Error Correction

9 Months Ended

Sep. 30, 2020

Accounting Changes and Error Corrections [Abstract]

We have corrected herein our consolidated financial statements as of September 30, 2019 and for the three and nine months ended September 30, 2019, in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 250, Accounting Changes and Error Corrections.

Error Correction Background

During the preparation of the 2019 Annual Report on Form 10-K (filed on February 27, 2020) the Company noted errors in previously issued financial statements relating to share-based compensation expense for stock options and restricted stock awards held by retirement eligible employees and directors. As defined by our Long-Term Incentive Plans (Note 12), stock options and restricted stock awards are fully vested when an active employee or director meets certain retirement eligibility requirements. We have corrected the previously issued 2019 financial statements to recognize all share-based compensation, related to retirement eligible employees or directors, by the earlier of the grant date (if retirement eligible on grant date) or ratably from grant date to retirement eligible date. The corrected financial statements also include corrections for the tax effect of the share-based compensation corrections as well as the corrections' impact on our prior periods' employees profit sharing bonus plan (Note 13).

Description of Tables

The following tables represent our corrected consolidated statements of income and statements of stockholders' equity for the three and nine months ended September 30, 2019 and statements of cash flows for the nine months ended September 30, 2019, as well as our corrected consolidated balance sheet data at September 30, 2019. The values as previously reported for September 30, 2019 were derived from our Quarterly Report on Form 10-Q for the three and nine month ended September 30, 2019 filed on October 31, 2019.


	Consolidated Statements of Income
	Three Months Ended September 30, 2019							Nine Months Ended September 30, 2019
	Previously Reported		Corrections			As Corrected		Previously Reported		Corrections			As Corrected
	(in thousands, except share and per share data)
Net sales	$	113,500	$	—		$	113,500	$	346,759	$	—		$	346,759
Cost of sales	86,115		(25)		(a)	86,090		263,406		309		(a)	263,715
Gross profit	27,385		25			27,410		83,353		(309)			83,044
Selling, general and administrative expenses	12,994		(620)		(b)	12,374		37,476		1,487		(b)	38,963
Loss (gain) on disposal of assets	6		—			6		296		—			296
Income from operations	14,385		645			15,030		45,581		(1,796)			43,785
Interest income, net	9		—			9		49		—			49
Other (expense) income, net	(7)		—			(7)		(16)		—			(16)
Income before taxes	14,387		645			15,032		45,614		(1,796)			43,818
Income tax provision	560		182		(c)	742		7,924		(544)		(c)	7,380
Net income	$	13,827	$	463		$	14,290	$	37,690	$	(1,252)		$	36,438
Earnings per share:
Basic	$	0.27	$	—		$	0.27	$	0.72	$	(0.02)		$	0.70
Diluted	$	0.26	$	—		$	0.26	$	0.72	$	(0.03)		$	0.69
Cash dividends declared per common share:	$	—	$	—		$	—	$	0.16	$	—		$	0.16
Weighted average shares outstanding:
Basic	52,111,444		—			52,111,444		52,086,209		—			52,086,209
Diluted	52,722,127		—			52,722,127		52,624,583		—			52,624,583

Balance Sheet Data (at end of period):
Current assets	$	170,536	$	(252)	(c)	$	170,284
Total assets	352,152		(252)		(c)	351,900
Current liabilities	53,882		(779)		(d)	53,103
Deferred income taxes	15,034		(2,161)		(c)	12,873

Total stockholders' equity	$	279,567	$	2,688	(e)	$	282,255

(a) The share-based compensation correction to cost of sales for the three and nine months ended September 30, 2019 was approximately $0.1 million and $0.3 million, respectively.

(b) The share-based compensation correction to selling, general and administrative expenses for the three and nine months ended September 30, 2019 was approximately $0.7 million and $1.7 million, respectively. Included in the correction to selling, general and administrative expenses is a correction to our employee profit sharing bonus plan (Note 13) of approximately $0.1 million and $0.2 million for the three and nine months ended September 30, 2019, respectively.

(c) The corrections to income tax receivable and deferred tax liability are the tax effect of the share-based compensation correction.

(d) This is the cumulative reduction of our employee profit sharing bonus plan (Note 13) liability as a result of the share-based compensation correction. The prior period costs were recovered through our estimated 2019 fourth quarter payment which was paid in early 2020.

(e) This is the cumulative effect on stockholders' equity as a result of the share-based compensation correction. See table below for a description of the changes in stockholders' equity in the consolidated statements of stockholders' equity for the three and nine months ended September 30, 2019, respectively.


