10-K
2013-12-31
false
Omega Flex, Inc.
0001317945
--12-31
10091822
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<!--egx--><p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'><b>1. BASIS OF PRESENTATION AND CONSOLIDATION</b></p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'> </p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;margin-left:-2.4pt'><b><u>Description of Business</u></b></p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;margin-left:-2.4pt'> </p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'>                The accompanying consolidated financial statements include the accounts of Omega Flex, Inc. (Omega) and its subsidiaries (collectively the “Company”).  The Company’s audited consolidated financial statements for the year ended December 31, 2013 and 2012 have been prepared in accordance with accounting standards set by the Financial Accounting Standards Board (FASB), and with the instructions of Form 10-K and Article 8 of Regulation S-X.  All material inter-company accounts and transactions have been eliminated in consolidation.</p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-autospace:ideograph-numeric ideograph-other'> </p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'><b>                </b>The Company is a leading manufacturer of flexible metal hose, which is used in a variety of applications to carry gases and liquids within their particular applications.  The Company’s business is controlled as a single operating segment that consists of the manufacture and sale of flexible metal hose and accessories. These applications include carrying liquefied gases in certain processing applications, fuel gases within residential and commercial buildings and vibration absorbers in high vibration applications.  The Company’s flexible metal piping is also used to carry other types of gases and fluids in a number of industrial applications where the customer requires the piping to have both a degree of flexibility and/or an ability to carry corrosive compounds or mixtures, or to carry at both very high and very low (cryogenic) temperatures.</p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'> </p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'>                The Company manufactures flexible metal hose at its facilities in Exton, Pennsylvania with a minor amount of manufacturing performed in the United Kingdom, and sells its products through distributors, wholesalers and to original equipment manufacturers (“OEMs”) throughout North America, and in certain European markets.</p>
<!--egx--><p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'><b>2. SIGNIFICANT ACCOUNTING POLICIES</b></p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'> </p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'><b><u>Use of Estimates</u></b></p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'> </p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'>                The preparation of financial statements in conformity with generally accepted accounting principles (GAAP) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the dates of the financial statements and the reported amounts of revenues and expenses during the reporting periods. The most significant estimates and assumptions relate to revenue recognition, inventory valuations, goodwill and intangible asset valuations, product liability costs, phantom stock and accounting for income taxes.  Actual amounts could differ significantly from these estimates.</p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'> </p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'><b><u>Revenue Recognition</u></b></p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'> </p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'>                The Company’s revenue recognition activities relate almost entirely to the manufacture and sale of flexible metal hose and pipe.  Under GAAP, revenues are considered to have been earned when the Company has substantially accomplished what it must do to be entitled to the benefits represented by the revenues.  The following criteria represent preconditions to the recognition of revenue:</p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;margin-left:20.15pt'> </p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;margin-left:.25in'>•      Persuasive evidence of an arrangement for the sale of product or services must exist.</p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;margin-left:.25in'>•      Delivery has occurred or services rendered.</p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;margin-left:.25in'>•      The sales price to the customer is fixed or determinable.</p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;margin-left:.25in'>•      Collection is reasonably assured.</p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;margin-left:20.15pt'> </p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;margin-left:-1.2pt'><font style='font-family:Symbol'>                 </font>The Company generally recognizes revenue upon shipment in accordance with the above principles.</p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'> </p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'><b><u>Cash Equivalents</u></b></p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'> </p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'>                The Company considers all highly liquid investments with an original maturity of 90 days or less at the time of purchase to be cash equivalents. Cash equivalents include investments in an institutional money market fund, which invests in U.S. Treasury bills, notes and bonds, and/or repurchase agreements, backed by such obligations.  Carrying value approximates fair value.  Cash and cash equivalents are deposited at various area banks, which at times may exceed federally insured limits.  The Company monitors the viability of the banking institutions carrying its assets on a regular basis, and has the ability to transfer cash to various institutions during times of risk.  The Company has not experienced any losses related to these cash balances, and believes its credit risk to be minimal.</p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'> </p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'><b><u>Inventories</u></b></p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'> </p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'>                Inventories are valued at the lower of cost or market.  The cost of inventories is determined by the first-in, first-out (FIFO) method.  The Company generally considers inventory quantities beyond two-years usage, measured on a historical usage basis, to be excess inventory and reduces the carrying value of inventory accordingly.</p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'> </p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'><b><u>Property and Equipment</u></b></p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'> </p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'>                Property and equipment are carried at cost. Depreciation and amortization are computed using the straight-line method over the estimated useful lives of the assets or, for leasehold improvements, the life of the lease, if shorter. When assets are retired or otherwise disposed of, the cost and related accumulated depreciation are removed from the accounts and any resulting gain or loss is reflected in other income or expense for the period. The cost of maintenance and repairs is expensed as incurred; significant improvements are capitalized.</p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'> </p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'><b><u>Goodwill</u></b></p> <p align="left" style='margin:0in;margin-bottom:.0001pt;text-align:justify;punctuation-wrap:simple;text-autospace:none;text-align:left'> </p> <p align="left" style='margin:0in;margin-bottom:.0001pt;text-align:justify;punctuation-wrap:simple;text-autospace:none;text-align:left'>                In accordance with Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) Topic 350, Intangibles – Goodwill and Other, the Company performed an annual impairment test as of December 31, 2013 and 2012.  These tests did not indicate any impairment of goodwill during either period, and there were no circumstances that would indicate otherwise.</p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'> </p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'><b><u>Product Liability Reserves</u></b></p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'> </p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'>                Product liability reserves represent the estimated unpaid amounts under the Company’s insurance policies with respect to existing claims.  The Company uses the most current available data to estimate claims.  As explained more fully under Contingencies (see Note 11), for various product liability claims covered under the Company’s general liability insurance policies, the Company must pay certain defense costs within its deductible or self-insured retention limits, ranging primarily from $25,000 to $250,000 per claim, depending on the terms of the policy in the applicable policy year, up to an aggregate amount.  The Company is vigorously defending against all known claims.</p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'> </p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'><b><u>Fair Value of Financial and Nonfinancial Instruments</u></b></p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'> </p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'>                The Company measures financial instruments in accordance with FASB ASC Topic 820, Fair Value Measurements and Disclosures.  The accounting standard defines fair value, establishes a framework for measuring fair value under GAAP, and enhances disclosures about fair value measurements. Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Valuation techniques used to measure fair value must maximize the use of observable inputs and minimize the use of unobservable inputs.  The standard creates a fair value hierarchy which prioritizes the inputs to valuation techniques used to measure fair value into three broad levels as follows: Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities; Level 2 inputs are inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly; and Level 3 inputs are unobservable inputs that reflect the Company’s own assumptions about the assumptions market participants would use in pricing the asset or liability. The Company relies on its actively traded share value – a level 1 input – in determining the fair value of the reporting unit in its annual impairment test as described in the FASB ASC Topic 350, Intangibles - Goodwill and Other.</p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'> </p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'><b><u>Advertising Expense</u></b></p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'> </p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'>                Advertising costs are charged to operations as incurred and are included in selling expenses in the accompanying consolidated financial statements.  Such charges aggregated $673,000 and $1,017,000, for the years ended December 31, 2013, and 2012, respectively.  </p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'> </p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'><b><u>Research and Development Expense</u></b></p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'> </p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'>                Research and development expenses are charged to operations as incurred. Such charges aggregated $720,000, and $807,000, for the years ended December 31, 2013 and 2012, respectively and are included in engineering expense in the accompanying consolidated statements of operations.</p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'> </p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'><b><u>Shipping Costs</u></b></p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'> </p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'>                Shipping costs are included in selling expense on the consolidated statements of operations. The expense relating to shipping was $2,016,000 and $1,715,000 for the years ended December 31, 2013 and 2012, respectively.</p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'> </p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'><b><u>Provision for Doubtful Accounts</u></b></p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'> </p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'>                The allowance for doubtful accounts reflects our best estimate of probable losses inherent in the accounts receivable balance.  The Company determines the allowance based on any known collection issues, historical experience, and other currently available evidence.  The reserve for future credits, discounts, and doubtful accounts was $729,000 and $653,000 as of December 31, 2013 and 2012, respectively.  In regards to identifying uncollectible accounts, the Company reviews an aging report on a consistent basis to determine past due accounts, and utilizes a well established credit rating agency.  The Company charges off those accounts that are deemed uncollectible once all collection efforts have been exhausted.</p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'> </p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'><b><u>Earnings per Common Share</u></b></p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'> </p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'>                Basic earnings per share have been computed using the weighted-average number of common shares outstanding.  For the periods presented, there are no dilutive securities.  Consequently, basic and dilutive earnings per share are the same.</p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'> </p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'><b><u>Currency Translation</u></b></p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'> </p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'>                Assets and liabilities denominated in foreign currencies, most of which relate to our United Kingdom subsidiary whose functional currency is British pound sterling, are translated into U.S. dollars at exchange rates prevailing on the balance sheet dates.  The statements of operations are translated into U.S. dollars at average exchange rates.  Adjustments resulting from the translation of financial statements are excluded from the determination of income and are accumulated in a separate component of shareholders’ equity.  For the years ended December 31, 2013 and 2012, exchange gains and losses resulting from foreign currency transactions were not significant and are included in the statements of operations (other income (expense)) in the period in which they occur.</p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'> </p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'><b><u>Income Taxes</u></b></p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'> </p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'>                The Company accounts for tax liabilities in accordance with the FASB ASC Topic 740, Income Taxes.  Under this method the Company recorded tax expense, related deferred taxes and tax benefits, and uncertainties in tax positions.</p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'> </p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'>                Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases.  Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled.  The effect on deferred tax assets and liabilities from a change in tax rates is recognized in income in the period that includes the enactment date.  A valuation allowance is provided for deferred tax assets if it is more likely than not that these items will either expire before the Company is able to realize the benefit, or that future deductibility is uncertain.</p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'> </p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'>                The FASB ASC Topic 740, Income Taxes clarifies the criteria that an individual tax position must satisfy for some or all of the benefits of that position to be recognized in a company’s financial statements.  This guidance prescribes a recognition threshold of more-likely than-not, and a measurement attribute for all tax positions taken or expected to be taken on a tax return, in order for those tax positions to be recognized in the financial statements.</p> <p style='margin-top:0in;margin-right:0in;margin-bottom:0in;margin-left:.5in;margin-bottom:.0001pt;margin-left:0in;text-align:justify'> </p> <p style='margin-top:0in;margin-right:0in;margin-bottom:0in;margin-left:.5in;margin-bottom:.0001pt;margin-left:0in;text-align:justify'>                The Company follows the provisions of ASC 740-10 relative to accounting for uncertainties in tax positions. These provisions provide guidance on the recognition, de-recognition and measurement of potential tax benefits associated with tax positions. The Company elected to recognize interest and penalties related to income tax matters as a component of the income tax provision in the consolidated statements of income. For additional information regarding ASC 740-10, see Note 8.</p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'> </p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'><b><u>Other Comprehensive Income</u></b></p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'> </p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'>                For the years ended December 31, 2013 and 2012, respectively, the components of other comprehensive income consisted solely of foreign currency translation adjustments.</p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'> </p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'><b><u>Significant Concentration</u></b></p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'> </p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'>                One customer accounted for approximately 16% of sales in both 2013 and 2012.  That same customer accounted for 23% and 22% of Accounts Receivable at December 31, 2013 and 2012, respectively.  Also, during 2013 and 2012, approximately 90% of sales occurred in North America, with the remaining 10% portion scattered among other countries, but mostly pertaining to the United Kingdom.</p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'> </p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'><b><u>Subsequent Events</u></b></p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'> </p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'>                The Company evaluates all events or transactions through the date of the related filing that may have a material impact on its consolidated financial statements.  Refer to Note 13 of the consolidated financial statements.</p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'> </p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'><b><u>Recent Accounting Pronouncements</u></b></p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-indent:.5in'> </p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-indent:.5in'>ASU 2011-12, “<i>Comprehensive Income (Topic 220) Deferral of the Effective Date for Amendments to the Presentation of Reclassifications of Items Out of Accumulated Other Comprehensive Income in Accounting Standards Update No. 2011-05</i>,” issued in December 2011 amends ASU 2011-05 to reflect only those changes in Update 2011-05 that relate to the presentation of reclassification adjustments. The amendments are being made to allow FASB time to re-deliberate whether to present on the face of the financial statements the effects of reclassifications out of accumulated other comprehensive income on the components of net income and other comprehensive income for all periods presented. While FASB is considering the operational concerns about the presentation requirements for reclassification adjustments and the needs of financial statement users for additional information about reclassification adjustments; entities should continue to report reclassifications out of accumulated other comprehensive income consistent with the presentation requirements in effect before Update 2011-05. Public entities should begin applying these requirements for fiscal years ending after December 15, 2011. Adoption of ASU 2011-12 had no material impact on the financial statements.</p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'> </p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-indent:.5in'>ASU 2013-11, <i>“Income Taxes (Topic 740): Presentation of Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists (a consensus of the FASB Emerging Issues Task Force)</i>.  Per this ASU, an unrecognized tax benefit, or a portion of an unrecognized tax benefit, should be presented in the financial statements as a reduction to a deferred tax asset for a net operating loss carryforward, a similar tax loss, or a tax credit carryforward, except as follows.  To the extent a net operating loss carryforward, a similar tax loss, or a tax credit carryforward is not available at the reporting date under the tax law of the applicable jurisdiction to settle any additional income taxes that would result from the disallowance of a tax position or the tax law of the applicable jurisdiction does not require the entity to use, and the entity does not intend to use, the deferred tax asset for such purpose, the unrecognized tax benefit should be presented in the financial statements as a liability and should not be combined with deferred tax assets.  The ASU is effective for fiscal years, and interim periods within those years, beginning after December 15, 2013.  The adoption of this guidance is not expected to have a material effect on the Company’s financial statements.</p>
