XML 20 R10.htm IDEA: XBRL DOCUMENT v3.22.2
STOCKHOLDERS' EQUITY
 6 Months Ended
Jun. 30, 2022
Stockholders' Equity Note [Abstract]  
STOCKHOLDERS' EQUITY STOCKHOLDERS’ EQUITY
STOCK-BASED COMPENSATION
The Company’s results for the three and six months ended June 30, 2022 and 2021 reflected the following stock-based compensation cost, and such compensation cost had the following effects on net earnings:
Increase/(Decrease) for theIncrease/(Decrease) for the
Three Months Ended June 30,Six Months Ended June 30,
2022202120222021
Cost of sales$277 $444 $676 $744 
Operating expenses3,535 2,849 6,213 5,170 
Net earnings(2,933)(2,547)(5,312)(4,569)
As allowed by ASC 718, the Company has made an estimate of expected forfeitures based on its historical experience and is recognizing compensation cost only for those stock-based compensation awards expected to vest.
The Company’s stock incentive plans allow for the granting of stock awards and options to purchase common stock. Both incentive stock options and nonqualified stock options can be awarded under the plans. No option will be exercisable for longer than ten years after the date of grant. The Company has approved and reserved a number of shares to be issued upon exercise of the outstanding options that is adequate to cover all exercises. As of June 30, 2022, the plans had 534,120 shares available for future awards. Compensation expense for stock options and stock awards is recognized on a straight-line basis over the vesting period, generally three years for stock options, three to four years for employee restricted stock awards, three years for employee
performance share awards, and three years for non-employee director restricted stock awards. Certain awards provide for accelerated vesting if there is a change in control (as defined in the plans) or other qualifying events.
Option activity for the six months ended June 30, 2022 and 2021 is summarized below:
For the six months ended June 30, 2022Shares (000s)Weighted
Average
Exercise
Price		Aggregate
Intrinsic
Value		Weighted
Average
Remaining
Contractual
Term
Outstanding as of December 31, 2021867 $88.19 $69,711 
Granted109 138.07 
Exercised(18)72.74 
Forfeited(6)120.36 
Canceled— — 
Outstanding as of June 30, 2022952 $93.99 $34,907 6.4
Exercisable as of June 30, 2022666 $81.11 $32,409 5.4
For the six months ended June 30, 2021 Shares (000s)Weighted
Average
Exercise
Price		Aggregate
Intrinsic
Value		Weighted
Average
Remaining
Contractual
Term
Outstanding as of December 31, 2020858 $80.58 $29,735 
Granted129 119.12 
Exercised(58)65.95 
Forfeited(2)101.38 
Canceled(1)74.57 
Outstanding as of June 30, 2021926 $86.85 $41,107 6.8
Exercisable as of June 30, 2021580 $73.72 $33,398 5.6
ASC 718 requires companies to measure the cost of employee services received in exchange for an award of equity instruments based on the grant-date fair value of the award. The fair value of each option grant is estimated on the date of the grant using the Black-Scholes option-pricing model with the following weighted average assumptions: dividend yields of 0.5% and 0.5%; expected volatilities of 31% and 33%; risk-free interest rates of 2.0% and 0.5%; and expected lives of 4.9 years and 4.9 years, in each case for the six months ended June 30, 2022 and 2021, respectively.
The Company used a projected expected life for each award granted based on historical experience of employees’ exercise behavior. Expected volatility is based on the Company’s historical volatility levels. Dividend yields are based on the Company’s historical dividend yields. Risk-free interest rates are based on the implied yields currently available on U.S. Treasury Zero coupon issues with a remaining term equal to the expected life.
