| Significant Accounting Policies [Text Block] | NOTE 1. SIGNIFICANT ACCOUNTING POLICIES SUMMARY OF OPERATIONS AND BASIS OF PRESENTATION Business Description Omega Protein Corporation (the “Company”) is a nutritional products company that develops, produces and delivers healthy products throughout the world to improve the nutritional integrity of foods, dietary supplements and animal feeds. The Company operates through two industry segments: animal nutrition and human nutrition. The animal nutrition segment is comprised primarily of two subsidiaries: Omega Protein, Inc. (“Omega Protein”) and Omega Shipyard, Inc. (“Omega Shipyard”). Omega Protein, the Company’s principal operating subsidiary, is the successor to a business conducted since 1913. Omega Protein produces and markets a variety of products produced from menhaden (a herring-like species of fish found in commercial quantities in the U.S. coastal waters of the Atlantic Ocean and Gulf of Mexico), including regular grade and value-added specialty fish meals, crude and refined fish oils and fish solubles. Omega Protein’s fish meal products are primarily used as a protein ingredient in animal feed for swine, aquaculture and household pets. Fish oil is utilized primarily for animal and aquaculture feeds, as well as additives to human food products and dietary supplements. Omega Protein’s fish solubles are sold primarily to livestock feed manufacturers, aquaculture feed manufacturers and for use as an organic fertilizer. Omega Protein’s business is seasonal in nature and generally has higher revenues during the third quarter of each fiscal year. A portion of Omega Protein’s production is transferred to the human nutrition segment where it is further processed and sold. Omega Shipyard owns and operates a drydock facility in Moss Point, Mississippi that is used to provide shoreside maintenance for Omega Protein’s fishing fleet. The human nutrition segment, which operates under the name “Bioriginal”, has three primary product lines: plant and marine based specialty oils, protein products and other nutraceutical ingredients. Bioriginal is comprised primarily of four subsidiaries: Bioriginal Food & Science Corp. (“Bioriginal Food & Science”), Wisconsin Specialty Protein, L.L.C. (“WSP”), Cyvex Nutrition, Inc. (“Cyvex”) and InCon Processing, L.L.C. (“InCon”). Bioriginal Food & Science, acquired by the Company in September 2014 and headquartered in Saskatoon, Canada with additional operations in the Netherlands, is a supplier of plant and marine based specialty oils to the food and nutraceutical industries. See Note 2 – Acquisition of Bioriginal Food & Science Corp. for additional information related to the Company’s acquisition of Bioriginal Food & Science. WSP, acquired by the Company in February 2013, is a manufacturer and marketer of specialty dairy proteins and other related products headquartered in Madison, Wisconsin and operates a production facility in Reedsburg, Wisconsin. See Note 3 – Acquisition of Wisconsin Specialty Protein, L.L.C. for additional information related to the Company’s acquisition of WSP. Cyvex is located in Irvine, California and is an ingredient provider in the nutraceutical industry. InCon is located in Batavia, Illinois and is a specialty processor that utilizes molecular distillation technology to concentrate Omega-3 fish oils and, subject to outside demand and excess capacity, a variety of other compound products for third-party tolling customers. On March 8, 2016, as part of its strategy to focus on non-concentrated omega-3 oils instead of concentrated omega-3 oils, the Company decided to exit the Batavia, Illinois oil concentration facility and relocate certain assets from this facility to other Company facilities. In order to satisfy current customer obligations, the Company plans to continue to operate this facility on a limited basis through the middle of 2017. As of December 31, 2015, the Company recognized $4.5 million in losses relating to the impairment of property, plant and equipment as well as estimated decommissioning costs. For additional information see Note 4 – Plant Closure. In addition to the above recognized losses, to the extent we are unable to recover the remaining carrying value of our assets at the facility, we could have additional impairment charges. The remaining carrying value of these assets is $2.8 million. Additionally, we expect to incur additional costs associated with ongoing employee severance expenses and ongoing cost not attributable to future production such as clean-up and disassembly. Consolidation The consolidated financial statements include the accounts of Omega Protein Corporation and its wholly owned subsidiaries. All significant intercompany accounts and transactions have been eliminated in consolidation. Financial Statement Preparation The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the