<!--egx--> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'><b>3. INVENTORIES</b></p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'> </p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'>                Inventories, net of reserves of $1,094,000 and $1,017,000, respectively, consisted of the following at December 31:</p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'> </p> <div align="center"> <table border="0" cellspacing="0" cellpadding="0" style='border-collapse:collapse'> <tr align="left"> <td valign="top" style='padding:0in 5.4pt 0in 5.4pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'> </p> </td> <td valign="top" style='border:none;border-bottom:solid windowtext 1.0pt;padding:0in 5.4pt 0in 5.4pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'><b>       2013</b></p> </td> <td valign="top" style='padding:0in 5.4pt 0in 5.4pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'> </p> </td> <td valign="top" style='border:none;border-bottom:solid windowtext 1.0pt;padding:0in 5.4pt 0in 5.4pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'><b>        2012</b></p> </td> </tr> <tr align="left"> <td valign="top" style='padding:0in 5.4pt 0in 5.4pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'> </p> </td> <td colspan="3" valign="top" style='padding:0in 5.4pt 0in 5.4pt'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:center'>(in thousands)</p> </td> </tr> <tr align="left"> <td valign="top" style='padding:0in 5.4pt 0in 5.4pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'> </p> </td> <td valign="top" style='padding:0in 5.4pt 0in 5.4pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'> </p> </td> <td valign="top" style='padding:0in 5.4pt 0in 5.4pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'> </p> </td> <td valign="top" style='padding:0in 5.4pt 0in 5.4pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'> </p> </td> </tr> <tr align="left"> <td valign="top" style='padding:0in 5.4pt 0in 5.4pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'>Finished Goods</p> </td> <td valign="bottom" style='padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'>$ 4,839 </p> </td> <td valign="bottom" style='padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'> </p> </td> <td valign="bottom" style='padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'>$ 5,598 </p> </td> </tr> <tr align="left"> <td valign="top" style='padding:0in 5.4pt 0in 5.4pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'>Raw Materials</p> </td> <td valign="bottom" style='border:none;border-bottom:solid windowtext 1.0pt;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'>1,889 </p> </td> <td valign="bottom" style='padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'> </p> </td> <td valign="bottom" style='border:none;border-bottom:solid windowtext 1.0pt;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'>1,530 </p> </td> </tr> <tr align="left"> <td valign="top" style='padding:0in 5.4pt 0in 5.4pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'> </p> </td> <td valign="bottom" style='border:none;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'> </p> </td> <td valign="bottom" style='padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'> </p> </td> <td valign="bottom" style='border:none;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'> </p> </td> </tr> <tr align="left"> <td valign="top" style='padding:0in 5.4pt 0in 5.4pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'>Total Inventory-Net</p> </td> <td valign="bottom" style='border:none;border-bottom:double windowtext 1.5pt;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'>$ 6,728 </p> </td> <td valign="bottom" style='padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'> </p> </td> <td valign="bottom" style='border:none;border-bottom:double windowtext 1.5pt;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'>$ 7,128 </p> </td> </tr> </table> </div>
<!--egx--><p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'><b>4. PROPERTY AND EQUIPMENT</b></p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'> </p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'>                Property and equipment consisted of the following at December 31:</p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'> </p> <div align="center"> <table border="0" cellspacing="0" cellpadding="0" style='border-collapse:collapse'> <tr align="left"> <td valign="bottom" style='padding:0in 5.4pt 0in 5.4pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'> </p> </td> <td valign="bottom" style='border:none;border-bottom:solid windowtext 1.0pt;padding:0in 5.4pt 0in 5.4pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'><b>        2013 </b></p> </td> <td valign="top" style='padding:0in 5.4pt 0in 5.4pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'> </p> </td> <td valign="bottom" style='border:none;border-bottom:solid windowtext 1.0pt;padding:0in 5.4pt 0in 5.4pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'><b>        2012 </b></p> </td> <td valign="top" style='padding:0in 5.4pt 0in 5.4pt'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:center'> </p> </td> <td valign="bottom" style='border:none;border-bottom:solid windowtext 1.0pt;padding:0in 5.4pt 0in 5.4pt'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:center'><b>Depreciation and Amortization</b></p> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:center'><b>Est. Useful Lives</b></p> </td> </tr> <tr align="left"> <td valign="bottom" style='padding:0in 5.4pt 0in 5.4pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'> </p> </td> <td colspan="3" valign="top" style='padding:0in 5.4pt 0in 5.4pt'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:center'>(in thousands)</p> </td> <td valign="bottom" style='padding:0in 5.4pt 0in 5.4pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'> </p> </td> <td valign="top" style='border:none;padding:0in 5.4pt 0in 5.4pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'> </p> </td> <td valign="top" style='border:none;border-top:solid windowtext 1.0pt;padding:0in 5.4pt 0in 5.4pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'> </p> </td> </tr> <tr style='height:.1in'> <td valign="bottom" style='padding:0in 5.4pt 0in 5.4pt;height:.1in'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'> </p> </td> <td valign="bottom" style='padding:0in 5.4pt 0in 5.4pt;height:.1in'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'> </p> </td> <td valign="top" style='padding:0in 5.4pt 0in 5.4pt;height:.1in'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'> </p> </td> <td valign="bottom" style='padding:0in 5.4pt 0in 5.4pt;height:.1in'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'> </p> </td> <td valign="top" style='padding:0in 5.4pt 0in 5.4pt;height:.1in'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'> </p> </td> <td valign="bottom" style='padding:0in 5.4pt 0in 5.4pt;height:.1in'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'> </p> </td> </tr> <tr align="left"> <td valign="bottom" style='padding:0in 5.4pt 0in 5.4pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'>Land</p> </td> <td valign="bottom" style='padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'>$ 538 </p> </td> <td valign="bottom" style='padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'> </p> </td> <td valign="bottom" style='padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'>$ 538 </p> </td> <td valign="top" style='padding:0in 5.4pt 0in 5.4pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'> </p> </td> <td valign="bottom" style='padding:0in 5.4pt 0in 5.4pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'> </p> </td> </tr> <tr align="left"> <td valign="bottom" style='padding:0in 5.4pt 0in 5.4pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'>Buildings</p> </td> <td valign="bottom" style='padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'>4,141 </p> </td> <td valign="bottom" style='padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'> </p> </td> <td valign="bottom" style='padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'>4,141 </p> </td> <td valign="top" style='padding:0in 5.4pt 0in 5.4pt'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:center'> </p> </td> <td valign="bottom" style='padding:0in 5.4pt 0in 5.4pt'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:center'>39 Years</p> </td> </tr> <tr align="left"> <td valign="bottom" style='padding:0in 5.4pt 0in 5.4pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'>Leasehold Improvements</p> </td> <td valign="bottom" style='padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'>363 </p> </td> <td valign="bottom" style='padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'> </p> </td> <td valign="bottom" style='padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'>220 </p> </td> <td valign="top" style='padding:0in 5.4pt 0in 5.4pt'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:center'> </p> </td> <td valign="bottom" style='padding:0in 5.4pt 0in 5.4pt'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:center'>3-10 Years (Lesser of Life or Lease)</p> </td> </tr> <tr align="left"> <td valign="bottom" style='padding:0in 5.4pt 0in 5.4pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'>Equipment</p> </td> <td valign="bottom" style='border:none;border-bottom:solid windowtext 1.0pt;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'>9,168 </p> </td> <td valign="bottom" style='padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'> </p> </td> <td valign="bottom" style='border:none;border-bottom:solid windowtext 1.0pt;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'>8,801 </p> </td> <td valign="top" style='padding:0in 5.4pt 0in 5.4pt'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:center'> </p> </td> <td valign="bottom" style='padding:0in 5.4pt 0in 5.4pt'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:center'>3-10 Years</p> </td> </tr> <tr align="left"> <td valign="bottom" style='padding:0in 5.4pt 0in 5.4pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'> </p> </td> <td valign="bottom" style='border:none;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'>14,210 </p> </td> <td valign="bottom" style='padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'> </p> </td> <td valign="bottom" style='border:none;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'>13,700 </p> </td> <td valign="top" style='padding:0in 5.4pt 0in 5.4pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'> </p> </td> <td valign="bottom" style='padding:0in 5.4pt 0in 5.4pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'> </p> </td> </tr> <tr align="left"> <td valign="bottom" style='padding:0in 5.4pt 0in 5.4pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'>Accumulated Depreciation</p> </td> <td valign="bottom" style='border:none;border-bottom:solid windowtext 1.0pt;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'> (9,448)</p> </td> <td valign="top" style='padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'> </p> </td> <td valign="bottom" style='border:none;border-bottom:solid windowtext 1.0pt;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'> (8,876)</p> </td> <td valign="top" style='padding:0in 5.4pt 0in 5.4pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'> </p> </td> <td valign="bottom" style='padding:0in 5.4pt 0in 5.4pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'> </p> </td> </tr> <tr align="left"> <td valign="bottom" style='padding:0in 5.4pt 0in 5.4pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'> </p> </td> <td valign="bottom" style='border:none;border-bottom:double windowtext 1.5pt;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'>$ 4,762 </p> </td> <td valign="top" style='padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'> </p> </td> <td valign="bottom" style='border:none;border-bottom:double windowtext 1.5pt;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'>$ 4,824 </p> </td> <td valign="top" style='padding:0in 5.4pt 0in 5.4pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'> </p> </td> <td valign="bottom" style='padding:0in 5.4pt 0in 5.4pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'> </p> </td> </tr> <tr style='height:.1in'> <td valign="bottom" style='padding:0in 5.4pt 0in 5.4pt;height:.1in'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'> </p> </td> <td valign="bottom" style='border:none;padding:0in 5.4pt 0in 5.4pt;height:.1in'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'> </p> </td> <td valign="top" style='padding:0in 5.4pt 0in 5.4pt;height:.1in'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'> </p> </td> <td valign="bottom" style='border:none;padding:0in 5.4pt 0in 5.4pt;height:.1in'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'> </p> </td> <td valign="top" style='padding:0in 5.4pt 0in 5.4pt;height:.1in'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'> </p> </td> <td valign="bottom" style='padding:0in 5.4pt 0in 5.4pt;height:.1in'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'> </p> </td> </tr> </table> </div> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'> </p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-indent:.5in'>The above amounts include approximately $36,000 of equipment at December 31, 2013 and $60,000 at December 31, 2012 that had not yet been placed in service by the Company, and therefore no depreciation was recorded in the related periods for those assets. Depreciation and amortization expense was approximately $547,000 and $588,000 for the years ended December 31, 2013 and 2012, respectively.</p>
<!--egx--><p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'><b>5. LINE OF CREDIT</b></p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-indent:.5in'> </p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-indent:.5in'>On December 30, 2010, the Company agreed to a new Revolving Line of Credit Note and Loan Agreement with Santander Bank, formerly Sovereign Bank, NA (“Sovereign”).  The Company established a line of credit facility in the maximum amount of $10,000,000, maturing on December 31, 2014, with funds available for working capital purposes and other cash needs.  The loan is collateralized by all of the Company’s tangible and intangible assets.  The loan agreement provides for the payment of any borrowings under the agreement at an interest rate range of either LIBOR plus 1.75% to plus 2.75% (for borrowings with a fixed term of 30, 60, or 90 days), or, Prime less 0.50% to plus 0.50% (for borrowings with no fixed term other than the December 31, 2014 maturity date), depending upon the Company’s then existing financial ratios.  At December 31, 2013, the Company’s ratio would allow for the most favorable rate under the agreement’s range, which would be a rate of approximately 2.00% (LIBOR plus 1.75%).  The Company is required to pay an annual commitment fee for the access to the funds, and is also obligated to pay a “Line Fee” ranging from 17.5 to 35.0 basis points of the average unused balance on a quarterly basis, depending again upon the Company’s then existing financial ratios.  The Company may terminate the line at any time during the four year term, as long as there are no amounts outstanding.</p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-indent:.5in'> </p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-indent:.5in'>As of December 31, 2013, the Company had no outstanding borrowings on its line of credit, but at December 31, 2012, the Company owed $324,000, as it was paid off in full during the first quarter of 2013.</p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-indent:.5in'>As of December 31, 2013 and 2012, the Company was in compliance with all debt covenants.</p>
<!--egx--><p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'><b>6. SHAREHOLDERS’ EQUITY</b></p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-indent:.5in'> </p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-indent:.5in'>As of December 31, 2013 and December 31, 2012, the Company had authorized 20,000,000 common stock shares with par value of $0.01 per share.  At both dates, the number of shares issued was 10,153,633, and the total number of outstanding shares was 10,091,822, with the 61,811 variance representing shares held in Treasury.</p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-indent:.5in'> </p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-indent:.5in'>On December 9, 2013, the Board declared a special dividend of $.425 per share to all Shareholders of record as of December 19, 2013, and payable on or before January 2, 2014. The Company paid its transfer agent $4,289,000 on December 31, 2013, and the transfer agent paid the shareholder’s on January 2, 2014.</p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-indent:.5in'> </p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-indent:.5in'>On November 15, 2012, the Board declared a special dividend of $1.00 per share to all Shareholders of record as of November 30, 2012, which was paid on December 14, 2012, in the amount of $10,092,000.</p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-indent:.5in'> </p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-indent:.5in'>On April 4, 2012, the Company’s Board of Directors authorized an extension of its stock repurchase program for an additional two years, up to a maximum amount of $1,000,000.  The original program established in December of 2007 authorized the purchase of up to $5,000,000 of its common stock.  The purchases may be made from time-to-time in the open market or in privately negotiated transactions, depending on market and business conditions.  The Board retained the right to cancel, extend, or expand the share buyback program, at any time and from time-to-time.  Since inception, the Company has purchased a total of 61,811 shares for approximately $932,000, or approximately $15 per share.  The Company did not make any stock repurchases during 2013 or 2012.</p>
<!--egx--><p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'><b>7.  NONCONTROLLING INTERESTS</b></p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-indent:.5in'> </p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-indent:.5in'>The Company owns 100% of all subsidiaries, except for its UK subsidiary Omega Flex, Limited, of which it owns 95%.  A noncontrolling interest owns the other 5%, and held a book value of $62,000 at December 31, 2012.  The total equity of the Company including the non-controlling interest was $19,742,000 at December 31, 2012. </p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-indent:.5in'> </p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-indent:.5in'>For the twelve months ended December 31, 2013, the operations of Omega Flex, Limited generated a profit of $1,105,000.  The noncontrolling interest’s portion of the profit was $55,000.</p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-indent:.5in'> </p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-indent:.5in'>The noncontrolling interest must also recognize its share of any currency translation adjustment, since the subsidiary’s functional currency is British Pounds, and the local books are translated into US Dollars for consolidation purposes.  The noncontrolling interest’s share of foreign currency translation income was $5,000 for the year ended December 31, 2013.</p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-indent:.5in'> </p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-indent:.5in'>At December 31, 2013, after considering the income and foreign currency translation components described above, the balance of the noncontrolling interest was $122,000.</p>
<!--egx--><p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'><b>8. INCOME TAXES</b></p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'> </p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'>                Income tax expense consisted of the following:</p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'> </p> <div align="center"> <table border="0" cellspacing="0" cellpadding="0" width="506" style='width:379.85pt;border-collapse:collapse'> <tr align="left"> <td width="315" valign="top" style='width:236.05pt;padding:0in 5.4pt 0in 5.4pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'> </p> </td> <td width="78" valign="top" style='width:58.75pt;border:none;border-bottom:solid windowtext 1.0pt;padding:0in 5.4pt 0in 5.4pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'><b>        2013 </b></p> </td> <td width="40" valign="top" style='width:29.7pt;padding:0in 5.4pt 0in 5.4pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'> </p> </td> <td width="74" valign="top" style='width:55.35pt;border:none;border-bottom:solid windowtext 1.0pt;padding:0in 5.4pt 0in 5.4pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'><b>       2012 </b></p> </td> </tr> <tr style='height:16.6pt'> <td width="315" valign="top" style='width:236.05pt;padding:0in 5.4pt 0in 5.4pt;height:16.6pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'> </p> </td> <td width="192" colspan="3" valign="top" style='width:143.8pt;padding:0in 5.4pt 0in 5.4pt;height:16.6pt'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:center'><b>      (in thousands)</b></p> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:center'><b> </b></p> </td> </tr> <tr align="left"> <td width="315" valign="top" style='width:236.05pt;padding:0in 5.4pt 0in 5.4pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'>Federal Income Tax:</p> </td> <td width="78" valign="bottom" style='width:58.75pt;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'> </p> </td> <td width="40" valign="bottom" style='width:29.7pt;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'> </p> </td> <td width="74" valign="bottom" style='width:55.35pt;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'> </p> </td> </tr> <tr align="left"> <td width="315" valign="top" style='width:236.05pt;padding:0in 5.4pt 0in 5.4pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'> Current</p> </td> <td width="78" valign="bottom" style='width:58.75pt;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'>$ 4,273 </p> </td> <td width="40" valign="bottom" style='width:29.7pt;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'> </p> </td> <td width="74" valign="bottom" style='width:55.35pt;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'>$ 4,020 </p> </td> </tr> <tr align="left"> <td width="315" valign="top" style='width:236.05pt;padding:0in 5.4pt 0in 5.4pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'> Deferred</p> </td> <td width="78" valign="bottom" style='width:58.75pt;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'>(39) </p> </td> <td width="40" valign="bottom" style='width:29.7pt;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'> </p> </td> <td width="74" valign="bottom" style='width:55.35pt;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'>(101) </p> </td> </tr> <tr align="left"> <td width="315" valign="top" style='width:236.05pt;padding:0in 5.4pt 0in 5.4pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'> </p> </td> <td width="78" valign="bottom" style='width:58.75pt;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'> </p> </td> <td width="40" valign="bottom" style='width:29.7pt;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'> </p> </td> <td width="74" valign="bottom" style='width:55.35pt;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'> </p> </td> </tr> <tr align="left"> <td width="315" valign="top" style='width:236.05pt;padding:0in 5.4pt 0in 5.4pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'>State Income Tax:</p> </td> <td width="78" valign="bottom" style='width:58.75pt;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'> </p> </td> <td width="40" valign="bottom" style='width:29.7pt;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'> </p> </td> <td width="74" valign="bottom" style='width:55.35pt;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'> </p> </td> </tr> <tr align="left"> <td width="315" valign="top" style='width:236.05pt;padding:0in 5.4pt 0in 5.4pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'> Current</p> </td> <td width="78" valign="bottom" style='width:58.75pt;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'>329 </p> </td> <td width="40" valign="bottom" style='width:29.7pt;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'> </p> </td> <td width="74" valign="bottom" style='width:55.35pt;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'>472 </p> </td> </tr> <tr align="left"> <td width="315" valign="top" style='width:236.05pt;padding:0in 5.4pt 0in 5.4pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'> Deferred</p> </td> <td width="78" valign="bottom" style='width:58.75pt;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'>(2) </p> </td> <td width="40" valign="bottom" style='width:29.7pt;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'> </p> </td> <td width="74" valign="bottom" style='width:55.35pt;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'>(16) </p> </td> </tr> <tr align="left"> <td width="315" valign="top" style='width:236.05pt;padding:0in 5.4pt 0in 5.4pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'> </p> </td> <td width="78" valign="bottom" style='width:58.75pt;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'> </p> </td> <td width="40" valign="bottom" style='width:29.7pt;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'> </p> </td> <td width="74" valign="bottom" style='width:55.35pt;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'> </p> </td> </tr> <tr align="left"> <td width="315" valign="top" style='width:236.05pt;padding:0in 5.4pt 0in 5.4pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'>Foreign Income Tax:</p> </td> <td width="78" valign="bottom" style='width:58.75pt;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'> </p> </td> <td width="40" valign="bottom" style='width:29.7pt;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'> </p> </td> <td width="74" valign="bottom" style='width:55.35pt;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'> </p> </td> </tr> <tr align="left"> <td width="315" valign="top" style='width:236.05pt;padding:0in 5.4pt 0in 5.4pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'> Current</p> </td> <td width="78" valign="bottom" style='width:58.75pt;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'>-- </p> </td> <td width="40" valign="bottom" style='width:29.7pt;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'> </p> </td> <td width="74" valign="bottom" style='width:55.35pt;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'>-- </p> </td> </tr> <tr align="left"> <td width="315" valign="top" style='width:236.05pt;padding:0in 5.4pt 0in 5.4pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'> Deferred</p> </td> <td width="78" valign="bottom" style='width:58.75pt;border:none;border-bottom:solid windowtext 1.0pt;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'>330 </p> </td> <td width="40" valign="bottom" style='width:29.7pt;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'> </p> </td> <td width="74" valign="bottom" style='width:55.35pt;border:none;border-bottom:solid windowtext 1.0pt;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'>(329) </p> </td> </tr> <tr align="left"> <td width="315" valign="top" style='width:236.05pt;padding:0in 5.4pt 0in 5.4pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'> Income Tax Expense </p> </td> <td width="78" valign="bottom" style='width:58.75pt;border:none;border-bottom:double windowtext 1.5pt;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'>$ 4,891 </p> </td> <td width="40" valign="bottom" style='width:29.7pt;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'> </p> </td> <td width="74" valign="bottom" style='width:55.35pt;border:none;border-bottom:double windowtext 1.5pt;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'>$ 4,046 </p> </td> </tr> </table> </div> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'> </p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'>Pre-tax income included foreign income/(losses) of $1,375,000 and ($1,531,000) in 2013 and 2012, respectively.