket using a variety of distribution methods.

 

Aerospace Components:
This segment manufactures components primarily for customers in the aerospace industry.

 

 

Information by industry segment is set forth below: 

 

 

  

 

 

13. SUBSEQUENT EVENTS

 

None. 

 

 

 

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