Company’s financial statements and the accompanying notes and the reported amounts of revenues and expenses during the reporting period. Actual amounts, when available, could differ from those estimates and those differences could have a material effect on the financial statements. As noted in the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2015, the Company revised the December 31, 2014 consolidated balance sheet to correct for the classification of $0.4 million of accounts payable to other long-term liabilities. This revision was not considered to be material, individually or in the aggregate, to previously issued financial statements. The revisions had no effect on the results of operations (net or comprehensive income) or financial condition (stockholders’ equity). Revenue Recognition The Company derives revenue principally from the sales of a variety of protein and oil products derived from menhaden. In addition and as a result of its acquisitions of Cyvex, InCon, WSP and Bioriginal Food & Science, the Company’s revenues include sales of dietary supplements and food ingredients and products. The Company recognizes revenue for the sale of its products when price is established, collectability is reasonably assured and risk and rewards of ownership of its products and title are transferred to the customer. Shipping and Handling Amounts billed to customers associated with shipping and handling are included in revenues and the related costs are included in cost of sales. For 2015, 2014 and 2013, $10.3 million, $10.3 million and $9.4 million of shipping and handling costs are included in cost of sales, respectively. Cash and Cash Equivalents The Company considers cash in banks and short-term investments with original maturities of three months or less as cash and cash equivalents. Allowances for Doubtful Accounts The Company’s receivables are recorded at net realizable value. The Company maintains allowances for doubtful accounts for estimated losses resulting from the inability of the Company’s customers to make required payments. The Company considers the following factors when determining if collection is reasonably assured: customer credit worthiness, past transaction history with the customer, and changes in customer payment terms. If the Company has no previous experience with the customer, the Company typically obtains reports from credit organizations to ensure that the customer has a history of paying its creditors. The Company may also request financial information, including financial statements or other documents (e.g., bank statements), or may obtain a letter of credit from the customer to ensure that the customer has the means of making payment. If the financial condition of the Company’s customers were to deteriorate, adversely affecting their ability to make payments, additional allowances would be required. Inventories Omega Protein’s fishing season runs from mid-April to the first of November in the Gulf of Mexico and from the beginning of May into November or December in the Atlantic. Government regulations generally preclude Omega Protein from fishing during the off-seasons. Omega Protein’s inventory cost system considers all costs associated with an annual fish catch and its processing, both variable and fixed, including both costs incurred during the off-season and during the fishing season. Omega Protein’s costing system allocates cost to inventory quantities on a per unit basis as calculated by a formula that considers total estimated inventoriable costs for a fishing season (including off-season costs) to total estimated units of production and the relative fair market value of the individual products produced. Omega Protein adjusts the cost of sales, off-season costs and inventory balances at the end of each quarter based on revised estimates of total inventoriable costs and units of production. Omega Protein’s lower-of-cost-or-market-value analyses at year-end and at interim periods compare the total estimated per unit production cost of Omega Protein’s expected production to the projected per unit market prices of the products. The impairment analyses involve estimates of, among other things, future fish catches and the related cost, and expected commodity prices for the fish products as well as projected purchase commitments from customers. These estimates, which management believes are reasonable and supportable, involve estimates of future activities and events which are inherently imprecise and from which actual results may differ materially from the Company’s estimates. During the off-seasons, in connection with the upcomin g fishing seasons, Omega Protein incurs costs (e.g., plant and vessel related labor, utilities, rent, repairs, and depreciation) that are directly related to Omega Protein’s infrastructure. These costs accu