</p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-indent:.5in'>Total income tax expense differed from statutory income tax expense, computed by applying the U.S. federal income tax rate of 34% to earnings before income tax, as follows:</p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-indent:.5in'> </p> <div align="center"> <table border="0" cellspacing="0" cellpadding="0" style='border-collapse:collapse'> <tr align="left"> <td width="319" valign="top" style='width:239.4pt;padding:0in 5.4pt 0in 5.4pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'> </p> </td> <td width="66" valign="top" style='width:49.5pt;border:none;border-bottom:solid windowtext 1.0pt;padding:0in 5.4pt 0in 5.4pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'><b>      2013 </b></p> </td> <td width="39" valign="top" style='width:29.25pt;padding:0in 5.4pt 0in 5.4pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'> </p> </td> <td width="74" valign="top" style='width:55.15pt;border:none;border-bottom:solid windowtext 1.0pt;padding:0in 5.4pt 0in 5.4pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'><b>       2012 </b></p> </td> </tr> <tr align="left"> <td width="319" valign="top" style='width:239.4pt;padding:0in 5.4pt 0in 5.4pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'> </p> </td> <td width="179" colspan="3" valign="top" style='width:133.9pt;padding:0in 5.4pt 0in 5.4pt'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:center'><b>(in thousands)</b></p> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:center'><b> </b></p> </td> </tr> <tr align="left"> <td width="319" valign="top" style='width:239.4pt;padding:0in 5.4pt 0in 5.4pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'>Computed Statutory Income Tax Expense</p> </td> <td width="66" valign="bottom" style='width:49.5pt;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'>$ 5,075 </p> </td> <td width="39" valign="bottom" style='width:29.25pt;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'> </p> </td> <td width="74" valign="bottom" style='width:55.15pt;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'>$ 3,693 </p> </td> </tr> <tr align="left"> <td width="319" valign="top" style='width:239.4pt;padding:0in 5.4pt 0in 5.4pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'>State Income Tax, Net of Federal Tax Benefit</p> </td> <td width="66" valign="bottom" style='width:49.5pt;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'>220 </p> </td> <td width="39" valign="bottom" style='width:29.25pt;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'> </p> </td> <td width="74" valign="bottom" style='width:55.15pt;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'>296 </p> </td> </tr> <tr align="left"> <td width="319" valign="top" style='width:239.4pt;padding:0in 5.4pt 0in 5.4pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'>Foreign Tax Rate Differential</p> </td> <td width="66" valign="bottom" style='width:49.5pt;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'>(149) </p> </td> <td width="39" valign="bottom" style='width:29.25pt;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'> </p> </td> <td width="74" valign="bottom" style='width:55.15pt;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'>168 </p> </td> </tr> <tr align="left"> <td width="319" valign="top" style='width:239.4pt;padding:0in 5.4pt 0in 5.4pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'>Manufacturing Deduction </p> </td> <td width="66" valign="bottom" style='width:49.5pt;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'>(299) </p> </td> <td width="39" valign="bottom" style='width:29.25pt;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'> </p> </td> <td width="74" valign="bottom" style='width:55.15pt;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'>(180) </p> </td> </tr> <tr align="left"> <td width="319" valign="top" style='width:239.4pt;padding:0in 5.4pt 0in 5.4pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'>Reduction in Tax Uncertainties </p> </td> <td width="66" valign="bottom" style='width:49.5pt;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'>(19) </p> </td> <td width="39" valign="bottom" style='width:29.25pt;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'> </p> </td> <td width="74" valign="bottom" style='width:55.15pt;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'>(16) </p> </td> </tr> <tr align="left"> <td width="319" valign="top" style='width:239.4pt;padding:0in 5.4pt 0in 5.4pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'>Other - Net</p> </td> <td width="66" valign="bottom" style='width:49.5pt;border:none;border-bottom:solid windowtext 1.0pt;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'>63 </p> </td> <td width="39" valign="bottom" style='width:29.25pt;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'> </p> </td> <td width="74" valign="bottom" style='width:55.15pt;border:none;border-bottom:solid windowtext 1.0pt;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'>85 </p> </td> </tr> <tr align="left"> <td width="319" valign="top" style='width:239.4pt;padding:0in 5.4pt 0in 5.4pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'>Income Tax Expense</p> </td> <td width="66" valign="bottom" style='width:49.5pt;border:none;border-bottom:double windowtext 1.5pt;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'>$ 4,891 </p> </td> <td width="39" valign="bottom" style='width:29.25pt;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'> </p> </td> <td width="74" valign="bottom" style='width:55.15pt;border:none;border-bottom:double windowtext 1.5pt;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'>$ 4,046 </p> </td> </tr> <tr style='height:5.85pt'> <td width="319" valign="top" style='width:239.4pt;padding:0in 5.4pt 0in 5.4pt;height:5.85pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'> </p> </td> <td width="66" valign="top" style='width:49.5pt;border:none;padding:0in 5.4pt 0in 5.4pt;height:5.85pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'> </p> </td> <td width="39" valign="top" style='width:29.25pt;padding:0in 5.4pt 0in 5.4pt;height:5.85pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'> </p> </td> <td width="74" valign="top" style='width:55.15pt;border:none;padding:0in 5.4pt 0in 5.4pt;height:5.85pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'> </p> </td> </tr> </table> </div> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'>                </p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'>                A deferred income tax (expense) benefit results from temporary timing differences in the recognition of income and expense for income tax and financial reporting purposes.  The components of and changes in the net deferred tax assets (liabilities) which give rise to this deferred income tax (expense) benefit for the years ended December 31, 2013 and 2012 are as follows:</p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:justify'> </p> <div align="center"> <table border="0" cellspacing="0" cellpadding="0" style='border-collapse:collapse'> <tr align="left"> <td width="306" valign="top" style='width:229.35pt;padding:0in 5.4pt 0in 5.4pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'> </p> </td> <td width="180" colspan="3" valign="top" style='width:135.2pt;padding:0in 5.4pt 0in 5.4pt'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:center'><b>December 31,</b></p> </td> </tr> <tr align="left"> <td width="306" valign="top" style='width:229.35pt;padding:0in 5.4pt 0in 5.4pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'> </p> </td> <td width="72" valign="top" style='width:.75in;border:none;border-bottom:solid windowtext 1.0pt;padding:0in 5.4pt 0in 5.4pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'><b>         2013 </b></p> </td> <td width="46" valign="top" style='width:34.65pt;padding:0in 5.4pt 0in 5.4pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'> </p> </td> <td width="62" valign="top" style='width:46.55pt;border:none;border-bottom:solid windowtext 1.0pt;padding:0in 5.4pt 0in 5.4pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'><b>      2012 </b></p> </td> </tr> <tr align="left"> <td width="306" valign="top" style='width:229.35pt;padding:0in 5.4pt 0in 5.4pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'> </p> </td> <td width="180" colspan="3" valign="top" style='width:135.2pt;padding:0in 5.4pt 0in 5.4pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'><b>             (in thousands)</b></p> </td> </tr> <tr align="left"> <td width="306" valign="top" style='width:229.35pt;padding:0in 5.4pt 0in 5.4pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'><u>Deferred Tax Assets:</u></p> </td> <td width="72" valign="bottom" style='width:.75in;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'> </p> </td> <td width="46" valign="bottom" style='width:34.65pt;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'> </p> </td> <td width="62" valign="bottom" style='width:46.55pt;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'> </p> </td> </tr> <tr align="left"> <td width="306" valign="top" style='width:229.35pt;padding:0in 5.4pt 0in 5.4pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'>Compensation Assets</p> </td> <td width="72" valign="bottom" style='width:.75in;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'>$ 117 </p> </td> <td width="46" valign="bottom" style='width:34.65pt;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'> </p> </td> <td width="62" valign="bottom" style='width:46.55pt;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'>$ 109 </p> </td> </tr> <tr align="left"> <td width="306" valign="top" style='width:229.35pt;padding:0in 5.4pt 0in 5.4pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'>Inventory Valuation</p> </td> <td width="72" valign="bottom" style='width:.75in;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'>516 </p> </td> <td width="46" valign="bottom" style='width:34.65pt;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'> </p> </td> <td width="62" valign="bottom" style='width:46.55pt;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'>491 </p> </td> </tr> <tr align="left"> <td width="306" valign="top" style='width:229.35pt;padding:0in 5.4pt 0in 5.4pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'>Accounts Receivable Valuation</p> </td> <td width="72" valign="bottom" style='width:.75in;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'>267 </p> </td> <td width="46" valign="bottom" style='width:34.65pt;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'> </p> </td> <td width="62" valign="bottom" style='width:46.55pt;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'>232 </p> </td> </tr> <tr align="left"> <td width="306" valign="top" style='width:229.35pt;padding:0in 5.4pt 0in 5.4pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'>Deferred Litigation Costs</p> </td> <td width="72" valign="bottom" style='width:.75in;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'>57 </p> </td> <td width="46" valign="bottom" style='width:34.65pt;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'> </p> </td> <td width="62" valign="bottom" style='width:46.55pt;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'>62 </p> </td> </tr> <tr align="left"> <td width="306" valign="top" style='width:229.35pt;padding:0in 5.4pt 0in 5.4pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'>Foreign Net Operating Losses</p> </td> <td width="72" valign="bottom" style='width:.75in;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'>154 </p> </td> <td width="46" valign="bottom" style='width:34.65pt;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'> </p> </td> <td width="62" valign="bottom" style='width:46.55pt;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'>509 </p> </td> </tr> <tr align="left"> <td width="306" valign="top" style='width:229.35pt;padding:0in 5.4pt 0in 5.4pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'>Other</p> </td> <td width="72" valign="bottom" style='width:.75in;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'>335 </p> </td> <td width="46" valign="bottom" style='width:34.65pt;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'> </p> </td> <td width="62" valign="bottom" style='width:46.55pt;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'>290 </p> </td> </tr> <tr align="left"> <td width="306" valign="top" style='width:229.35pt;padding:0in 5.4pt 0in 5.4pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'>Compensation Liabilities</p> </td> <td width="72" valign="bottom" style='width:.75in;border:none;border-bottom:solid windowtext 1.0pt;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'>347 </p> </td> <td width="46" valign="bottom" style='width:34.65pt;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'> </p> </td> <td width="62" valign="bottom" style='width:46.55pt;border:none;border-bottom:solid windowtext 1.0pt;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'>287 </p> </td> </tr> <tr align="left"> <td width="306" valign="top" style='width:229.35pt;padding:0in 5.4pt 0in 5.4pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'>Total Deferred Assets</p> </td> <td width="72" valign="bottom" style='width:.75in;border:none;border-bottom:double windowtext 1.5pt;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'>$ 1,793 </p> </td> <td width="46" valign="bottom" style='width:34.65pt;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'> </p> </td> <td width="62" valign="bottom" style='width:46.55pt;border:none;border-bottom:double windowtext 1.5pt;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'>$ 1,980 </p> </td> </tr> <tr style='height:8.1pt'> <td width="306" valign="top" style='width:229.35pt;padding:0in 5.4pt 0in 5.4pt;height:8.1pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'> </p> </td> <td width="72" valign="bottom" style='width:.75in;border:none;padding:0in 5.4pt 0in 5.4pt;height:8.1pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'> </p> </td> <td width="46" valign="bottom" style='width:34.65pt;padding:0in 5.4pt 0in 5.4pt;height:8.1pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'> </p> </td> <td width="62" valign="bottom" style='width:46.55pt;border:none;padding:0in 5.4pt 0in 5.4pt;height:8.1pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'> </p> </td> </tr> <tr align="left"> <td width="306" valign="top" style='width:229.35pt;padding:0in 5.4pt 0in 5.4pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'><u>Deferred Tax Liabilities:</u></p> </td> <td width="72" valign="bottom" style='width:.75in;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'> </p> </td> <td width="46" valign="bottom" style='width:34.65pt;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'> </p> </td> <td width="62" valign="bottom" style='width:46.55pt;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'> </p> </td> </tr> <tr align="left"> <td width="306" valign="top" style='width:229.35pt;padding:0in 5.4pt 0in 5.4pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'>Prepaid Expenses</p> </td> <td width="72" valign="bottom" style='width:.75in;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'>(386) </p> </td> <td width="46" valign="bottom" style='width:34.65pt;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'> </p> </td> <td width="62" valign="bottom" style='width:46.55pt;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'>(399) </p> </td> </tr> <tr align="left"> <td width="306" valign="top" style='width:229.35pt;padding:0in 5.4pt 0in 5.4pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'>Depreciation and Amortization</p> </td> <td width="72" valign="bottom" style='width:.75in;border:none;border-bottom:solid windowtext 1.0pt;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'>(1,568) </p> </td> <td width="46" valign="bottom" style='width:34.65pt;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'> </p> </td> <td width="62" valign="bottom" style='width:46.55pt;border:none;border-bottom:solid windowtext 1.0pt;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'>(1,445) </p> </td> </tr> <tr align="left"> <td width="306" valign="top" style='width:229.35pt;padding:0in 5.4pt 0in 5.4pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'>Total Deferred Liabilities</p> </td> <td width="72" valign="bottom" style='width:.75in;border:none;border-bottom:solid windowtext 1.0pt;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'>($1,954) </p> </td> <td width="46" valign="bottom" style='width:34.65pt;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'> </p> </td> <td width="62" valign="bottom" style='width:46.55pt;border:none;border-bottom:solid windowtext 1.0pt;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'>($1,844) </p> </td> </tr> <tr align="left"> <td width="306" valign="top" style='width:229.35pt;padding:0in 5.4pt 0in 5.4pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'> </p> </td> <td width="72" valign="bottom" style='width:.75in;border:none;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'> </p> </td> <td width="46" valign="bottom" style='width:34.65pt;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'> </p> </td> <td width="62" valign="bottom" style='width:46.55pt;border:none;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'> </p> </td> </tr> <tr align="left"> <td width="306" valign="top" style='width:229.35pt;padding:0in 5.4pt 0in 5.4pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'>Total Deferred Tax Asset (Liability)</p> </td> <td width="72" valign="bottom" style='width:.75in;border:none;border-bottom:double windowtext 1.5pt;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'>($161) </p> </td> <td width="46" valign="bottom" style='width:34.65pt;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'> </p> </td> <td width="62" valign="bottom" style='width:46.55pt;border:none;border-bottom:double windowtext 1.5pt;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'>$136 </p> </td> </tr> </table> </div> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'> </p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'>                Management believes it is more likely than not that the Company will have sufficient taxable income when these timing differences reverse and that the deferred tax assets will be realized and, accordingly, no valuation allowance is deemed necessary.</p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-indent:.5in'> </p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-indent:.5in'>The Company is currently subject to audit by the Internal Revenue Service for the calendar years ended 2012, 2011 and 2010.  The Company and its Subsidiaries state income tax returns are subject to audit for the calendar years ended 2009 through 2012.</p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-indent:.5in'> </p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-indent:.5in'>As of December 31, 2012, the Company had provided a liability of $119,000 for unrecognized tax benefits related to various federal and state income tax matters, which is included in Other Long Term Liabilities.  Of this amount, the amount that would impact the Company’s effective tax rate, if recognized, was $85,000.  The difference between the total amount of unrecognized tax benefits and the amount that would impact the effective tax rate consists of items that are offset by the federal tax benefit of state income tax items of $34,000.  The reserve at December 31, 2013 was $100,000, the most of which impacts the effective tax rate.</p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-indent:.5in'> </p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-indent:.5in'>The following is a tabular reconciliation of the total amounts of unrecognized tax benefits for the year:</p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-indent:.5in'> </p> <div align="center"> <table border="0" cellspacing="0" cellpadding="0" width="569" style='width:426.5pt;border-collapse:collapse'> <tr align="left"> <td width="384" valign="top" style='width:4.0in;padding:0in 5.4pt 0in 5.4pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'> </p> </td> <td width="78" valign="top" style='width:58.2pt;border:none;border-bottom:solid windowtext 1.0pt;padding:0in 5.4pt 0in 5.4pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'><b>       2013 </b></p> </td> <td width="32" valign="top" style='width:23.95pt;padding:0in 5.4pt 0in 5.4pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'> </p> </td> <td width="75" valign="top" style='width:56.35pt;border:none;border-bottom:solid windowtext 1.0pt;padding:0in 5.4pt 0in 5.4pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'><b>       2012 </b></p> </td> </tr> <tr align="left"> <td width="384" valign="top" style='width:4.0in;padding:0in 5.4pt 0in 5.4pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'> </p> </td> <td width="78" valign="top" style='width:58.2pt;border:none;padding:0in 5.4pt 0in 5.4pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'> </p> </td> <td width="32" valign="top" style='width:23.95pt;padding:0in 5.4pt 0in 5.4pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'> </p> </td> <td width="75" valign="top" style='width:56.35pt;border:none;padding:0in 5.4pt 0in 5.4pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'> </p> </td> </tr> <tr align="left"> <td width="384" valign="top" style='width:4.0in;padding:0in 5.4pt 0in 5.4pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'>Beginning Unrecognized Tax Benefits – </p> </td> <td width="78" valign="bottom" style='width:58.2pt;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'>$ 119 </p> </td> <td width="32" valign="bottom" style='width:23.95pt;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'> </p> </td> <td width="75" valign="bottom" style='width:56.35pt;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'>$ 135 </p> </td> </tr> <tr align="left"> <td width="384" valign="top" style='width:4.0in;padding:0in 5.4pt 0in 5.4pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'>Current Year – Increases</p> </td> <td width="78" valign="bottom" style='width:58.2pt;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'>--- </p> </td> <td width="32" valign="bottom" style='width:23.95pt;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'> </p> </td> <td width="75" valign="bottom" style='width:56.35pt;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'>--- </p> </td> </tr> <tr align="left"> <td width="384" valign="top" style='width:4.0in;padding:0in 5.4pt 0in 5.4pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'>Current Year – Decreases  </p> </td> <td width="78" valign="bottom" style='width:58.2pt;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'>--- </p> </td> <td width="32" valign="bottom" style='width:23.95pt;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'> </p> </td> <td width="75" valign="bottom" style='width:56.35pt;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'>--- </p> </td> </tr> <tr align="left"> <td width="384" valign="top" style='width:4.0in;padding:0in 5.4pt 0in 5.4pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'>Current Year – Interest/Penalties</p> </td> <td width="78" valign="bottom" style='width:58.2pt;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'>5 </p> </td> <td width="32" valign="bottom" style='width:23.95pt;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'> </p> </td> <td width="75" valign="bottom" style='width:56.35pt;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'>6 </p> </td> </tr> <tr align="left"> <td width="384" valign="top" style='width:4.0in;padding:0in 5.4pt 0in 5.4pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'>Expired Statutes</p> </td> <td width="78" valign="bottom" style='width:58.2pt;border:none;border-bottom:solid windowtext 1.0pt;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'>(24) </p> </td> <td width="32" valign="bottom" style='width:23.95pt;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'> </p> </td> <td width="75" valign="bottom" style='width:56.35pt;border:none;border-bottom:solid windowtext 1.0pt;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'>(22) </p> </td> </tr> <tr align="left"> <td width="384" valign="top" style='width:4.0in;padding:0in 5.4pt 0in 5.4pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'>Ending Unrecognized Tax Benefits – </p> </td> <td width="78" valign="bottom" style='width:58.2pt;border:none;border-bottom:double windowtext 1.5pt;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'>$ 100 </p> </td> <td width="32" valign="bottom" style='width:23.95pt;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'> </p> </td> <td width="75" valign="bottom" style='width:56.35pt;border:none;border-bottom:double windowtext 1.5pt;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'>$ 119 </p> </td> </tr> </table> </div>