Other information pertaining to option activity during the three and six months ended June 30, 2022 and 2021 is as follows:
 Three Months Ended
June 30,		Six Months Ended
June 30,
 2022202120222021
Weighted-average fair value of options granted$— $34.42 $40.26 $33.11 
Total intrinsic value of stock options exercised ($000s)$495 $1,814 $1,149 $3,731 
Non-vested restricted stock activity for the six months ended June 30, 2022 and 2021 is summarized below:
Six Months Ended June 30,
20222021
Shares (000s)Weighted
Average Grant
Date Fair
Value		Shares (000s)Weighted
Average Grant
Date Fair
Value
Non-vested balance as of December 31166 $99.70 159 $90.71 
Granted34 137.74 37 119.30 
Vested(77)80.84 (13)87.33 
Forfeited(3)116.73 (2)85.60 
Non-vested balance as of June 30120 $122.03 181 $96.89 

Non-vested performance share activity for the six months ended June 30, 2022 and 2021 is summarized below:
Six Months Ended June 30,
20222021
Shares (000s)Weighted
Average Grant
Date Fair
Value		Shares (000s)Weighted
Average Grant
Date Fair
Value
Non-vested balance as of December 3169 $110.72 71$91.99 
Granted39 114.22 36108.74
Vested(35)53.17 (24)70.64
Forfeited(3)84.09 (11)74.57
Non-vested balance as of June 3070 $127.69 72$110.22 

The performance share (“PS”) awards provide the recipients the right to receive a certain number of shares of the Company’s common stock in the future, subject to an EBITDA performance hurdle, where vesting is dependent upon the Company achieving a certain EBITDA percentage growth over the performance period, and relative total shareholder return (TSR) where vesting is dependent upon the Company’s TSR performance over the performance period relative to a comparator group consisting of the Russell 2000 index constituents. Expense is measured based on the fair value at the date of grant utilizing a Black-Scholes methodology to produce a Monte-Carlo simulation model which allows for the incorporation of the performance hurdles that must be met before the PS vests. The assumptions used in the fair value determination were risk free interest rates of 1.8% and 0.2%; dividend yields of 0.5% and 0.6%; volatilities of 32% and 33%; and initial TSR’s of -15.7% and 11.7%, in each case for the six months ended June 30, 2022 and 2021, respectively. Expense is estimated based on the number of shares expected to vest, assuming the requisite service period is rendered and the probable outcome of the performance condition is achieved.  The estimate is revised if subsequent information indicates that the actual number of shares likely to vest differs from previous estimates. Expense is ultimately adjusted based on the actual achievement of service and performance targets. The PS will cliff vest 100% at the end of the third year following the grant in accordance with the performance metrics set forth.
As of June 30, 2022 and 2021, there were $19,988 and $19,796, respectively, of total unrecognized compensation costs related to non-vested share-based compensation arrangements granted under the plans. As of June 30, 2022, the unrecognized
compensation cost is expected to be recognized over a weighted-average period of approximately 1.7 years. The Company estimates that share-based compensation expense for the year ended December 31, 2022 will be approximately $13,000.
REPURCHASE OF COMMON STOCK
The Company's Board of Directors has approved a stock repurchase program. The total authorization under this program is 3,763,038 shares. Since the inception of the program in June 1999, a total of 3,068,905 shares have been purchased. The Company’s prior presentation of reflecting treasury stock separately within stockholders’ equity has been adjusted to conform to the presentation prescribed by the State of Maryland, where the Company is incorporated. In connection therewith, adjustments to balances previously reflected as treasury stock of $8,472, $2,210, and $7,873 as of June 30, 2021, March 31, 2021, and December 31, 2020, respectively, were made to the condensed consolidated statements of changes in stockholders’ equity and prior references to “Treasury shares purchased” were updated to “Repurchases of common stock”, accordingly. There was no impact to total stockholders’ equity in any of the years presented as a result of these updates. The Company intends to acquire shares from time to time at prevailing market prices if and to the extent it deems it is advisable to do so based on its assessment of corporate cash flow, market conditions and other factors. The Company also repurchases shares from employees in connection with settlement of transactions under the Company's equity incentive plans. During the six months ended June 30, 2022 and 2021, the Company purchased 250,661 and 86,124 shares, respectively, from open market purchases and from employees on a net-settlement basis to provide cash to employees to cover the associated employee payroll taxes. These shares were purchased at an average cost of $140.42 and $125.81, respectively.