mulate in inventory and are applied as elements of the cost of production of Omega Protein’s products throughout the fishing season ratably based on Omega Protein’s monthly units of production and the expected total units of production for the season. Any costs incurred during abnormal downtime related to activity at Omega Protein’s plants are charged to expense as incurred. The human nutrition segment generally uses FIFO for inventory it manufactures and for nutraceutical inventory. The Company’s inventory is stated at the lower of cost and net realizable value. Business Interruption Insurance Proceeds The Company recorded a receivable in December 2015 of approximately $0.3 million in proceeds, net of deductible, from its business interruption insurance coverage provider related to an incident causing downtime at one of its Gulf of Mexico production facilities in July 2014. The proceeds were calculated based on lost inventory production. Given that the Company experienced a slight decrease in production as a result of the incident some of which would have been sold in 2015, the proceeds related to lost inventory production were recognized as an increase in revenues. Insurance Omega Protein carries insurance for certain losses relating to its vessels and Jones Act liabilities for employees aboard its vessels. Omega Protein records gross insurance reserves by using an estimation process that considers Company-specific and industry information as well as management’s experience, assumptions and consultation with counsel. These reserves include estimated settlement costs. In addition, insurance receivables are recorded for those portions of the claims in excess of Company insurance policy annual aggregate deductibles and stop losses. Management’s current estimated range of liabilities related to such cases is based on claims for which management can estimate the amount and range of loss. For those claims where there may be a range of loss, Omega Protein has recorded an estimated liability inside that range, based on management’s experience, assumptions and consultation with counsel. The process of estimating and establishing reserves for these claims is inherently uncertain and the actual ultimate net cost of a claim may vary materially from the estimated amount reserved. There is some degree of inherent variability in assessing the ultimate amount of losses associated with these claims due to the extended period of time that transpires between when a claim occurs and the full settlement of the claim. This variability is generally greater for Jones Act claims by vessel employees. Omega Protein evaluates loss estimates associated with claims and losses as additional information becomes available and revises its estimates. Although management believes estimated reserves related to these claims are adequately recorded, it is possible that actual results could significantly differ from the recorded reserves, which could materially impact Omega Protein’s business, financial condition or results of operations. The Company is primarily self-insured for health insurance. The Company purchases individual stop loss coverage with a large deductible. As a result, the Company is primarily self-insured for claims and associated costs up to the amount of the deductible, with claims in excess of the deductible amount being covered by insurance. Expected claims estimates are based on health care trend rates and historical claims data; actual claims may differ from those estimates. The Company evaluates its claims experience related to this coverage with information obtained from its risk management consultants. Assumptions used in preparing these insurance estimates are based on factors such as claims settlement patterns, claim development trends, claim frequency and severity patterns, inflationary trends and data reasonableness. Together these factors will generally affect the analysis and determination of the “best estimate” of the projected ultimate claim losses. The results of these evaluations are used to both analyze and adjust the Company’s insurance loss reserves. In addition to the above insurance policies, the Company maintains insurance coverage for property, inventory, workers compensation, general liability, product liability and other items. The nature and extent of the insurance coverage varies by line of policy. Research and Development Energy Swap Agreements The Company does not enter into financial instruments for trading or speculative purposes. During 2015, 2014 and 2013, Omega Protein entered into energy swap agreements to manage portions of its cash flow exposure related to the volatility of natural gas, diesel and fuel oil energy prices for its fish meal and fish oil production operations. The swaps effectively fix pricing for the quantities listed below during the consumption periods.