<!--egx--><p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'><b>9. LEASES</b></p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'> </p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'>                In the United Kingdom, the Company leases a facility in Banbury, England for approximately $20,000 per month, which serves sales, warehousing and operational functions.  The lease in Banbury was effective April 1, 2006 and has a 15-year term ending in March 2021.  There is an option to terminate the lease in December of 2017.  Termination in 2017 requires a penalty of 2 months rentals, or approximately $40,000.  The Company’s current intention is to utilize the facility for the 15 years.</p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-indent:.5in'> </p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-indent:.5in'>In the United States, the Company owns its main operating facility located at 451 Creamery Way in Exton, PA, but in March 2013, the Company decided to lease additional space in Exton to ensure that all growth potential was not inhibited.  This new facility, located at 427 Creamery Way in Exton, PA costs approximately $10,000 per month, and is under contract for a 5-year term.  Additionally, the Company leased office space during 2013 and 2012 in Middletown, CT for approximately $9,000 a month.</p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-indent:.5in'> </p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-indent:.5in'>In addition to property rentals, the Company also leases several automobiles, which are included in the rent expense and in the operating lease details below.</p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-indent:.5in'> </p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-indent:.5in'>Rent expense for operating leases was approximately $435,000 and $325,000 for the years ended December 31, 2013, and 2012, respectively.</p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-indent:.5in'> </p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-indent:.5in'>Future minimum lease payments under non-cancelable leases as of December 31, 2013 is as follows:</p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-indent:.5in'> </p> <div align="center"> <table border="0" cellspacing="0" cellpadding="0" style='border-collapse:collapse'> <tr align="left"> <td valign="bottom" style='padding:0in 5.4pt 0in 5.4pt'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:center'><b>Year Ending December 31,</b></p> </td> <td valign="top" style='padding:0in 5.4pt 0in 5.4pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'> </p> </td> <td valign="top" style='padding:0in 5.4pt 0in 5.4pt'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;margin-right:-5.4pt;text-align:center'><b>Operating Leases</b></p> </td> </tr> <tr align="left"> <td valign="bottom" style='padding:0in 5.4pt 0in 5.4pt'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:center'> </p> </td> <td valign="top" style='padding:0in 5.4pt 0in 5.4pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'> </p> </td> <td valign="top" style='padding:0in 5.4pt 0in 5.4pt'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:center'>(in thousands)</p> </td> </tr> <tr align="left"> <td valign="bottom" style='padding:0in 5.4pt 0in 5.4pt'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:center'> </p> </td> <td valign="top" style='padding:0in 5.4pt 0in 5.4pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'> </p> </td> <td valign="top" style='padding:0in 5.4pt 0in 5.4pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'> </p> </td> </tr> <tr align="left"> <td valign="bottom" style='padding:0in 5.4pt 0in 5.4pt'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:center'>2014</p> </td> <td valign="top" style='padding:0in 5.4pt 0in 5.4pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'> </p> </td> <td valign="top" style='padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'> $ 531</p> </td> </tr> <tr align="left"> <td valign="bottom" style='padding:0in 5.4pt 0in 5.4pt'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:center'>2015</p> </td> <td valign="top" style='padding:0in 5.4pt 0in 5.4pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'> </p> </td> <td valign="top" style='padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'>  506</p> </td> </tr> <tr align="left"> <td valign="bottom" style='padding:0in 5.4pt 0in 5.4pt'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:center'>2016</p> </td> <td valign="top" style='padding:0in 5.4pt 0in 5.4pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'> </p> </td> <td valign="top" style='padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'>  479</p> </td> </tr> <tr align="left"> <td valign="bottom" style='padding:0in 5.4pt 0in 5.4pt'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:center'>2017</p> </td> <td valign="top" style='padding:0in 5.4pt 0in 5.4pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'> </p> </td> <td valign="top" style='padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'>  406</p> </td> </tr> <tr align="left"> <td valign="bottom" style='padding:0in 5.4pt 0in 5.4pt'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:center'>2018</p> </td> <td valign="top" style='padding:0in 5.4pt 0in 5.4pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'> </p> </td> <td valign="top" style='padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'>  249</p> </td> </tr> <tr align="left"> <td valign="bottom" style='padding:0in 5.4pt 0in 5.4pt'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:center'>Thereafter</p> </td> <td valign="top" style='padding:0in 5.4pt 0in 5.4pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'> </p> </td> <td valign="top" style='border:none;border-bottom:solid windowtext 1.0pt;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'>  538</p> </td> </tr> <tr style='height:.15in'> <td valign="bottom" style='padding:0in 5.4pt 0in 5.4pt;height:.15in'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:center'> </p> </td> <td valign="top" style='padding:0in 5.4pt 0in 5.4pt;height:.15in'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'> </p> </td> <td valign="top" style='border:none;padding:0in 5.4pt 0in 5.4pt;height:.15in'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'> </p> </td> </tr> <tr align="left"> <td valign="bottom" style='padding:0in 5.4pt 0in 5.4pt'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:center'>Total Minimum Lease Payments</p> </td> <td valign="top" style='padding:0in 5.4pt 0in 5.4pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'> </p> </td> <td valign="top" style='border:none;border-bottom:double windowtext 1.5pt;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'> $ 2,709</p> </td> </tr> <tr style='height:.1in'> <td valign="top" style='padding:0in 5.4pt 0in 5.4pt;height:.1in'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:center'> </p> </td> <td valign="top" style='padding:0in 5.4pt 0in 5.4pt;height:.1in'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'> </p> </td> <td valign="top" style='border:none;padding:0in 5.4pt 0in 5.4pt;height:.1in'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'> </p> </td> </tr> </table> </div>
<!--egx--><p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'><b>10. EMPLOYEE BENEFIT PLANS</b></p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'> </p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'><b>Defined Contribution and 401(K) Plans</b></p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'> </p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'>                The Company maintains a qualified non-contributory profit-sharing plan (the “Plan”) covering all eligible employees.  There were $263,000 and $261,000 of contributions made to the Plan in 2013 and 2012 respectively, which were charged to expense.</p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'> </p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'>                Contributions to the Plan are defined as three percent (3%) of gross wages up to the current Old Age, Survivors, and Disability (OASDI) limit and six percent (6%) of the excess over the OASDI limit, subject to the maximum allowed under the Employee Retirement Income Security Act (ERISA).  Participants vest over six years. </p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'> </p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'>                The Company also maintains a savings & retirement plan qualified under Internal Revenue Code Section 401(k) for all employees.  Employees are eligible to participate in the Plan the first day of the month following date of hire.  Participants may elect to have up to fifty percent (50%) of their compensation withheld, up to the maximum allowed by the Internal Revenue Code.  After completing (1) year of service, the Company contributes an additional amount equal to 25% of all employee contributions, up to a maximum of 6% of an employee’s gross wages.  Contributions are funded on a current basis.  Contributions to the Plan charged to expense for the years ended December 31, 2013 and 2012 were $80,000 and $77,000, respectively.  The participant’s Company contribution vests ratably over six years.  There were no significant changes made to the Plan during 2013 or 2012.</p>
<!--egx--><p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'><b>11. COMMITMENTS AND CONTINGENCIES</b></p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'> </p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'>Commitments:</p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'> </p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-indent:.5in'>Under a number of indemnity agreements between the Company and each of its officers and directors, the Company has agreed to indemnify each of its officers and directors against any liability asserted against them in their capacity as an officer or director, or both.  The Company’s indemnity obligations under the indemnity agreements are subject to certain conditions and limitations set forth in each of the agreements.  Under the terms of the Agreement, the Company is contingently liable for costs which may be incurred by the officers and directors in connection with claims arising by reason of these individuals’ roles as officers and directors.  The Company has obtained directors’ and officers’ insurance policies to fund certain obligations under the indemnity agreements.</p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'>                </p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-indent:.5in'>The Company has salary continuation agreements with one current employee, and one former employee who retired at the end of 2010.  These agreements provide for monthly payments to each of the employees or their designated beneficiary upon the employee’s retirement or death.  The payment benefits range from $1,000 per month to $3,000 per month with the term of such payments limited to 15 years after the employee’s retirement at age 65.  The agreements also provide for survivorship benefits if the employee dies before attaining age 65, and severance payments if the employee is terminated without cause; the amount of which is dependent on the length of company service at the date of termination.  The net present value of the retirement payments associated with these agreements is $451,000 at December 31, 2013, of which $439,000 is included in Other Long Term Liabilities, and the remaining current portion of $12,000 is included in Other Liabilities, associated with the retired employee previously noted who is now receiving benefit payments.  The December 31, 2012 liability of $481,000, had $469,000 reported in Other Long Term Liabilities, and a current portion of $12,000 in Other Liabilities. </p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'> </p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-indent:.5in'>The Company has obtained and is the beneficiary of three whole life insurance policies with respect to the two employees discussed above, and one other employee policy.  The cash surrender value of such policies (included in Other Long Term Assets) amounts to $962,000 at December 31, 2013 and $838,000 at December 31, 2012.</p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'>                </p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-indent:.5in'>As disclosed in detail in Note 9, under the caption “Leases”, the Company has several lease obligations in place that will be paid out over time.  Most notably, the Company has a lease for the manufacturing facility in Banbury, England, and also the new building lease in Exton, Pennsylvania near the current main operating facility, which provides additional manufacturing, warehousing and distribution space.</p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-indent:.5in'> </p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'>Contingencies:</p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'> </p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-indent:.5in'>The Company’s general liability insurance policies are subject to deductibles or retentions, ranging primarily from $25,000 to $250,000 per claim, (depending on the terms of the policy and the applicable policy year) up to an aggregate amount.  The Company is insured on a ‘first dollar’ basis for workers’ compensation subject to statutory limits.  In the ordinary and normal conduct of the Company’s business, it is subject to periodic lawsuits, investigations and claims (collectively, the “Claims”).  There has been an increase in the number of those Claims over the past few years relating primarily to product liability, most notably since 2010 when the Company took its first lightning related case to trial in Pennsylvania as described below.  However, the current year rate of Claims was lower than the previous year, although many of the new claims are associated with higher deductable or retention programs, and thus the overall cash expenditure has remained similar between 2013 and 2012.  The Company does not believe that the Claims have legal merit, and is therefore vigorously defending against those Claims.  In 2013, the Company won two of the Claims at two separate trials, both of which were held in U.S. District Court; one in St. Louis, Missouri and the other in Bridgeport, Connecticut.  In both cases, the jury unanimously found that the Company was not negligent in designing its TracPipe® product, and that the TracPipe® product was not defective or unreasonably dangerous.  In 2010, the Company took another one of the Claims to trial in Pennsylvania, and the jury returned a verdict that the Company was not negligent in designing and selling the TracPipe product, but that under the unique law in Pennsylvania for strict liability, the product lacked “any element” necessary to make it safe for its intended use.  The Company has appealed that portion of the verdict, and the Supreme Court of Pennsylvania heard oral arguments on that case with the focus on whether the product liability law in Pennsylvania should be revised.  A decision is expected in the first half of 2014. </p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'> </p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-indent:.5in'>The Company has in place commercial general liability insurance policies that cover the Claims, as noted above, including those alleging damages as a result of product defects.  Litigation is subject to many uncertainties and management is unable to predict the outcome of the pending suits and claims. The potential liability for a given claim could range from zero to a maximum of $250,000, depending upon the insurance deductible in place for the respective claim year.  The aggregate maximum exposure for all current open claims is estimated not to exceed approximately $3,400,000, which represents the defense costs and any settlements or adverse verdicts incurred over time within the insurance policy deductibles or retentions.  It is possible that the results of operations or liquidity and capital resources of the Company could be adversely affected by the ultimate outcome of the pending litigation as a result of the costs of contesting such lawsuits, potentially materially. The Company is currently unable to estimate the ultimate liability, if any, that may result from the pending litigation, and accordingly, the liability in the consolidated financial statements primarily represents an accrual for legal costs for services previously rendered and outstanding settlements for existing claims. The liabilities recorded on the Company’s books at December 31, 2013 and December 31, 2012 were $686,000 and $537,000, respectively, and are included in Other Liabilities.  </p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'> </p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-indent:.5in'>Finally, two putative class action cases have been filed against the company; one in U.S. District Court for the Middle District of Florida titled <i>Hall v. Omega Flex, Inc.</i> and one in U.S. District Court for the Southern District of Ohio titled <i>Schoelwer v. Omega Flex, Inc</i>.  In both cases, the lead plaintiffs claimed that they are exposed to an increased likelihood of harm if one of the plaintiffs’ houses that contain TracPipe CSST is struck by lightning, that could damage the CSST causing a release of fuel gas in the house and causing a fire.  However, none of the lead plaintiffs have suffered any actual harm.  In January 2014, the judge in the <i>Hall</i> case granted the Company’s motion to dismiss all of the plaintiff’s claims due primarily to a lack of jurisdiction because there is no actual case or controversy posed by these claims.  The plaintiff in <i>Schoelwer</i> voluntarily dismissed her claims in January 2014.  </p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-indent:.5in'> </p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-indent:.5in'>In 2007, the Company instituted a legal complaint against a former insurer, seeking reimbursement of amounts paid in defense of a class action litigation, as well as supplementary payments made in connection with the class action.  In March of 2012, the Company and the insurer settled the litigation for $4,700,000, with receipt of the cash occurring during that same month.  For clarity regarding this item, it is defined as the “Insurance Legal Recovery or ILR” on the accompanying consolidated statement of operations for the year ended December 31, 2012.</p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'> </p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-indent:.5in'>In February of 2012, the Company was made aware of a fraud perpetrated by an outside party involving insurance related premiums that the Company had prepaid for umbrella coverage. The assets are currently secured by a governmental agency who is investigating the case, and being held in a custodial account.  The value of the assets amount to $227,000 at December 31, 2013, and are included in Other Long Term Assets.  It is possible that not all of those funds will be returned to the Company, or the Company may need to incur additional costs to procure collection, but the outcome is currently not known or able to be estimated.  The Company is currently pursing all avenues in an effort to bring closure to the event, reclaim the assets, and has since replaced the aforementioned insurance coverage.</p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'> </p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-indent:.5in'>As disclosed in Note 13, Subsequent Events, in the Company’s December 31, 2012 Form 10-K, our subsidiary, Omega Flex Limited (“OFL”), had been sued regarding the installation of TracPipe product in an apartment complex in England.  In March of 2013, OFL settled that case by entering into a settlement agreement and making a one-time payment of £800,000 to resolve all claims associated with the project.  The Company recorded approximately $1,300,000 in Other Liabilities at December 31, 2012 to reflect the event.  The amount was paid in full in March 2013, and therefore there is no liability relating to this at December 31, 2013.</p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'> </p>
