Error Correction

3 Months Ended

Mar. 31, 2020

Accounting Changes and Error Corrections [Abstract]

Error CorrectionWe have corrected herein our consolidated financial statements as of March 31, 2019 and for the three months ended March 31, 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, statements of stockholders' equity, and statements of cash flows for the three months ended March 31, 2019, as well as our corrected consolidated balance sheet at March 31, 2019. The values as previously reported for March 31, 2019 were derived from our Quarterly Report on Form 10-Q for the three month ended March 31, 2019 filed on May 2, 2019.


	Consolidated Statements of Income
	Three Months Ended March 31, 2019
	Previously Reported		Corrections			As Corrected
	(in thousands, except share and per share data)
Net sales	$	113,822	$	—		$	113,822
Cost of sales	88,029		363		(a)	88,392
Gross profit	25,793		(363)			25,430
Selling, general and administrative expenses	11,001		2,676		(b)	13,677
Loss (gain) on disposal of assets	284		—			284
Income from operations	14,508		(3,039)			11,469
Interest income, net	9		—			9
Other (expense) income, net	(26)		—			(26)
Income before taxes	14,491		(3,039)			11,452
Income tax provision	3,589		(894)		(c)	2,695
Net income	$	10,902	$	(2,145)		$	8,757
Earnings per share:
Basic	$	0.21	$	(0.04)		$	0.17
Diluted	$	0.21	$	(0.04)		$	0.17

Weighted average shares outstanding:
Basic	51,992,150		—			51,992,150
Diluted	52,369,660		—			52,369,660

Balance Sheet Data (at end of period):
Current assets	$	146,798	$	(287)	(c)	$	146,511
Total assets	319,525		(287)		(c)	319,238
Current liabilities	44,000		(918)		(d)	43,082
Deferred income taxes	12,713		(2,545)		(c)	10,168
Other long-term liabilities	3,442		—			3,442
Total stockholders' equity	$	259,370	$	3,176	(e)	$	262,546

(a) The share-based compensation correction to cost of sales for the quarter ended March 31, 2019 was approximately $0.4 million.

(b) The share-based compensation correction to selling, general and administrative expenses for the quarter ended March 31, 2019 was approximately $3.0 million. Included in the correction to selling, general and administrative expenses is a correction to our employee profit sharing bonus plan (Note 13) of approximately $0.4 million for the quarter ended March 31, 2019.

(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 result of the share-based compensation correction. See table below for a descriptions of the changes in stockholders' equity in the consolidated statements of stockholders' equity for the quarter ended March 31, 2019.


		Consolidated Statements of Stockholders’ Equity
		Common Stock						Paid-in		Retained
		Shares		Amount		Capital		Earnings		Total
As Previously Reported			(in thousands)
	Balance at December 31, 2018	51,991		$	208	$	—	$	247,291	$	247,499
	Net income	—		—		—		10,902		10,902
	Stock options exercised and restricted	237		1		4,009		—		4,010
	stock awards granted
	Share-based compensation	—		—		2,030		—		2,030
	Stock repurchased and retired	(129)		(1)		(5,070)		—		(5,071)

	Balance at March 31, 2019	52,099		208		969		258,193		259,370
Correction Impacts
	Balance at December 31, 2018	—		—		—		1,944		1,944
	Net income	—		—		—		(2,145)		(2,145)
	Stock options exercised and restricted	—		—		—		—		—
	stock awards granted
	Share-based compensation	—		—		3,377		—		3,377
	Stock repurchased and retired	—		—		—		—		—

	Balance at March 31, 2019	—		—		3,377		(201)		3,176
As Corrected
	Balance at December 31, 2018	51,991		$	208	$	—	$	249,235	$	249,443
	Net income	—		—		—		8,757		8,757
	Stock options exercised and restricted	237		1		4,009		—		4,010
	stock awards granted
	Share-based compensation	—		—		5,407		—		5,407
	Stock repurchased and retired	(129)		(1)		(5,070)		—		(5,071)

	Balance at March 31, 2019	52,099		$	208	$	4,346	$	257,992	$	262,546

See descriptions of changes to net income in the consolidated statement of income for the three months ended March 31, 2019 in the table above.


	Consolidated Statements of Cash Flows
	Three Months Ended March 31, 2019
	Previously Reported		Corrections		As Corrected
Operating Activities	(in thousands)
Net income	$	10,902	$	(2,145)	$	8,757
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	5,914		—		5,914


Provision for losses on accounts receivable, net of adjustments	115		—		115
Provision for excess and obsolete inventories	357		—		357
Share-based compensation	2,030		3,377		5,407
Loss (gain) on disposition of assets	284		—		284
Foreign currency transaction (gain) loss	(16)		—		(16)
Interest income on note receivable	(6)		—		(6)
Deferred income taxes	1,887		(978)		909
Changes in assets and liabilities:
Accounts receivable	(4,725)		—		(4,725)
Income taxes	1,348		84		1,432
Inventories	2,678		—		2,678
Prepaid expenses and other	(561)		—		(561)
Accounts payable	(5,730)		—		(5,730)
Deferred revenue	25		—		25
Accrued liabilities and donations	411		(338)		73
Net cash provided by operating activities	14,913		—		14,913
Investing Activities
Capital expenditures	(8,772)		—		(8,772)

Proceeds from sale of property, plant and equipment	52		—		52





Principal payments from note receivable	17		—		17
Net cash used in investing activities	(8,703)		—		(8,703)
Financing Activities


Stock options exercised	4,010		—		4,010
Repurchase of stock	(4,483)		—		(4,483)
Employee taxes paid by withholding shares	(588)		—		(588)

Net cash used in financing activities	(1,061)		—		(1,061)
Net decrease in cash and cash equivalents	5,149		—		5,149
Cash and cash equivalents, beginning of year	1,994		—		1,994
Cash and cash equivalents, end of year	$	7,143	$	—	$	7,143

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