Energy Swap Consumption Period Quantity Price Per Unit Energy Swap Asset/(Liability ) as of December 31, Deferred Tax Asset/(Liability) as of December 31, 2015
(in thousands)
Diesel - NYMEX Heating Oil Swap May - November, 2016 2,418,679 Gallons $ 2.23 $ (2,319 ) $ 812
Natural Gas - NYMEX Natural Gas Swap April – October, 2016 374,850 MMBTUs $ 3.05 (207 ) 72
Propane – Natural Gas Liquids Swap June - November, 2016 1,902,590 Gallons $ 0.58 (322 ) 113
Diesel - NYMEX Heating Oil Swap May - November, 2017 716,560 Gallons $ 1.69 (165 ) 58
Natural Gas - NYMEX Natural Gas Swap April – October, 2017 187,400 MMBTUs $ 2.97 (45 ) 15
$ (3,058 ) $ 1,070
Energy Swap Consumption Period Quantity Price Per Unit Energy Swap Asset/(Liability) as of December 31 Deferred Tax Asset/(Liability) as of December
(in thousands)
Diesel - NYMEX Heating Oil Swap May - November, 2015 2,333,848 Gallons $ 2.75 $ (2,097 ) $ 734
Natural Gas - NYMEX Natural Gas Swap April – October, 2015 114,000 MMBTUs $ 4.09 (125 ) 44
Propane – Natural Gas Liquids Swap June - November, 2015 1,024,800 Gallons $ 0.86 (346 ) 121
Diesel - NYMEX Heating Oil Swap May - November, 2016 1,333,464 Gallons $ 2.50 (679 ) 238
Propane – Natural Gas Liquids Swap June - November, 2016 341,600 Gallons $ 0.67 (41 ) 14
$ (3,288 ) $ 1,151 As of December 31, 2015, Omega Protein has recorded a long-term liability of $0.2 million, net of the current portion included in other current liabilities of $2.9 million, to recognize the fair value of energy swap derivatives, and has also recorded a deferred tax asset of $1.1 million associated therewith. As of December 31, 2014, Omega Protein has recorded a long-term liability of $0.7 million net of the current portion included in other current liabilities of $2.6 million to recognize the fair value of energy swap derivatives, and has also recorded a deferred tax asset of $1.2 million associated therewith. The effective portion of the change in fair value from inception to December 31, 2015 is recorded in “accumulated other comprehensive loss” in the Company’s consolidated financial statements. The following table illustrates the changes recorded, net of tax, in accumulated other comprehensive loss resulting from the energy swap agreements.
(in thousands)
2015 2014
Balance at January 1, $ (2,137 ) $ 179
Net loss (gain), net of tax, reclassified to unallocated inventory cost pool 2,083 34
Net change associated with current period swap transactions, net of tax, (1,958 ) (2,350 )
Balance at December 31, $ (2,012 ) $ (2,137 ) The $2.0 million reported in accumulated other comprehensive loss as of December 31, 2015 will be reclassified to the unallocated inventory cost pool in the period when the energy consumption takes place. The amount to be reclassified, net of taxes, during the next 12 months is expected to be approximately $1.9 million. The aggregate fair value of derivative instruments in gross liability positions as of December 31, 2015 and December 31, 2014 was $3.1 million and $3.3 million, respectively. These amounts represent the maximum exposure to loss at the reporting date as a result of all of the counterparties failing to perform as contracted.
As of December 31, 2015 (in thousands) Gross Amounts of Recognized Assets (Liabilities) Gross Amounts of Assets (Liabilities) Offset Net Amounts of Assets (Liabilities) Presented in the Balance Sheet
Energy swap derivatives – liability position $ (3,058 ) $ — $ (3,058 )
As of December 31, 2014 (in thousands) Gross Amounts of Recognized Assets (Liabilities) Gross Amounts of Assets (Liabilities) Offset Net Amounts of Assets (Liabilities) Presented in the Balance Sheet
Energy swap derivatives – liability position $ (3,288 ) $ — $ (3,288 ) If, at any time, the swaps are determined to be ineffective due to changes in the Company’s energy usage, price correlations or underlying hedge agreements or assumptions, the fair value of the portion of the energy swaps determined to be ineffective will be recognized as a gain or loss in cost of sales for the applicable period. For 2015 and 2014, the Company recognized a gain of $0.1 million and $0 million, respectively, to cost of sales resulting from transactions associated with the ineffectiveness of diesel energy swaps. The fair value of all outstanding derivatives is determined using a model with inputs that are observable in the market or can be derived from or corroborated by observable data (level 2). The determination of the fair values above incorporates various factors required under FASB ASC 820-10. These factors include not only the credit standing of the counterparties involved and the impact of credit enhancements (such as cash deposits, letters of credit and priority interests), but also the impact of the Company’s nonperformance risk on its liabilities. The fair value of the diesel, propane and natural gas energy swaps is derived from the underlying market price of similar instruments at a specific valuation date. The underlying market price for the diesel and natural gas swaps is based upon the NYMEX Futures Curve. The underlying market price for propane is based upon the Mont Belvieu Propane futures curve. These methods rely upon quoted prices for similar instruments in active markets. Subsequent to December 31, 2015, Omega Protein entered into the following energy swap agreements:
Energy Swap Consumption Period Quantity Price Per Unit
Diesel - NYMEX Heating Oil Swap May – November, 2016 518,100 Gallons $ 1.08
Propane – Natural Gas Liquids Swap June – November, 2016 658,200 Gallons $ 0.38
Diesel - NYMEX Heating Oil Swap May – November, 2017 1,802,000 Gallons $ 1.32
Natural Gas - NYMEX Natural Gas Swap April – October, 2017 125,000 MMBTUs $ 2.59
Propane – Natural Gas Liquids Swap June – November, 2017 1,464,800 Gallons $ 0.40 Income Taxes The Company utilizes the asset and liability method to account for income taxes. This method requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of existing temporary differences between the financial reporting and tax reporting basis of assets and liabilities, and operating loss and tax credits carryforwards for tax purposes. The Company records a valuation allowance to reduce the deferred tax assets to the amount that is more likely than not to be realized. The Company believes that the deferred tax assets recorded as of December 31, 2015, net of the valuation allowance, are realizable through future reversals of existing taxable temporary differences and future taxable income. If the Company were to subsequently determine that it would be able to realize deferred tax assets in the future in excess of the net recorded amount, the adjustment would increase earnings for the period in which such determination was made. The Company will continue to assess the adequacy of the valuation allowance on a quarterly basis. Any changes to the estimated valuation allowance could be material to the consolidated financial condition and results of operations. Accounting for the Impairment of Long-Lived Assets The Company evaluates at each balance sheet date the continued appropriateness of the carrying value of its long-lived assets, including its long-term receivables and property, plant and equipment. The Company reviews long-lived assets for impairment when events or changes in circumstances indicate that the carrying amount of any such assets or grouping of assets may not be recoverable. The Company has grouped certain assets together (primarily marine vessels) for impairment testing on a fleet basis. If indicators of impairment are present, management evaluates the undiscounted cash flows estimated to be generated by those assets or grouping of assets compared to the carrying amount of those items. The net carrying value of assets or grouping of assets not recoverable is reduced to fair value. The Company considers continued operating losses, or significant and long-term changes in business conditions, to be its primary indicators of a potential impairment. Property, Equipment and Depreciation Property and equipment additions are recorded at cost. Depreciation of property and equipment is computed by the straight-line method at rates expected to amortize the cost of property and equipment, net of salvage value, over their estimated useful lives. Estimated useful lives, determined at the date of acquisition, of new assets acquired are based primarily on the review of existing property and equipment as well as other factors. Estimated useful lives are as follows:
Useful Lives (years)
Stainless steel equipment 25
Fishing vessels and fish processing plants 15 - 20
Machinery, equipment, furniture and fixtures and other 3 - 10 Replacements and major improvements are capitalized and amortized over a period of 5 to 15 years. Upon sale or retirement, the costs and related accumulated depreciation are eliminated from the accounts. Any resulting gains or losses are included in the statement of comprehensive income. The Company reviews its assets for impairment when events or changes in circumstances indicate that an asset’s carrying amounts may not be recoverable. In connection with this review, assets are grouped at the lowest level at which identifiable cash flows are largely independent of other asset groupings. Among others, the Company considers continued operating losses, or significant and long-term changes in business conditions, to be indicators of a potential impairment. If the estimated undiscounted future cash flows are not sufficient to support the asset’s recorded value, an impairment charge is recognized to reduce the carrying amount of the long-lived asset to its estimated fair value. Plant Closure Property, plant and equipment impairments related to the closure of the Cameron, Louisiana and Batavia, Illinois plants are made in accordance with the impairment of long-lived assets policy. Employee severance related charges have been recognized to the extent that the amount is probable, measurable and no-future service is expected or for those still employed, recognized pro-rata over the remaining service period. Ongoing clean-up and dismantlement