<!--egx--><p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'><b>12. STOCK – BASED COMPENSATION PLANS</b></p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'> </p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'><b>Phantom Stock Plan</b></p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'> </p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'><b><i>Plan Description.  </i></b>On April 1, 2006, the Company adopted the Omega Flex, Inc. 2006 Phantom Stock Plan (the “Plan”).  The Plan authorizes the grant of up to one million units of phantom stock to employees, officers or directors of the Company and of any of its subsidiaries.  The phantom stock units ("Units") each represent a contractual right to payment of compensation in the future based on the market value of the Company’s common stock.  The Units are not shares of the Company’s common stock, and a recipient of the Units <u>does not</u> receive any of the following:</p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;margin-left:.5in'> </p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;margin-left:.75in;text-indent:-.25in'><font style='font-family:Wingdings'>§ </font>ownership interest in the Company</p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;margin-left:.75in;text-indent:-.25in'><font style='font-family:Wingdings'>§ </font>shareholder voting rights </p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;margin-left:.75in;text-indent:-.25in'><font style='font-family:Wingdings'>§ </font>other incidents of ownership to the Company’s common stock</p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-indent:.5in'> </p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-indent:.5in'>The Units are granted to participants upon the recommendation of the Company’s CEO, and the approval of the Compensation Committee.  Each of the Units that are granted to a participant will be initially valued by the Compensation Committee, at an amount equal to the closing price of the Company’s common stock on the grant date, but are recorded at fair value using the Black-Sholes method as described below.  The Units follow a vesting schedule, with a maximum vesting of 3 years after the grant date.  Upon vesting, the Units represent a contractual right of payment for the value of the Unit.  The Units will be paid on their maturity date, one year after all of the Units granted in a particular award have fully vested, unless an acceptable event occurs under the terms of the Plan prior to one year, which would allow for earlier payment.  The amount to be paid to the participant on the maturity date is dependent on the type of Unit granted to the participant.</p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-indent:.5in'> </p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-indent:.5in'>The Units may be <i>Full Value,</i> in which the value of each Unit at the maturity date, will equal the closing price of the Company’s common stock as of the maturity date; or <i>Appreciation Only</i>, in which the value of each Unit at the maturity date will be equal to the closing price of the Company’s common stock at the maturity date <i>minus</i> the closing price of the Company’s common stock at the grant date.</p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-indent:.5in'> </p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-indent:.5in'>On December 9, 2009, the Board of Directors authorized an amendment to the Plan to pay an amount equal to the value of any cash or stock dividend declared by the Company on its common stock to be accrued to the phantom stock units outstanding as of the record date of the common stock dividend.  The dividend equivalent will be paid at the same time the underlying phantom stock units are paid to the participant.</p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-indent:.5in'> </p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-indent:.5in'>In certain circumstances, the Units may be immediately vested upon the participant’s death or disability.  All Units granted to a participant are forfeited if the participant is terminated from his relationship with the Company or its subsidiary for “cause,” which is defined under the Plan.  If a participant’s employment or relationship with the Company is terminated for reasons other than for “cause,” then any vested Units will be paid to the participant upon termination.  However, Units granted to certain “specified employees” as defined in Section 409A of the Internal Revenue Code will be paid approximately 181 days after termination.</p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-indent:.5in'> </p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-indent:.5in'><b><i>Grants of Phantom Stock Units.  </i></b>As of December 31, 2012, the Company had 16,790 unvested units outstanding, all of which were granted at <i>Full Value</i>.  On April 3, 2013, the Company granted an additional 8,700 <i>Full Value</i> Units with a fair value of $12.59 per unit on grant date. In all cases, the grant price was equal to the closing price of the Company’s common stock at the grant date. In March 2013, the Company paid $154,000 for the 8,645 fully vested and matured units that were granted on February 20, 2009.  As of December 31, 2013, the Company had 17,193 unvested units outstanding.  </p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-indent:.5in'> </p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-indent:.5in'>The Company uses the Black-Scholes option pricing model as its method for determining fair value of the Units.  The Company uses the straight-line method of attributing the value of the stock-based compensation expense relating to the Units.  The compensation expense (including adjustment of the liability to its fair value) from the Units is recognized over the vesting period of each grant or award.</p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-indent:.5in'> </p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-indent:.5in'>The FASB ASC Topic 718 Stock Compensation requires forfeitures to be estimated at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates in order to derive the Company’s best estimate of awards ultimately to vest. </p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-indent:.5in'> </p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-indent:.5in'>Forfeitures represent only the unvested portion of a surrendered Unit and are typically estimated based on historical experience.  Based on an analysis of the Company’s historical data, which has limited experience related to any stock-based plan forfeitures, the Company applied a 0% forfeiture rate to Plan Units outstanding in determining its Plan Unit compensation expense as of December 31, 2013. </p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-indent:.5in'> </p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-indent:.5in'>The total Phantom Stock related liability as of December 31, 2013 was $499,000 of which $176,000 is included in other liabilities, as it is expected to be paid in March 2014, and the balance of $323,000 is included in other long term liabilities.</p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-indent:.5in'> </p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-indent:.5in'>In accordance with FASB ASC Topic 718 Stock Compensation, the Company recorded compensation expense of approximately $312,000 and $72,000 related to the Phantom Stock Plan for each of the years ended December 31, 2013 and 2012, respectively.</p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-indent:.5in'> </p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-indent:.5in'>The following table summarizes information about the Company’s nonvested phantom stock Units at December 31, 2013:</p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-indent:.5in'> </p> <div align="center"> <table border="0" cellspacing="0" cellpadding="0" style='border-collapse:collapse'> <tr align="left"> <td width="328" valign="bottom" style='width:245.65pt;padding:0in 5.4pt 0in 5.4pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'> </p> </td> <td width="126" valign="bottom" style='width:94.3pt;border:none;border-bottom:solid windowtext 1.0pt;padding:0in 5.4pt 0in 5.4pt'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:center'><b>Units</b></p> </td> <td width="21" valign="top" style='width:15.6pt;padding:0in 5.4pt 0in 5.4pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'> </p> </td> <td width="158" valign="bottom" style='width:118.75pt;border:none;border-bottom:solid windowtext 1.0pt;padding:0in 5.4pt 0in 5.4pt'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:center'><b>Weighted Average Grant Date Fair Value</b></p> </td> </tr> <tr align="left"> <td width="328" valign="bottom" style='width:245.65pt;padding:0in 5.4pt 0in 5.4pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'>Number of Phantom Stock Unit Awards:</p> </td> <td width="126" valign="bottom" style='width:94.3pt;border:none;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'> </p> </td> <td width="21" valign="top" style='width:15.6pt;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'> </p> </td> <td width="158" valign="bottom" style='width:118.75pt;border:none;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'> </p> </td> </tr> <tr align="left"> <td width="328" valign="bottom" style='width:245.65pt;padding:0in 5.4pt 0in 5.4pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'> Nonvested at December 31, 2012</p> </td> <td width="126" valign="bottom" style='width:94.3pt;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'> 16,790 </p> </td> <td width="21" valign="top" style='width:15.6pt;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'> </p> </td> <td width="158" valign="bottom" style='width:118.75pt;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'> $ 12.14 </p> </td> </tr> <tr align="left"> <td width="328" valign="bottom" style='width:245.65pt;padding:0in 5.4pt 0in 5.4pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;margin-left:8.4pt;text-indent:-8.4pt'> Granted</p> </td> <td width="126" valign="bottom" style='width:94.3pt;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'> 8,700 </p> </td> <td width="21" valign="top" style='width:15.6pt;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'> </p> </td> <td width="158" valign="bottom" style='width:118.75pt;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'> $ 12.59 </p> </td> </tr> <tr align="left"> <td width="328" valign="bottom" style='width:245.65pt;padding:0in 5.4pt 0in 5.4pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'> Vested</p> </td> <td width="126" valign="bottom" style='width:94.3pt;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'> (8,297)</p> </td> <td width="21" valign="top" style='width:15.6pt;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'> </p> </td> <td width="158" valign="bottom" style='width:118.75pt;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'> $ 11.05</p> </td> </tr> <tr align="left"> <td width="328" valign="bottom" style='width:245.65pt;padding:0in 5.4pt 0in 5.4pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'> Forfeited</p> </td> <td width="126" valign="bottom" style='width:94.3pt;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'> (---)</p> </td> <td width="21" valign="top" style='width:15.6pt;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'> </p> </td> <td width="158" valign="bottom" style='width:118.75pt;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'> $---</p> </td> </tr> <tr align="left"> <td width="328" valign="bottom" style='width:245.65pt;padding:0in 5.4pt 0in 5.4pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'> Canceled</p> </td> <td width="126" valign="bottom" style='width:94.3pt;border:none;border-bottom:solid windowtext 1.0pt;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'> (---)</p> </td> <td width="21" valign="top" style='width:15.6pt;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'> </p> </td> <td width="158" valign="bottom" style='width:118.75pt;border:none;border-bottom:solid windowtext 1.0pt;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'> $---</p> </td> </tr> <tr align="left"> <td width="328" valign="bottom" style='width:245.65pt;padding:0in 5.4pt 0in 5.4pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'> </p> </td> <td width="126" valign="bottom" style='width:94.3pt;border:none;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'> </p> </td> <td width="21" valign="top" style='width:15.6pt;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'> </p> </td> <td width="158" valign="bottom" style='width:118.75pt;border:none;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'> </p> </td> </tr> <tr align="left"> <td width="328" valign="bottom" style='width:245.65pt;padding:0in 5.4pt 0in 5.4pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'>Nonvested at December 31, 2013</p> </td> <td width="126" valign="bottom" style='width:94.3pt;border:none;border-bottom:double windowtext 1.5pt;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'> 17,193 </p> </td> <td width="21" valign="top" style='width:15.6pt;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'> </p> </td> <td width="158" valign="bottom" style='width:118.75pt;border:none;border-bottom:double windowtext 1.5pt;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'> $ 12.89 </p> </td> </tr> <tr align="left"> <td width="328" valign="bottom" style='width:245.65pt;padding:0in 5.4pt 0in 5.4pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'> </p> </td> <td width="126" valign="bottom" style='width:94.3pt;border:none;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'> </p> </td> <td width="21" valign="top" style='width:15.6pt;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'> </p> </td> <td width="158" valign="bottom" style='width:118.75pt;border:none;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'> </p> </td> </tr> <tr align="left"> <td width="328" valign="bottom" style='width:245.65pt;padding:0in 5.4pt 0in 5.4pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'>Phantom Stock Unit Awards Expected to Vest</p> </td> <td width="126" valign="bottom" style='width:94.3pt;border:none;border-bottom:solid windowtext 1.0pt;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'> 17,193 </p> </td> <td width="21" valign="top" style='width:15.6pt;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'> </p> </td> <td width="158" valign="bottom" style='width:118.75pt;border:none;border-bottom:solid windowtext 1.0pt;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'> $ 12.89 </p> </td> </tr> </table> </div> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'> </p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-indent:.5in'> The total unrecognized compensation cost calculated at December 31, 2013 was $193,000 which will be recognized through April of 2016.  The Company will recognize the related expense over the weighted average period of 1.19 years.</p>
<!--egx--><p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-indent:.6pt'><b>13.  SUBSEQUENT EVENTS</b></p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'> </p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'>                The Company is not currently aware of any subsequent event that would require disclosure or any adjustment to the consolidated financial statements as stated at December 31, 2013.</p>
<!--egx--><p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'><b><u>Use of Estimates</u></b></p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'> </p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'>                The preparation of financial statements in conformity with generally accepted accounting principles (GAAP) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the dates of the financial statements and the reported amounts of revenues and expenses during the reporting periods. The most significant estimates and assumptions relate to revenue recognition, inventory valuations, goodwill and intangible asset valuations, product liability costs, phantom stock and accounting for income taxes.  Actual amounts could differ significantly from these estimates.</p>
<!--egx--><p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'><b><u>Revenue Recognition</u></b></p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'> </p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'>                The Company’s revenue recognition activities relate almost entirely to the manufacture and sale of flexible metal hose and pipe.  Under GAAP, revenues are considered to have been earned when the Company has substantially accomplished what it must do to be entitled to the benefits represented by the revenues.  The following criteria represent preconditions to the recognition of revenue:</p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;margin-left:20.15pt'> </p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;margin-left:.25in'>•      Persuasive evidence of an arrangement for the sale of product or services must exist.</p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;margin-left:.25in'>•      Delivery has occurred or services rendered.</p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;margin-left:.25in'>•      The sales price to the customer is fixed or determinable.</p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;margin-left:.25in'>•      Collection is reasonably assured.</p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;margin-left:20.15pt'> </p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;margin-left:-1.2pt'><font style='font-family:Symbol'>                 </font>The Company generally recognizes revenue upon shipment in accordance with the above principles.</p>
<!--egx--><p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'><b><u>Cash Equivalents</u></b></p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'> </p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'>                The Company considers all highly liquid investments with an original maturity of 90 days or less at the time of purchase to be cash equivalents. Cash equivalents include investments in an institutional money market fund, which invests in U.S. Treasury bills, notes and bonds, and/or repurchase agreements, backed by such obligations.  Carrying value approximates fair value.  Cash and cash equivalents are deposited at various area banks, which at times may exceed federally insured limits.  The Company monitors the viability of the banking institutions carrying its assets on a regular basis, and has the ability to transfer cash to various institutions during times of risk.  The Company has not experienced any losses related to these cash balances, and believes its credit risk to be minimal.</p>
<!--egx--><p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'><b><u>Inventories</u></b></p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'> </p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'>                Inventories are valued at the lower of cost or market.  The cost of inventories is determined by the first-in, first-out (FIFO) method.  The Company generally considers inventory quantities beyond two-years usage, measured on a historical usage basis, to be excess inventory and reduces the carrying value of inventory accordingly.</p>
<!--egx--><p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'><b><u>Property and Equipment</u></b></p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'> </p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'>                Property and equipment are carried at cost. Depreciation and amortization are computed using the straight-line method over the estimated useful lives of the assets or, for leasehold improvements, the life of the lease, if shorter. When assets are retired or otherwise disposed of, the cost and related accumulated depreciation are removed from the accounts and any resulting gain or loss is reflected in other income or expense for the period. The cost of maintenance and repairs is expensed as incurred; significant improvements are capitalized.</p>
<!--egx--><p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'><b><u>Goodwill</u></b></p> <p align="left" style='margin:0in;margin-bottom:.0001pt;text-align:justify;punctuation-wrap:simple;text-autospace:none;text-align:left'> </p> <p align="left" style='margin:0in;margin-bottom:.0001pt;text-align:justify;punctuation-wrap:simple;text-autospace:none;text-align:left'>                In accordance with Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) Topic 350, Intangibles – Goodwill and Other, the Company performed an annual impairment test as of December 31, 2013 and 2012.  These tests did not indicate any impairment of goodwill during either period, and there were no circumstances that would indicate otherwise.</p>
<!--egx--><p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'><b><u>Product Liability Reserves</u></b></p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'> </p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'>                Product liability reserves represent the estimated unpaid amounts under the Company’s insurance policies with respect to existing claims.  The Company uses the most current available data to estimate claims.  As explained more fully under Contingencies (see Note 11), for various product liability claims covered under the Company’s general liability insurance policies, the Company must pay certain defense costs within its deductible or self-insured retention limits, ranging primarily from $25,000 to $250,000 per claim, depending on the terms of the policy in the applicable policy year, up to an aggregate amount.  The Company is vigorously defending against all known claims.</p>
<!--egx--><p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'><b><u>Fair Value of Financial and Nonfinancial Instruments</u></b></p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'> </p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'>                The Company measures financial instruments in accordance with FASB ASC Topic 820, Fair Value Measurements and Disclosures.  The accounting standard defines fair value, establishes a framework for measuring fair value under GAAP, and enhances disclosures about fair value measurements. Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Valuation techniques used to measure fair value must maximize the use of observable inputs and minimize the use of unobservable inputs.  The standard creates a fair value hierarchy which prioritizes the inputs to valuation techniques used to measure fair value into three broad levels as follows: Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities; Level 2 inputs are inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly; and Level 3 inputs are unobservable inputs that reflect the Company’s own assumptions about the assumptions market participants would use in pricing the asset or liability. The Company relies on its actively traded share value – a level 1 input – in determining the fair value of the reporting unit in its annual impairment test as described in the FASB ASC Topic 350, Intangibles - Goodwill and Other.</p>
<!--egx--><p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'><b><u>Advertising Expense</u></b></p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'> </p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'>                Advertising costs are charged to operations as incurred and are included in selling expenses in the accompanying consolidated financial statements.  Such charges aggregated $673,000 and $1,017,000, for the years ended December 31, 2013, and 2012, respectively.  </p>
<!--egx--><p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'><b><u>Research and Development Expense</u></b></p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'> </p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'>                Research and development expenses are charged to operations as incurred. Such charges aggregated $720,000, and $807,000, for the years ended December 31, 2013 and 2012, respectively and are included in engineering expense in the accompanying consolidated statements of operations.</p>