		Consolidated Statements of Stockholders’ Equity
		Nine Months Ended September 30, 2019
		Common Stock			Paid-in		Retained
		Shares	Amount		Capital		Earnings		Total
As Previously Reported		(in thousands)
	Balances at December 31, 2018	51,991	$	208	$	—	$	247,291	$	247,499
	Net income	—	—		—		37,690		37,690
	Stock options exercised and restricted	494	2		11,281		—		11,283
	stock awards granted
	Share-based compensation	—	—		7,858		—		7,858
	Stock repurchased and retired	(366)	(1)		(16,459)		—		(16,460)
	Dividends	—	—		—		(8,303)		(8,303)
	Balances at September 30, 2019	52,119	209		2,680		276,678		279,567
Correction Impacts
	Balances at December 31, 2018	—	—		—		1,944		1,944
	Net income	—	—		—		(1,252)		(1,252)
	Stock options exercised and restricted	—	—		—		—		—
	stock awards granted
	Share-based compensation	—	—		1,996		—		1,996
	Stock repurchased and retired	—	—		—		—		—
	Dividends	—	—		—		—		—
	Balances at September 30, 2019	—	—		1,996		692		2,688
As Corrected
	Balances at December 31, 2018	51,991	$	208	$	—	$	249,235	$	249,443
	Net income	—	—		—		36,438		36,438
	Stock options exercised and restricted	494	2		11,281		—		11,283
	stock awards granted
	Share-based compensation	—	—		9,854		—		9,854
	Stock repurchased and retired	(366)	(1)		(16,459)		—		(16,460)
	Dividends	—	—		—		(8,303)		(8,303)
	Balances at September 30, 2019	52,119	$	209	$	4,676	$	277,370	$	282,255

See descriptions of changes to net income in the consolidated statement of income for the nine months ended September 30, 2019 in the table above.


		Consolidated Statements of Stockholders’ Equity
		Three Months Ended September 30, 2019
		Common Stock			Paid-in		Retained
		Shares	Amount		Capital		Earnings		Total
As Previously Reported		(in thousands)
	Balances at June 30, 2019	52,118	$	209	$	1,586	$	262,774	$	264,569
	Net income	—	—		—		13,827		13,827
	Stock options exercised and restricted	110	—		3,598		—		3,598
	stock awards granted
	Share-based compensation	—	—		2,785		—		2,785
	Stock repurchased and retired	(109)	—		(5,289)		—		(5,289)
	Dividends	—	—		—		77		77
	Balances at September 30, 2019	52,119	209		2,680		276,678		279,567
Correction Impacts
	Balances at June 30, 2019	—	—		2,713		229		2,942
	Net income	—	—		—		463		463
	Stock options exercised and restricted	—	—		—		—		—
	stock awards granted
	Share-based compensation	—	—		(717)		—		(717)
	Stock repurchased and retired	—	—		—		—		—
	Dividends	—	—		—		—		—
	Balances at September 30, 2019	—	—		1,996		692		2,688
As Corrected
	Balances at June 30, 2019	52,118	$	209	$	4,299	$	263,003	$	267,511
	Net income	—	—		—		14,290		14,290
	Stock options exercised and restricted	110	—		3,598		—		3,598
	stock awards granted
	Share-based compensation	—	—		2,068		—		2,068
	Stock repurchased and retired	(109)	—		(5,289)		—		(5,289)
	Dividends	—	—		—		77		77
	Balances at September 30, 2019	52,119	$	209	$	4,676	$	277,370	$	282,255

See descriptions of changes to net income in the consolidated statement of income for the three months ended September 30, 2019 in the table above.


	Consolidated Statements of Cash Flows
	Nine Months Ended September 30, 2019
	Previously Reported		Corrections		As Corrected
Operating Activities	(in thousands)
Net income	$	37,690	$	(1,252)	$	36,438
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	17,627		—		17,627


Provision for credit losses on accounts receivable, net of adjustments	91		—		91
Provision for excess and obsolete inventories	1,003		—		1,003
Share-based compensation	7,858		1,996		9,854
Loss (gain) on disposition of assets	296		—		296
Foreign currency transaction (gain) loss	(17)		—		(17)
Interest income on note receivable	(19)		—		(19)
Deferred income taxes	4,208		(594)		3,614
Changes in assets and liabilities:
Accounts receivable	(2,096)		—		(2,096)
Income taxes	2,234		49		2,283
Inventories	(4,014)		—		(4,014)
Prepaid expenses and other	(513)		—		(513)
Accounts payable	782		—		782
Deferred revenue	263		—		263
Accrued liabilities and donations	5,190		(199)		4,991
Net cash provided by operating activities	70,583		—		70,583
Investing Activities
Capital expenditures	(30,831)		—		(30,831)

Proceeds from sale of property, plant and equipment	68		—		68
Investment in certificates of deposits	(6,000)		—		(6,000)
Maturities of certificates of deposits	6,000		—		6,000



Principal payments from note receivable	39		—		39
Net cash used in investing activities	(30,724)		—		(30,724)
Financing Activities


Stock options exercised	11,283		—		11,283
Repurchase of stock	(15,437)		—		(15,437)
Employee taxes paid by withholding shares	(1,023)		—		(1,023)
Cash dividends paid to stockholders	(8,303)		—		(8,303)
Net cash used in financing activities	(13,480)		—		(13,480)
Net increase in cash and cash equivalents	26,379		—		26,379
Cash and cash equivalents, beginning of year	1,994		—		1,994
Cash and cash equivalents, end of year	$	28,373	$	—	$	28,373

See descriptions of changes to net income and the balance sheet in the tables above.