<!--egx--><p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'><b><u>Shipping Costs</u></b></p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'> </p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'>                Shipping costs are included in selling expense on the consolidated statements of operations. The expense relating to shipping was $2,016,000 and $1,715,000 for the years ended December 31, 2013 and 2012, respectively.</p>
<!--egx--><p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'><b><u>Provision for Doubtful Accounts</u></b></p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'> </p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'>                The allowance for doubtful accounts reflects our best estimate of probable losses inherent in the accounts receivable balance.  The Company determines the allowance based on any known collection issues, historical experience, and other currently available evidence.  The reserve for future credits, discounts, and doubtful accounts was $729,000 and $653,000 as of December 31, 2013 and 2012, respectively.  In regards to identifying uncollectible accounts, the Company reviews an aging report on a consistent basis to determine past due accounts, and utilizes a well established credit rating agency.  The Company charges off those accounts that are deemed uncollectible once all collection efforts have been exhausted.</p>
<!--egx--><p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'><b><u>Earnings per Common Share</u></b></p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'> </p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'>                Basic earnings per share have been computed using the weighted-average number of common shares outstanding.  For the periods presented, there are no dilutive securities.  Consequently, basic and dilutive earnings per share are the same.</p>
<!--egx--><p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'><b><u>Currency Translation</u></b></p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'> </p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'>                Assets and liabilities denominated in foreign currencies, most of which relate to our United Kingdom subsidiary whose functional currency is British pound sterling, are translated into U.S. dollars at exchange rates prevailing on the balance sheet dates.  The statements of operations are translated into U.S. dollars at average exchange rates.  Adjustments resulting from the translation of financial statements are excluded from the determination of income and are accumulated in a separate component of shareholders’ equity.  For the years ended December 31, 2013 and 2012, exchange gains and losses resulting from foreign currency transactions were not significant and are included in the statements of operations (other income (expense)) in the period in which they occur.</p>
<!--egx--><p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'><b><u>Income Taxes</u></b></p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'> </p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'>                The Company accounts for tax liabilities in accordance with the FASB ASC Topic 740, Income Taxes.  Under this method the Company recorded tax expense, related deferred taxes and tax benefits, and uncertainties in tax positions.</p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'> </p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'>                Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases.  Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled.  The effect on deferred tax assets and liabilities from a change in tax rates is recognized in income in the period that includes the enactment date.  A valuation allowance is provided for deferred tax assets if it is more likely than not that these items will either expire before the Company is able to realize the benefit, or that future deductibility is uncertain.</p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'> </p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'>                The FASB ASC Topic 740, Income Taxes clarifies the criteria that an individual tax position must satisfy for some or all of the benefits of that position to be recognized in a company’s financial statements.  This guidance prescribes a recognition threshold of more-likely than-not, and a measurement attribute for all tax positions taken or expected to be taken on a tax return, in order for those tax positions to be recognized in the financial statements.</p> <p style='margin-top:0in;margin-right:0in;margin-bottom:0in;margin-left:.5in;margin-bottom:.0001pt;margin-left:0in;text-align:justify'> </p> <p style='margin-top:0in;margin-right:0in;margin-bottom:0in;margin-left:.5in;margin-bottom:.0001pt;margin-left:0in;text-align:justify'>                The Company follows the provisions of ASC 740-10 relative to accounting for uncertainties in tax positions. These provisions provide guidance on the recognition, de-recognition and measurement of potential tax benefits associated with tax positions. The Company elected to recognize interest and penalties related to income tax matters as a component of the income tax provision in the consolidated statements of income. For additional information regarding ASC 740-10, see Note 8.</p>
<!--egx--><p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'><b><u>Other Comprehensive Income</u></b></p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'> </p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'>                For the years ended December 31, 2013 and 2012, respectively, the components of other comprehensive income consisted solely of foreign currency translation adjustments.</p>
<!--egx--><p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'><b><u>Significant Concentration</u></b></p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'> </p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'>                One customer accounted for approximately 16% of sales in both 2013 and 2012.  That same customer accounted for 23% and 22% of Accounts Receivable at December 31, 2013 and 2012, respectively.  Also, during 2013 and 2012, approximately 90% of sales occurred in North America, with the remaining 10% portion scattered among other countries, but mostly pertaining to the United Kingdom.</p>
<!--egx--><p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'><b><u>Subsequent Events</u></b></p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'> </p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'>                The Company evaluates all events or transactions through the date of the related filing that may have a material impact on its consolidated financial statements.  Refer to Note 13 of the consolidated financial statements.</p>
<!--egx--><p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'><b><u>Recent Accounting Pronouncements</u></b></p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-indent:.5in'> </p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-indent:.5in'>ASU 2011-12, “<i>Comprehensive Income (Topic 220) Deferral of the Effective Date for Amendments to the Presentation of Reclassifications of Items Out of Accumulated Other Comprehensive Income in Accounting Standards Update No. 2011-05</i>,” issued in December 2011 amends ASU 2011-05 to reflect only those changes in Update 2011-05 that relate to the presentation of reclassification adjustments. The amendments are being made to allow FASB time to re-deliberate whether to present on the face of the financial statements the effects of reclassifications out of accumulated other comprehensive income on the components of net income and other comprehensive income for all periods presented. While FASB is considering the operational concerns about the presentation requirements for reclassification adjustments and the needs of financial statement users for additional information about reclassification adjustments; entities should continue to report reclassifications out of accumulated other comprehensive income consistent with the presentation requirements in effect before Update 2011-05. Public entities should begin applying these requirements for fiscal years ending after December 15, 2011. Adoption of ASU 2011-12 had no material impact on the financial statements.</p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'> </p> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-indent:.5in'>ASU 2013-11, <i>“Income Taxes (Topic 740): Presentation of Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists (a consensus of the FASB Emerging Issues Task Force)</i>.  Per this ASU, an unrecognized tax benefit, or a portion of an unrecognized tax benefit, should be presented in the financial statements as a reduction to a deferred tax asset for a net operating loss carryforward, a similar tax loss, or a tax credit carryforward, except as follows.  To the extent a net operating loss carryforward, a similar tax loss, or a tax credit carryforward is not available at the reporting date under the tax law of the applicable jurisdiction to settle any additional income taxes that would result from the disallowance of a tax position or the tax law of the applicable jurisdiction does not require the entity to use, and the entity does not intend to use, the deferred tax asset for such purpose, the unrecognized tax benefit should be presented in the financial statements as a liability and should not be combined with deferred tax assets.  The ASU is effective for fiscal years, and interim periods within those years, beginning after December 15, 2013.  The adoption of this guidance is not expected to have a material effect on the Company’s financial statements.</p>
<!--egx--><p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'> </p> <div align="center"> <table border="0" cellspacing="0" cellpadding="0" style='border-collapse:collapse'> <tr align="left"> <td valign="top" style='padding:0in 5.4pt 0in 5.4pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'> </p> </td> <td valign="top" style='border:none;border-bottom:solid windowtext 1.0pt;padding:0in 5.4pt 0in 5.4pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'><b>       2013</b></p> </td> <td valign="top" style='padding:0in 5.4pt 0in 5.4pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'> </p> </td> <td valign="top" style='border:none;border-bottom:solid windowtext 1.0pt;padding:0in 5.4pt 0in 5.4pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'><b>        2012</b></p> </td> </tr> <tr align="left"> <td valign="top" style='padding:0in 5.4pt 0in 5.4pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'> </p> </td> <td colspan="3" valign="top" style='padding:0in 5.4pt 0in 5.4pt'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:center'>(in thousands)</p> </td> </tr> <tr align="left"> <td valign="top" style='padding:0in 5.4pt 0in 5.4pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'> </p> </td> <td valign="top" style='padding:0in 5.4pt 0in 5.4pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'> </p> </td> <td valign="top" style='padding:0in 5.4pt 0in 5.4pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'> </p> </td> <td valign="top" style='padding:0in 5.4pt 0in 5.4pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'> </p> </td> </tr> <tr align="left"> <td valign="top" style='padding:0in 5.4pt 0in 5.4pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'>Finished Goods</p> </td> <td valign="bottom" style='padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'>$ 4,839 </p> </td> <td valign="bottom" style='padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'> </p> </td> <td valign="bottom" style='padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'>$ 5,598 </p> </td> </tr> <tr align="left"> <td valign="top" style='padding:0in 5.4pt 0in 5.4pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'>Raw Materials</p> </td> <td valign="bottom" style='border:none;border-bottom:solid windowtext 1.0pt;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'>1,889 </p> </td> <td valign="bottom" style='padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'> </p> </td> <td valign="bottom" style='border:none;border-bottom:solid windowtext 1.0pt;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'>1,530 </p> </td> </tr> <tr align="left"> <td valign="top" style='padding:0in 5.4pt 0in 5.4pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'> </p> </td> <td valign="bottom" style='border:none;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'> </p> </td> <td valign="bottom" style='padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'> </p> </td> <td valign="bottom" style='border:none;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'> </p> </td> </tr> <tr align="left"> <td valign="top" style='padding:0in 5.4pt 0in 5.4pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'>Total Inventory-Net</p> </td> <td valign="bottom" style='border:none;border-bottom:double windowtext 1.5pt;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'>$ 6,728 </p> </td> <td valign="bottom" style='padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'> </p> </td> <td valign="bottom" style='border:none;border-bottom:double windowtext 1.5pt;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'>$ 7,128 </p> </td> </tr> </table> </div>
<!--egx--><p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'> </p> <div align="center"> <table border="0" cellspacing="0" cellpadding="0" style='border-collapse:collapse'> <tr align="left"> <td valign="bottom" style='padding:0in 5.4pt 0in 5.4pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'> </p> </td> <td valign="bottom" style='border:none;border-bottom:solid windowtext 1.0pt;padding:0in 5.4pt 0in 5.4pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'><b>        2013 </b></p> </td> <td valign="top" style='padding:0in 5.4pt 0in 5.4pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'> </p> </td> <td valign="bottom" style='border:none;border-bottom:solid windowtext 1.0pt;padding:0in 5.4pt 0in 5.4pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'><b>        2012 </b></p> </td> <td valign="top" style='padding:0in 5.4pt 0in 5.4pt'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:center'> </p> </td> <td valign="bottom" style='border:none;border-bottom:solid windowtext 1.0pt;padding:0in 5.4pt 0in 5.4pt'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:center'><b>Depreciation and Amortization</b></p> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:center'><b>Est. Useful Lives</b></p> </td> </tr> <tr align="left"> <td valign="bottom" style='padding:0in 5.4pt 0in 5.4pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'> </p> </td> <td colspan="3" valign="top" style='padding:0in 5.4pt 0in 5.4pt'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:center'>(in thousands)</p> </td> <td valign="bottom" style='padding:0in 5.4pt 0in 5.4pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'> </p> </td> <td valign="top" style='border:none;padding:0in 5.4pt 0in 5.4pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'> </p> </td> <td valign="top" style='border:none;border-top:solid windowtext 1.0pt;padding:0in 5.4pt 0in 5.4pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'> </p> </td> </tr> <tr style='height:.1in'> <td valign="bottom" style='padding:0in 5.4pt 0in 5.4pt;height:.1in'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'> </p> </td> <td valign="bottom" style='padding:0in 5.4pt 0in 5.4pt;height:.1in'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'> </p> </td> <td valign="top" style='padding:0in 5.4pt 0in 5.4pt;height:.1in'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'> </p> </td> <td valign="bottom" style='padding:0in 5.4pt 0in 5.4pt;height:.1in'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'> </p> </td> <td valign="top" style='padding:0in 5.4pt 0in 5.4pt;height:.1in'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'> </p> </td> <td valign="bottom" style='padding:0in 5.4pt 0in 5.4pt;height:.1in'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'> </p> </td> </tr> <tr align="left"> <td valign="bottom" style='padding:0in 5.4pt 0in 5.4pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'>Land</p> </td> <td valign="bottom" style='padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'>$ 538 </p> </td> <td valign="bottom" style='padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'> </p> </td> <td valign="bottom" style='padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'>$ 538 </p> </td> <td valign="top" style='padding:0in 5.4pt 0in 5.4pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'> </p> </td> <td valign="bottom" style='padding:0in 5.4pt 0in 5.4pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'> </p> </td> </tr> <tr align="left"> <td valign="bottom" style='padding:0in 5.4pt 0in 5.4pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'>Buildings</p> </td> <td valign="bottom" style='padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'>4,141 </p> </td> <td valign="bottom" style='padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'> </p> </td> <td valign="bottom" style='padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'>4,141 </p> </td> <td valign="top" style='padding:0in 5.4pt 0in 5.4pt'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:center'> </p> </td> <td valign="bottom" style='padding:0in 5.4pt 0in 5.4pt'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:center'>39 Years</p> </td> </tr> <tr align="left"> <td valign="bottom" style='padding:0in 5.4pt 0in 5.4pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'>Leasehold Improvements</p> </td> <td valign="bottom" style='padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'>363 </p> </td> <td valign="bottom" style='padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'> </p> </td> <td valign="bottom" style='padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'>220 </p> </td> <td valign="top" style='padding:0in 5.4pt 0in 5.4pt'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:center'> </p> </td> <td valign="bottom" style='padding:0in 5.4pt 0in 5.4pt'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:center'>3-10 Years (Lesser of Life or Lease)</p> </td> </tr> <tr align="left"> <td valign="bottom" style='padding:0in 5.4pt 0in 5.4pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'>Equipment</p> </td> <td valign="bottom" style='border:none;border-bottom:solid windowtext 1.0pt;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'>9,168 </p> </td> <td valign="bottom" style='padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'> </p> </td> <td valign="bottom" style='border:none;border-bottom:solid windowtext 1.0pt;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'>8,801 </p> </td> <td valign="top" style='padding:0in 5.4pt 0in 5.4pt'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:center'> </p> </td> <td valign="bottom" style='padding:0in 5.4pt 0in 5.4pt'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:center'>3-10 Years</p> </td> </tr> <tr align="left"> <td valign="bottom" style='padding:0in 5.4pt 0in 5.4pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'> </p> </td> <td valign="bottom" style='border:none;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'>14,210 </p> </td> <td valign="bottom" style='padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'> </p> </td> <td valign="bottom" style='border:none;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'>13,700 </p> </td> <td valign="top" style='padding:0in 5.4pt 0in 5.4pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'> </p> </td> <td valign="bottom" style='padding:0in 5.4pt 0in 5.4pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'> </p> </td> </tr> <tr align="left"> <td valign="bottom" style='padding:0in 5.4pt 0in 5.4pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'>Accumulated Depreciation</p> </td> <td valign="bottom" style='border:none;border-bottom:solid windowtext 1.0pt;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'> (9,448)</p> </td> <td valign="top" style='padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'> </p> </td> <td valign="bottom" style='border:none;border-bottom:solid windowtext 1.0pt;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'> (8,876)</p> </td> <td valign="top" style='padding:0in 5.4pt 0in 5.4pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'> </p> </td> <td valign="bottom" style='padding:0in 5.4pt 0in 5.4pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'> </p> </td> </tr> <tr align="left"> <td valign="bottom" style='padding:0in 5.4pt 0in 5.4pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'> </p> </td> <td valign="bottom" style='border:none;border-bottom:double windowtext 1.5pt;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'>$ 4,762 </p> </td> <td valign="top" style='padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'> </p> </td> <td valign="bottom" style='border:none;border-bottom:double windowtext 1.5pt;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'>$ 4,824 </p> </td> <td valign="top" style='padding:0in 5.4pt 0in 5.4pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'> </p> </td> <td valign="bottom" style='padding:0in 5.4pt 0in 5.4pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'> </p> </td> </tr> <tr style='height:.1in'> <td valign="bottom" style='padding:0in 5.4pt 0in 5.4pt;height:.1in'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'> </p> </td> <td valign="bottom" style='border:none;padding:0in 5.4pt 0in 5.4pt;height:.1in'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'> </p> </td> <td valign="top" style='padding:0in 5.4pt 0in 5.4pt;height:.1in'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'> </p> </td> <td valign="bottom" style='border:none;padding:0in 5.4pt 0in 5.4pt;height:.1in'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'> </p> </td> <td valign="top" style='padding:0in 5.4pt 0in 5.4pt;height:.1in'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'> </p> </td> <td valign="bottom" style='padding:0in 5.4pt 0in 5.4pt;height:.1in'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'> </p> </td> </tr> </table> </div>
<!--egx--><p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'> </p> <div align="center"> <table border="0" cellspacing="0" cellpadding="0" width="506" style='width:379.85pt;border-collapse:collapse'> <tr align="left"> <td width="315" valign="top" style='width:236.05pt;padding:0in 5.4pt 0in 5.4pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'> </p> </td> <td width="78" valign="top" style='width:58.75pt;border:none;border-bottom:solid windowtext 1.0pt;padding:0in 5.4pt 0in 5.4pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'><b>        2013 </b></p> </td> <td width="40" valign="top" style='width:29.7pt;padding:0in 5.4pt 0in 5.4pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'> </p> </td> <td width="74" valign="top" style='width:55.35pt;border:none;border-bottom:solid windowtext 1.0pt;padding:0in 5.4pt 0in 5.4pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'><b>       2012 </b></p> </td> </tr> <tr style='height:16.6pt'> <td width="315" valign="top" style='width:236.05pt;padding:0in 5.4pt 0in 5.4pt;height:16.6pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'> </p> </td> <td width="192" colspan="3" valign="top" style='width:143.8pt;padding:0in 5.4pt 0in 5.4pt;height:16.6pt'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:center'><b>      (in thousands)</b></p> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:center'><b> </b></p> </td> </tr> <tr align="left"> <td width="315" valign="top" style='width:236.05pt;padding:0in 5.4pt 0in 5.4pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'>Federal Income Tax:</p> </td> <td width="78" valign="bottom" style='width:58.75pt;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'> </p> </td> <td width="40" valign="bottom" style='width:29.7pt;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'> </p> </td> <td width="74" valign="bottom" style='width:55.35pt;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'> </p> </td> </tr> <tr align="left"> <td width="315" valign="top" style='width:236.05pt;padding:0in 5.4pt 0in 5.4pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'> Current</p> </td> <td width="78" valign="bottom" style='width:58.75pt;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'>$ 4,273 </p> </td> <td width="40" valign="bottom" style='width:29.7pt;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'> </p> </td> <td width="74" valign="bottom" style='width:55.35pt;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'>$ 4,020 </p> </td> </tr> <tr align="left"> <td width="315" valign="top" style='width:236.05pt;padding:0in 5.4pt 0in 5.4pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'> Deferred</p> </td> <td width="78" valign="bottom" style='width:58.75pt;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'>(39) </p> </td> <td width="40" valign="bottom" style='width:29.7pt;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'> </p> </td> <td width="74" valign="bottom" style='width:55.35pt;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'>(101) </p> </td> </tr> <tr align="left"> <td width="315" valign="top" style='width:236.05pt;padding:0in 5.4pt 0in 5.4pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'> </p> </td> <td width="78" valign="bottom" style='width:58.75pt;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'> </p> </td> <td width="40" valign="bottom" style='width:29.7pt;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'> </p> </td> <td width="74" valign="bottom" style='width:55.35pt;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'> </p> </td> </tr> <tr align="left"> <td width="315" valign="top" style='width:236.05pt;padding:0in 5.4pt 0in 5.4pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'>State Income Tax:</p> </td> <td width="78" valign="bottom" style='width:58.75pt;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'> </p> </td> <td width="40" valign="bottom" style='width:29.7pt;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'> </p> </td> <td width="74" valign="bottom" style='width:55.35pt;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'> </p> </td> </tr> <tr align="left"> <td width="315" valign="top" style='width:236.05pt;padding:0in 5.4pt 0in 5.4pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'> Current</p> </td> <td width="78" valign="bottom" style='width:58.75pt;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'>329 </p> </td> <td width="40" valign="bottom" style='width:29.7pt;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'> </p> </td> <td width="74" valign="bottom" style='width:55.35pt;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'>472 </p> </td> </tr> <tr align="left"> <td width="315" valign="top" style='width:236.05pt;padding:0in 5.4pt 0in 5.4pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'> Deferred</p> </td> <td width="78" valign="bottom" style='width:58.75pt;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'>(2) </p> </td> <td width="40" valign="bottom" style='width:29.7pt;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'> </p> </td> <td width="74" valign="bottom" style='width:55.35pt;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'>(16) </p> </td> </tr> <tr align="left"> <td width="315" valign="top" style='width:236.05pt;padding:0in 5.4pt 0in 5.4pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'> </p> </td> <td width="78" valign="bottom" style='width:58.75pt;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'> </p> </td> <td width="40" valign="bottom" style='width:29.7pt;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'> </p> </td> <td width="74" valign="bottom" style='width:55.35pt;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'> </p> </td> </tr> <tr align="left"> <td width="315" valign="top" style='width:236.05pt;padding:0in 5.4pt 0in 5.4pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'>Foreign Income Tax:</p> </td> <td width="78" valign="bottom" style='width:58.75pt;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'> </p> </td> <td width="40" valign="bottom" style='width:29.7pt;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'> </p> </td> <td width="74" valign="bottom" style='width:55.35pt;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'> </p> </td> </tr> <tr align="left"> <td width="315" valign="top" style='width:236.05pt;padding:0in 5.4pt 0in 5.4pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'> Current</p> </td> <td width="78" valign="bottom" style='width:58.75pt;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'>-- </p> </td> <td width="40" valign="bottom" style='width:29.7pt;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'> </p> </td> <td width="74" valign="bottom" style='width:55.35pt;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'>-- </p> </td> </tr> <tr align="left"> <td width="315" valign="top" style='width:236.05pt;padding:0in 5.4pt 0in 5.4pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'> Deferred</p> </td> <td width="78" valign="bottom" style='width:58.75pt;border:none;border-bottom:solid windowtext 1.0pt;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'>330 </p> </td> <td width="40" valign="bottom" style='width:29.7pt;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'> </p> </td> <td width="74" valign="bottom" style='width:55.35pt;border:none;border-bottom:solid windowtext 1.0pt;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'>(329) </p> </td> </tr> <tr align="left"> <td width="315" valign="top" style='width:236.05pt;padding:0in 5.4pt 0in 5.4pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'> Income Tax Expense </p> </td> <td width="78" valign="bottom" style='width:58.75pt;border:none;border-bottom:double windowtext 1.5pt;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'>$ 4,891 </p> </td> <td width="40" valign="bottom" style='width:29.7pt;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'> </p> </td> <td width="74" valign="bottom" style='width:55.35pt;border:none;border-bottom:double windowtext 1.5pt;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'>$ 4,046 </p> </td> </tr> </table> </div>
<!--egx--><p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-indent:.5in'> </p> <div align="center"> <table border="0" cellspacing="0" cellpadding="0" style='border-collapse:collapse'> <tr align="left"> <td width="319" valign="top" style='width:239.4pt;padding:0in 5.4pt 0in 5.4pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'> </p> </td> <td width="66" valign="top" style='width:49.5pt;border:none;border-bottom:solid windowtext 1.0pt;padding:0in 5.4pt 0in 5.4pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'><b>      2013 </b></p> </td> <td width="39" valign="top" style='width:29.25pt;padding:0in 5.4pt 0in 5.4pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'> </p> </td> <td width="74" valign="top" style='width:55.15pt;border:none;border-bottom:solid windowtext 1.0pt;padding:0in 5.4pt 0in 5.4pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'><b>       2012 </b></p> </td> </tr> <tr align="left"> <td width="319" valign="top" style='width:239.4pt;padding:0in 5.4pt 0in 5.4pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'> </p> </td> <td width="179" colspan="3" valign="top" style='width:133.9pt;padding:0in 5.4pt 0in 5.4pt'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:center'><b>(in thousands)</b></p> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:center'><b> </b></p> </td> </tr> <tr align="left"> <td width="319" valign="top" style='width:239.4pt;padding:0in 5.4pt 0in 5.4pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'>Computed Statutory Income Tax Expense</p> </td> <td width="66" valign="bottom" style='width:49.5pt;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'>$ 5,075 </p> </td> <td width="39" valign="bottom" style='width:29.25pt;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'> </p> </td> <td width="74" valign="bottom" style='width:55.15pt;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'>$ 3,693 </p> </td> </tr> <tr align="left"> <td width="319" valign="top" style='width:239.4pt;padding:0in 5.4pt 0in 5.4pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'>State Income Tax, Net of Federal Tax Benefit</p> </td> <td width="66" valign="bottom" style='width:49.5pt;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'>220 </p> </td> <td width="39" valign="bottom" style='width:29.25pt;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'> </p> </td> <td width="74" valign="bottom" style='width:55.15pt;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'>296 </p> </td> </tr> <tr align="left"> <td width="319" valign="top" style='width:239.4pt;padding:0in 5.4pt 0in 5.4pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'>Foreign Tax Rate Differential</p> </td> <td width="66" valign="bottom" style='width:49.5pt;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'>(149) </p> </td> <td width="39" valign="bottom" style='width:29.25pt;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'> </p> </td> <td width="74" valign="bottom" style='width:55.15pt;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'>168 </p> </td> </tr> <tr align="left"> <td width="319" valign="top" style='width:239.4pt;padding:0in 5.4pt 0in 5.4pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'>Manufacturing Deduction </p> </td> <td width="66" valign="bottom" style='width:49.5pt;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'>(299) </p> </td> <td width="39" valign="bottom" style='width:29.25pt;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'> </p> </td> <td width="74" valign="bottom" style='width:55.15pt;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'>(180) </p> </td> </tr> <tr align="left"> <td width="319" valign="top" style='width:239.4pt;padding:0in 5.4pt 0in 5.4pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'>Reduction in Tax Uncertainties </p> </td> <td width="66" valign="bottom" style='width:49.5pt;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'>(19) </p> </td> <td width="39" valign="bottom" style='width:29.25pt;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'> </p> </td> <td width="74" valign="bottom" style='width:55.15pt;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'>(16) </p> </td> </tr> <tr align="left"> <td width="319" valign="top" style='width:239.4pt;padding:0in 5.4pt 0in 5.4pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'>Other - Net</p> </td> <td width="66" valign="bottom" style='width:49.5pt;border:none;border-bottom:solid windowtext 1.0pt;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'>63 </p> </td> <td width="39" valign="bottom" style='width:29.25pt;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'> </p> </td> <td width="74" valign="bottom" style='width:55.15pt;border:none;border-bottom:solid windowtext 1.0pt;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'>85 </p> </td> </tr> <tr align="left"> <td width="319" valign="top" style='width:239.4pt;padding:0in 5.4pt 0in 5.4pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'>Income Tax Expense</p> </td> <td width="66" valign="bottom" style='width:49.5pt;border:none;border-bottom:double windowtext 1.5pt;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'>$ 4,891 </p> </td> <td width="39" valign="bottom" style='width:29.25pt;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'> </p> </td> <td width="74" valign="bottom" style='width:55.15pt;border:none;border-bottom:double windowtext 1.5pt;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'>$ 4,046 </p> </td> </tr> <tr style='height:5.85pt'> <td width="319" valign="top" style='width:239.4pt;padding:0in 5.4pt 0in 5.4pt;height:5.85pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'> </p> </td> <td width="66" valign="top" style='width:49.5pt;border:none;padding:0in 5.4pt 0in 5.4pt;height:5.85pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'> </p> </td> <td width="39" valign="top" style='width:29.25pt;padding:0in 5.4pt 0in 5.4pt;height:5.85pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'> </p> </td> <td width="74" valign="top" style='width:55.15pt;border:none;padding:0in 5.4pt 0in 5.4pt;height:5.85pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'> </p> </td> </tr> </table> </div>
<!--egx--><p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:justify'> </p> <div align="center"> <table border="0" cellspacing="0" cellpadding="0" style='border-collapse:collapse'> <tr align="left"> <td width="306" valign="top" style='width:229.35pt;padding:0in 5.4pt 0in 5.4pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'> </p> </td> <td width="180" colspan="3" valign="top" style='width:135.2pt;padding:0in 5.4pt 0in 5.4pt'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:center'><b>December 31,</b></p> </td> </tr> <tr align="left"> <td width="306" valign="top" style='width:229.35pt;padding:0in 5.4pt 0in 5.4pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'> </p> </td> <td width="72" valign="top" style='width:.75in;border:none;border-bottom:solid windowtext 1.0pt;padding:0in 5.4pt 0in 5.4pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'><b>         2013 </b></p> </td> <td width="46" valign="top" style='width:34.65pt;padding:0in 5.4pt 0in 5.4pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'> </p> </td> <td width="62" valign="top" style='width:46.55pt;border:none;border-bottom:solid windowtext 1.0pt;padding:0in 5.4pt 0in 5.4pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'><b>      2012 </b></p> </td> </tr> <tr align="left"> <td width="306" valign="top" style='width:229.35pt;padding:0in 5.4pt 0in 5.4pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'> </p> </td> <td width="180" colspan="3" valign="top" style='width:135.2pt;padding:0in 5.4pt 0in 5.4pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'><b>             (in thousands)</b></p> </td> </tr> <tr align="left"> <td width="306" valign="top" style='width:229.35pt;padding:0in 5.4pt 0in 5.4pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'><u>Deferred Tax Assets:</u></p> </td> <td width="72" valign="bottom" style='width:.75in;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'> </p> </td> <td width="46" valign="bottom" style='width:34.65pt;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'> </p> </td> <td width="62" valign="bottom" style='width:46.55pt;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'> </p> </td> </tr> <tr align="left"> <td width="306" valign="top" style='width:229.35pt;padding:0in 5.4pt 0in 5.4pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'>Compensation Assets</p> </td> <td width="72" valign="bottom" style='width:.75in;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'>$ 117 </p> </td> <td width="46" valign="bottom" style='width:34.65pt;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'> </p> </td> <td width="62" valign="bottom" style='width:46.55pt;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'>$ 109 </p> </td> </tr> <tr align="left"> <td width="306" valign="top" style='width:229.35pt;padding:0in 5.4pt 0in 5.4pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'>Inventory Valuation</p> </td> <td width="72" valign="bottom" style='width:.75in;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'>516 </p> </td> <td width="46" valign="bottom" style='width:34.65pt;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'> </p> </td> <td width="62" valign="bottom" style='width:46.55pt;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'>491 </p> </td> </tr> <tr align="left"> <td width="306" valign="top" style='width:229.35pt;padding:0in 5.4pt 0in 5.4pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'>Accounts Receivable Valuation</p> </td> <td width="72" valign="bottom" style='width:.75in;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'>267 </p> </td> <td width="46" valign="bottom" style='width:34.65pt;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'> </p> </td> <td width="62" valign="bottom" style='width:46.55pt;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'>232 </p> </td> </tr> <tr align="left"> <td width="306" valign="top" style='width:229.35pt;padding:0in 5.4pt 0in 5.4pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'>Deferred Litigation Costs</p> </td> <td width="72" valign="bottom" style='width:.75in;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'>57 </p> </td> <td width="46" valign="bottom" style='width:34.65pt;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'> </p> </td> <td width="62" valign="bottom" style='width:46.55pt;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'>62 </p> </td> </tr> <tr align="left"> <td width="306" valign="top" style='width:229.35pt;padding:0in 5.4pt 0in 5.4pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'>Foreign Net Operating Losses</p> </td> <td width="72" valign="bottom" style='width:.75in;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'>154 </p> </td> <td width="46" valign="bottom" style='width:34.65pt;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'> </p> </td> <td width="62" valign="bottom" style='width:46.55pt;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'>509 </p> </td> </tr> <tr align="left"> <td width="306" valign="top" style='width:229.35pt;padding:0in 5.4pt 0in 5.4pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'>Other</p> </td> <td width="72" valign="bottom" style='width:.75in;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'>335 </p> </td> <td width="46" valign="bottom" style='width:34.65pt;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'> </p> </td> <td width="62" valign="bottom" style='width:46.55pt;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'>290 </p> </td> </tr> <tr align="left"> <td width="306" valign="top" style='width:229.35pt;padding:0in 5.4pt 0in 5.4pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'>Compensation Liabilities</p> </td> <td width="72" valign="bottom" style='width:.75in;border:none;border-bottom:solid windowtext 1.0pt;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'>347 </p> </td> <td width="46" valign="bottom" style='width:34.65pt;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'> </p> </td> <td width="62" valign="bottom" style='width:46.55pt;border:none;border-bottom:solid windowtext 1.0pt;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'>287 </p> </td> </tr> <tr align="left"> <td width="306" valign="top" style='width:229.35pt;padding:0in 5.4pt 0in 5.4pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'>Total Deferred Assets</p> </td> <td width="72" valign="bottom" style='width:.75in;border:none;border-bottom:double windowtext 1.5pt;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'>$ 1,793 </p> </td> <td width="46" valign="bottom" style='width:34.65pt;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'> </p> </td> <td width="62" valign="bottom" style='width:46.55pt;border:none;border-bottom:double windowtext 1.5pt;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'>$ 1,980 </p> </td> </tr> <tr style='height:8.1pt'> <td width="306" valign="top" style='width:229.35pt;padding:0in 5.4pt 0in 5.4pt;height:8.1pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'> </p> </td> <td width="72" valign="bottom" style='width:.75in;border:none;padding:0in 5.4pt 0in 5.4pt;height:8.1pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'> </p> </td> <td width="46" valign="bottom" style='width:34.65pt;padding:0in 5.4pt 0in 5.4pt;height:8.1pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'> </p> </td> <td width="62" valign="bottom" style='width:46.55pt;border:none;padding:0in 5.4pt 0in 5.4pt;height:8.1pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'> </p> </td> </tr> <tr align="left"> <td width="306" valign="top" style='width:229.35pt;padding:0in 5.4pt 0in 5.4pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'><u>Deferred Tax Liabilities:</u></p> </td> <td width="72" valign="bottom" style='width:.75in;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'> </p> </td> <td width="46" valign="bottom" style='width:34.65pt;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'> </p> </td> <td width="62" valign="bottom" style='width:46.55pt;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'> </p> </td> </tr> <tr align="left"> <td width="306" valign="top" style='width:229.35pt;padding:0in 5.4pt 0in 5.4pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'>Prepaid Expenses</p> </td> <td width="72" valign="bottom" style='width:.75in;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'>(386) </p> </td> <td width="46" valign="bottom" style='width:34.65pt;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'> </p> </td> <td width="62" valign="bottom" style='width:46.55pt;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'>(399) </p> </td> </tr> <tr align="left"> <td width="306" valign="top" style='width:229.35pt;padding:0in 5.4pt 0in 5.4pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'>Depreciation and Amortization</p> </td> <td width="72" valign="bottom" style='width:.75in;border:none;border-bottom:solid windowtext 1.0pt;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'>(1,568) </p> </td> <td width="46" valign="bottom" style='width:34.65pt;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'> </p> </td> <td width="62" valign="bottom" style='width:46.55pt;border:none;border-bottom:solid windowtext 1.0pt;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'>(1,445) </p> </td> </tr> <tr align="left"> <td width="306" valign="top" style='width:229.35pt;padding:0in 5.4pt 0in 5.4pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'>Total Deferred Liabilities</p> </td> <td width="72" valign="bottom" style='width:.75in;border:none;border-bottom:solid windowtext 1.0pt;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'>($1,954) </p> </td> <td width="46" valign="bottom" style='width:34.65pt;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'> </p> </td> <td width="62" valign="bottom" style='width:46.55pt;border:none;border-bottom:solid windowtext 1.0pt;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'>($1,844) </p> </td> </tr> <tr align="left"> <td width="306" valign="top" style='width:229.35pt;padding:0in 5.4pt 0in 5.4pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'> </p> </td> <td width="72" valign="bottom" style='width:.75in;border:none;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'> </p> </td> <td width="46" valign="bottom" style='width:34.65pt;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'> </p> </td> <td width="62" valign="bottom" style='width:46.55pt;border:none;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'> </p> </td> </tr> <tr align="left"> <td width="306" valign="top" style='width:229.35pt;padding:0in 5.4pt 0in 5.4pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'>Total Deferred Tax Asset (Liability)</p> </td> <td width="72" valign="bottom" style='width:.75in;border:none;border-bottom:double windowtext 1.5pt;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'>($161) </p> </td> <td width="46" valign="bottom" style='width:34.65pt;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'> </p> </td> <td width="62" valign="bottom" style='width:46.55pt;border:none;border-bottom:double windowtext 1.5pt;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'>$136 </p> </td> </tr> </table> </div>
<!--egx--><p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-indent:.5in'> </p> <div align="center"> <table border="0" cellspacing="0" cellpadding="0" width="569" style='width:426.5pt;border-collapse:collapse'> <tr align="left"> <td width="384" valign="top" style='width:4.0in;padding:0in 5.4pt 0in 5.4pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'> </p> </td> <td width="78" valign="top" style='width:58.2pt;border:none;border-bottom:solid windowtext 1.0pt;padding:0in 5.4pt 0in 5.4pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'><b>       2013 </b></p> </td> <td width="32" valign="top" style='width:23.95pt;padding:0in 5.4pt 0in 5.4pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'> </p> </td> <td width="75" valign="top" style='width:56.35pt;border:none;border-bottom:solid windowtext 1.0pt;padding:0in 5.4pt 0in 5.4pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'><b>       2012 </b></p> </td> </tr> <tr align="left"> <td width="384" valign="top" style='width:4.0in;padding:0in 5.4pt 0in 5.4pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'> </p> </td> <td width="78" valign="top" style='width:58.2pt;border:none;padding:0in 5.4pt 0in 5.4pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'> </p> </td> <td width="32" valign="top" style='width:23.95pt;padding:0in 5.4pt 0in 5.4pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'> </p> </td> <td width="75" valign="top" style='width:56.35pt;border:none;padding:0in 5.4pt 0in 5.4pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'> </p> </td> </tr> <tr align="left"> <td width="384" valign="top" style='width:4.0in;padding:0in 5.4pt 0in 5.4pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'>Beginning Unrecognized Tax Benefits – </p> </td> <td width="78" valign="bottom" style='width:58.2pt;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'>$ 119 </p> </td> <td width="32" valign="bottom" style='width:23.95pt;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'> </p> </td> <td width="75" valign="bottom" style='width:56.35pt;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'>$ 135 </p> </td> </tr> <tr align="left"> <td width="384" valign="top" style='width:4.0in;padding:0in 5.4pt 0in 5.4pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'>Current Year – Increases</p> </td> <td width="78" valign="bottom" style='width:58.2pt;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'>--- </p> </td> <td width="32" valign="bottom" style='width:23.95pt;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'> </p> </td> <td width="75" valign="bottom" style='width:56.35pt;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'>--- </p> </td> </tr> <tr align="left"> <td width="384" valign="top" style='width:4.0in;padding:0in 5.4pt 0in 5.4pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'>Current Year – Decreases  </p> </td> <td width="78" valign="bottom" style='width:58.2pt;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'>--- </p> </td> <td width="32" valign="bottom" style='width:23.95pt;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'> </p> </td> <td width="75" valign="bottom" style='width:56.35pt;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'>--- </p> </td> </tr> <tr align="left"> <td width="384" valign="top" style='width:4.0in;padding:0in 5.4pt 0in 5.4pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'>Current Year – Interest/Penalties</p> </td> <td width="78" valign="bottom" style='width:58.2pt;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'>5 </p> </td> <td width="32" valign="bottom" style='width:23.95pt;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'> </p> </td> <td width="75" valign="bottom" style='width:56.35pt;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'>6 </p> </td> </tr> <tr align="left"> <td width="384" valign="top" style='width:4.0in;padding:0in 5.4pt 0in 5.4pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'>Expired Statutes</p> </td> <td width="78" valign="bottom" style='width:58.2pt;border:none;border-bottom:solid windowtext 1.0pt;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'>(24) </p> </td> <td width="32" valign="bottom" style='width:23.95pt;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'> </p> </td> <td width="75" valign="bottom" style='width:56.35pt;border:none;border-bottom:solid windowtext 1.0pt;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'>(22) </p> </td> </tr> <tr align="left"> <td width="384" valign="top" style='width:4.0in;padding:0in 5.4pt 0in 5.4pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'>Ending Unrecognized Tax Benefits – </p> </td> <td width="78" valign="bottom" style='width:58.2pt;border:none;border-bottom:double windowtext 1.5pt;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'>$ 100 </p> </td> <td width="32" valign="bottom" style='width:23.95pt;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'> </p> </td> <td width="75" valign="bottom" style='width:56.35pt;border:none;border-bottom:double windowtext 1.5pt;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'>$ 119 </p> </td> </tr> </table> </div>
<!--egx--><p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-indent:.5in'> </p> <div align="center"> <table border="0" cellspacing="0" cellpadding="0" style='border-collapse:collapse'> <tr align="left"> <td valign="bottom" style='padding:0in 5.4pt 0in 5.4pt'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:center'><b>Year Ending December 31,</b></p> </td> <td valign="top" style='padding:0in 5.4pt 0in 5.4pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'> </p> </td> <td valign="top" style='padding:0in 5.4pt 0in 5.4pt'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;margin-right:-5.4pt;text-align:center'><b>Operating Leases</b></p> </td> </tr> <tr align="left"> <td valign="bottom" style='padding:0in 5.4pt 0in 5.4pt'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:center'> </p> </td> <td valign="top" style='padding:0in 5.4pt 0in 5.4pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'> </p> </td> <td valign="top" style='padding:0in 5.4pt 0in 5.4pt'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:center'>(in thousands)</p> </td> </tr> <tr align="left"> <td valign="bottom" style='padding:0in 5.4pt 0in 5.4pt'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:center'> </p> </td> <td valign="top" style='padding:0in 5.4pt 0in 5.4pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'> </p> </td> <td valign="top" style='padding:0in 5.4pt 0in 5.4pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'> </p> </td> </tr> <tr align="left"> <td valign="bottom" style='padding:0in 5.4pt 0in 5.4pt'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:center'>2014</p> </td> <td valign="top" style='padding:0in 5.4pt 0in 5.4pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'> </p> </td> <td valign="top" style='padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'> $ 531</p> </td> </tr> <tr align="left"> <td valign="bottom" style='padding:0in 5.4pt 0in 5.4pt'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:center'>2015</p> </td> <td valign="top" style='padding:0in 5.4pt 0in 5.4pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'> </p> </td> <td valign="top" style='padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'>  506</p> </td> </tr> <tr align="left"> <td valign="bottom" style='padding:0in 5.4pt 0in 5.4pt'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:center'>2016</p> </td> <td valign="top" style='padding:0in 5.4pt 0in 5.4pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'> </p> </td> <td valign="top" style='padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'>  479</p> </td> </tr> <tr align="left"> <td valign="bottom" style='padding:0in 5.4pt 0in 5.4pt'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:center'>2017</p> </td> <td valign="top" style='padding:0in 5.4pt 0in 5.4pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'> </p> </td> <td valign="top" style='padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'>  406</p> </td> </tr> <tr align="left"> <td valign="bottom" style='padding:0in 5.4pt 0in 5.4pt'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:center'>2018</p> </td> <td valign="top" style='padding:0in 5.4pt 0in 5.4pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'> </p> </td> <td valign="top" style='padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'>  249</p> </td> </tr> <tr align="left"> <td valign="bottom" style='padding:0in 5.4pt 0in 5.4pt'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:center'>Thereafter</p> </td> <td valign="top" style='padding:0in 5.4pt 0in 5.4pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'> </p> </td> <td valign="top" style='border:none;border-bottom:solid windowtext 1.0pt;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'>  538</p> </td> </tr> <tr style='height:.15in'> <td valign="bottom" style='padding:0in 5.4pt 0in 5.4pt;height:.15in'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:center'> </p> </td> <td valign="top" style='padding:0in 5.4pt 0in 5.4pt;height:.15in'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'> </p> </td> <td valign="top" style='border:none;padding:0in 5.4pt 0in 5.4pt;height:.15in'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'> </p> </td> </tr> <tr align="left"> <td valign="bottom" style='padding:0in 5.4pt 0in 5.4pt'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:center'>Total Minimum Lease Payments</p> </td> <td valign="top" style='padding:0in 5.4pt 0in 5.4pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'> </p> </td> <td valign="top" style='border:none;border-bottom:double windowtext 1.5pt;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'> $ 2,709</p> </td> </tr> <tr style='height:.1in'> <td valign="top" style='padding:0in 5.4pt 0in 5.4pt;height:.1in'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:center'> </p> </td> <td valign="top" style='padding:0in 5.4pt 0in 5.4pt;height:.1in'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'> </p> </td> <td valign="top" style='border:none;padding:0in 5.4pt 0in 5.4pt;height:.1in'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'> </p> </td> </tr> </table> </div>
<!--egx--><p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-indent:.5in'> </p> <div align="center"> <table border="0" cellspacing="0" cellpadding="0" style='border-collapse:collapse'> <tr align="left"> <td width="328" valign="bottom" style='width:245.65pt;padding:0in 5.4pt 0in 5.4pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'> </p> </td> <td width="126" valign="bottom" style='width:94.3pt;border:none;border-bottom:solid windowtext 1.0pt;padding:0in 5.4pt 0in 5.4pt'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:center'><b>Units</b></p> </td> <td width="21" valign="top" style='width:15.6pt;padding:0in 5.4pt 0in 5.4pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'> </p> </td> <td width="158" valign="bottom" style='width:118.75pt;border:none;border-bottom:solid windowtext 1.0pt;padding:0in 5.4pt 0in 5.4pt'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:center'><b>Weighted Average Grant Date Fair Value</b></p> </td> </tr> <tr align="left"> <td width="328" valign="bottom" style='width:245.65pt;padding:0in 5.4pt 0in 5.4pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'>Number of Phantom Stock Unit Awards:</p> </td> <td width="126" valign="bottom" style='width:94.3pt;border:none;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'> </p> </td> <td width="21" valign="top" style='width:15.6pt;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'> </p> </td> <td width="158" valign="bottom" style='width:118.75pt;border:none;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'> </p> </td> </tr> <tr align="left"> <td width="328" valign="bottom" style='width:245.65pt;padding:0in 5.4pt 0in 5.4pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'> Nonvested at December 31, 2012</p> </td> <td width="126" valign="bottom" style='width:94.3pt;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'> 16,790 </p> </td> <td width="21" valign="top" style='width:15.6pt;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'> </p> </td> <td width="158" valign="bottom" style='width:118.75pt;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'> $ 12.14 </p> </td> </tr> <tr align="left"> <td width="328" valign="bottom" style='width:245.65pt;padding:0in 5.4pt 0in 5.4pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none;margin-left:8.4pt;text-indent:-8.4pt'> Granted</p> </td> <td width="126" valign="bottom" style='width:94.3pt;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'> 8,700 </p> </td> <td width="21" valign="top" style='width:15.6pt;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'> </p> </td> <td width="158" valign="bottom" style='width:118.75pt;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'> $ 12.59 </p> </td> </tr> <tr align="left"> <td width="328" valign="bottom" style='width:245.65pt;padding:0in 5.4pt 0in 5.4pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'> Vested</p> </td> <td width="126" valign="bottom" style='width:94.3pt;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'> (8,297)</p> </td> <td width="21" valign="top" style='width:15.6pt;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'> </p> </td> <td width="158" valign="bottom" style='width:118.75pt;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'> $ 11.05</p> </td> </tr> <tr align="left"> <td width="328" valign="bottom" style='width:245.65pt;padding:0in 5.4pt 0in 5.4pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'> Forfeited</p> </td> <td width="126" valign="bottom" style='width:94.3pt;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'> (---)</p> </td> <td width="21" valign="top" style='width:15.6pt;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'> </p> </td> <td width="158" valign="bottom" style='width:118.75pt;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'> $---</p> </td> </tr> <tr align="left"> <td width="328" valign="bottom" style='width:245.65pt;padding:0in 5.4pt 0in 5.4pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'> Canceled</p> </td> <td width="126" valign="bottom" style='width:94.3pt;border:none;border-bottom:solid windowtext 1.0pt;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'> (---)</p> </td> <td width="21" valign="top" style='width:15.6pt;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'> </p> </td> <td width="158" valign="bottom" style='width:118.75pt;border:none;border-bottom:solid windowtext 1.0pt;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'> $---</p> </td> </tr> <tr align="left"> <td width="328" valign="bottom" style='width:245.65pt;padding:0in 5.4pt 0in 5.4pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'> </p> </td> <td width="126" valign="bottom" style='width:94.3pt;border:none;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'> </p> </td> <td width="21" valign="top" style='width:15.6pt;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'> </p> </td> <td width="158" valign="bottom" style='width:118.75pt;border:none;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'> </p> </td> </tr> <tr align="left"> <td width="328" valign="bottom" style='width:245.65pt;padding:0in 5.4pt 0in 5.4pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'>Nonvested at December 31, 2013</p> </td> <td width="126" valign="bottom" style='width:94.3pt;border:none;border-bottom:double windowtext 1.5pt;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'> 17,193 </p> </td> <td width="21" valign="top" style='width:15.6pt;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'> </p> </td> <td width="158" valign="bottom" style='width:118.75pt;border:none;border-bottom:double windowtext 1.5pt;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'> $ 12.89 </p> </td> </tr> <tr align="left"> <td width="328" valign="bottom" style='width:245.65pt;padding:0in 5.4pt 0in 5.4pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'> </p> </td> <td width="126" valign="bottom" style='width:94.3pt;border:none;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'> </p> </td> <td width="21" valign="top" style='width:15.6pt;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'> </p> </td> <td width="158" valign="bottom" style='width:118.75pt;border:none;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'> </p> </td> </tr> <tr align="left"> <td width="328" valign="bottom" style='width:245.65pt;padding:0in 5.4pt 0in 5.4pt'> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'>Phantom Stock Unit Awards Expected to Vest</p> </td> <td width="126" valign="bottom" style='width:94.3pt;border:none;border-bottom:solid windowtext 1.0pt;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'> 17,193 </p> </td> <td width="21" valign="top" style='width:15.6pt;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'> </p> </td> <td width="158" valign="bottom" style='width:118.75pt;border:none;border-bottom:solid windowtext 1.0pt;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-autospace:none;text-align:right'> $ 12.89 </p> </td> </tr> </table> </div>
673000
1017000
720000
807000
2016000
1715000
729000
653000
1094000
1017000
4839000
5598000
1889000
1530000
6728000
7128000
538000
538000
4141000
4141000
39
363000
220000
3
10
9168000
8801000
3
10
14210000
13700000
-9448000
-8876000
4762000
4824000
36000
60000
547000
588000
On December 30, 2010, the Company agreed to a new Revolving Line of Credit Note and Loan Agreement with Santander Bank, formerly Sovereign Bank, NA (“Sovereign”). The Company established a line of credit facility in the maximum amount of $10,000,000, maturing on December 31, 2014, with funds available for working capital purposes and other cash needs.
10000000
The loan is collateralized by all of the Company’s tangible and intangible assets.
The loan agreement provides for the payment of any borrowings under the agreement at an interest rate range of either LIBOR plus 1.75% to plus 2.75% (for borrowings with a fixed term of 30, 60, or 90 days), or, Prime less 0.50% to plus 0.50% (for borrowings with no fixed term other than the December 31, 2014 maturity date), depending upon the Company’s then existing financial ratios. At December 31, 2013, the Company’s ratio would allow for the most favorable rate under the agreement’s range, which would be a rate of approximately 2.00% (LIBOR plus 1.75%).
The Company is required to pay an annual commitment fee for the access to the funds, and is also obligated to pay a “Line Fee” ranging from 17.5 to 35.0 basis points of the average unused balance on a quarterly basis, depending again upon the Company’s then existing financial ratios.
0
324000
As of December 31, 2013 and 2012, the Company was in compliance with all debt covenants.
20000000
20000000
0.01
0.01
10153633
10153633
10091822
10091822
61811
61811
0.425
4289000
1.00
10092000
1000000
5000000
0
0
62000
19742000
55000
-5000
122000
4273000
4020000
-39000
-101000
329000
472000
-2000
-16000
330000
-329000
4891000
4046000
5075000
3693000
220000
296000
-149000
168000
-299000
-180000
-19000
-16000
63000
85000
4891000
4046000
117000
109000
516000
491000
267000
232000
57000
62000
154000
509000
335000
290000
347000
287000
1793000
1980000
386000
399000
-1568000
-1445000
1954000
1844000
-161000
136000
100000
135000
5000
6000
-24000
-22000
100000
119000
435000
325000
531000
506000
479000
406000
249000
538000
2709000
263000
261000
Contributions to the Plan are defined as three percent (3%) of gross wages up to the current Old Age, Survivors, and Disability (OASDI) limit and six percent (6%) of the excess over the OASDI limit, subject to the maximum allowed under the Employee Retirement Income Security Act (ERISA). Participants vest over six years.
Employees are eligible to participate in the Plan the first day of the month following date of hire. Participants may elect to have up to fifty percent (50%) of their compensation withheld, up to the maximum allowed by the Internal Revenue Code. After completing (1) year of service, the Company contributes an additional amount equal to 25% of all employee contributions, up to a maximum of 6% of an employee’s gross wages.
80000
77000
Under a number of indemnity agreements between the Company and each of its officers and directors, the Company has agreed to indemnify each of its officers and directors against any liability asserted against them in their capacity as an officer or director, or both. The Company’s indemnity obligations under the indemnity agreements are subject to certain conditions and limitations set forth in each of the agreements. Under the terms of the Agreement, the Company is contingently liable for costs which may be incurred by the officers and directors in connection with claims arising by reason of these individuals’ roles as officers and directors. The Company has obtained directors’ and officers’ insurance policies to fund certain obligations under the indemnity agreements.
The Company has salary continuation agreements with one current employee, and one former employee who retired at the end of 2010. These agreements provide for monthly payments to each of the employees or their designated beneficiary upon the employee’s retirement or death. The payment benefits range from $1,000 per month to $3,000 per month with the term of such payments limited to 15 years after the employee’s retirement at age 65. The agreements also provide for survivorship benefits if the employee dies before attaining age 65, and severance payments if the employee is terminated without cause; the amount of which is dependent on the length of company service at the date of termination
451000
439000
12000
481000
469000
12000
962000
838000
25000
250000
3400000
686000
537000
4700000
“Insurance Legal Recovery or ILR”
-227000
Other Long Term Assets
Plan Description. On April 1, 2006, the Company adopted the Omega Flex, Inc. 2006 Phantom Stock Plan (the “Plan”). The Plan authorizes the grant of up to one million units of phantom stock to employees, officers or directors of the Company and of any of its subsidiaries. The phantom stock units ('Units') each represent a contractual right to payment of compensation in the future based on the market value of the Company’s common stock. The Units are not shares of the Company’s common stock,
1000000
The phantom stock units ('Units') each represent a contractual right to payment of compensation in the future based on the market value of the Company's common stock. The Units are not shares of the Company's common stock, and a recipient of the Units does not receive any of the following: (a) ownership interest in the Company, (b) shareholder voting rights, and (c) other incidents of ownership to the Company's common stock. The Units are granted to participants upon the recommendation of the Company's CEO, and the approval of the Compensation Committee. Each of the Units that are granted to a participant will be initially valued by the Compensation Committee, and at a minimum, the Unit's value will be equal to the closing price of the Company's common stock on the grant date. The Units follow a vesting schedule, with a maximum vesting of 3 years after the grant date. Upon vesting, the Units represent a contractual right of payment for the value of the Unit. The Units will be paid on their maturity date, one year after all of the Units granted in a particular award have fully vested, unless an acceptable event occurs under the terms of the Plan prior to one year, which would allow for earlier payment. The amount to be paid to the participant on the maturity date is dependent on the type of Unit granted to the participant.
The Units follow a vesting schedule, with a maximum vesting of 3 years after the grant date. Upon vesting, the Units represent a contractual right of payment for the value of the Unit.
3 years
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The Company uses the Black-Scholes option pricing model as its method for determining fair value of the Units. The Company uses the straight-line method of attributing the value of the stock-based compensation expense relating to the Units. The compensation expense (including adjustment of the liability to its fair value) from the Units is recognized over the vesting period of each grant or award.
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Less allowance of $729.
Less allowance of $653
Common Stock - par value $0.01 per share; authorized 20,000,000 shares: 10,153,633 shares issued and 10,091,822 outstanding at both, December 31, 2013 and December 31, 2012.