costs will be recognized as incurred unless obligated and measureable by a contractual commitment. See Note 4 – Plant Closure for additional information related to the charges incurred. Acquisitions, Goodwill and Other Intangible Assets Goodwill is measured as the excess of the cost of an acquisition over the sum of the amounts assigned to the fair value of tangible and intangible assets acquired less liabilities assumed. The determination of the fair value of the intangible assets acquired involves certain judgments and estimates. These judgments can include, but are not limited to, the cash flows that an asset is expected to generate in the future and the appropriate weighted average cost of capital. The Company does not amortize goodwill or indefinite-lived intangible assets but performs tests for impairment annually, or when indications of potential impairment exist, utilizing a fair value approach at the reporting unit level. The Company determines fair value using widely accepted valuation techniques, including the income approach which estimates the fair value of its reporting units based on the future discounted cash flows, and the market approach which estimates the fair value of its reporting units based on comparable market prices. In testing for a potential impairment of goodwill, the Company estimates the fair value of its reporting units to which goodwill relates and compares it to the carrying value (book value) of the assets and liabilities related to those businesses. All of the Company’s goodwill and other intangible assets are the result of acquisitions in the human nutrition segment. This segment is comprised of three reporting units, 1) InCon and Cyvex, 2) WSP and 3) Bioriginal Food & Science. The Company amortizes other intangible assets with determinable lives over their estimated useful lives. The Company records an impairment charge on these assets when it determines that their carrying value may not be recoverable. The carrying value is not recoverable if it exceeds the undiscounted future cash flows resulting from the use of the asset and its eventual disposition. When there is existence of one or more indicators of impairment, the Company measures any impairment of intangible assets based on a projected discounted cash flow method using a discount rate determined by the Company’s management to be commensurate with the risk inherent in its business model. The Company’s estimates of future cash flows attributable to its other intangible assets require significant judgment based on the Company’s historical and anticipated results and are subject to many factors. See Note 10 - Goodwill and Other Intangible Assets for more information about goodwill and other intangible assets. Pension Plans The Company records the overfunded or underfunded status of defined benefit pension and postretirement plans as an asset or liability in its statement of financial position and changes in that funded status in the year in which the changes occur through other comprehensive income. The Company also measures the funded status of a plan as of the date of its year-end statement of financial position. The Company’s policy is to fund its pension plan at amounts not less than the minimum requirements of the Employee Retirement Income Security Act of 1974 (“ERISA”). In 2002, the Board of Directors authorized a plan to freeze the Company’s pension plan in accordance with ERISA rules and regulations so that new employees, hired after July 31, 2002, are not eligible to participate in the pension plan and further benefits no longer accrue for existing participants. The freezing of the pension plan had the effect of vesting all existing participants in their pension benefits in the plan. See Note 15 – Benefit Plans for additional information related to the Company’s pension plans. Comprehensive Income (Loss) Comprehensive income (loss) is defined as change in equity of a business enterprise during a period from transactions and other events and circumstances from non-owner sources, including foreign currency translation adjustments, interest and energy swap transactions, and pension benefits adjustments, including recognition of actuarial losses. The Company presents comprehensive income (loss) in its consolidated statements of comprehensive income and consolidated statements of stockholders’ equity. Accumulated Comprehensive Loss The components of accumulated other comprehensive loss included in stockholders’ equity are as follows: Changes in Accumulated Other Comprehensive Loss by Component
Gains and Losses On Cash Flow Hedges Defined Benefit Pension Items Foreign currency Translation adjustment Total
Beginning balance December 31, 2014 $ (2,137 ) $ (7,804 ) $ (915 ) $ (10,856 )
Other comprehensive loss before reclassifications (1,958 ) (1,311 ) (1,776 ) (5,045 )
Amounts reclassified from accumulated other comprehensive loss (a) 2,083 (b) 780 — 2,863
Net current-period other comprehensive income 125 (531 ) (1,776 ) (2,182 )
Ending balance December 31, 2015 $ (2,012 ) $ (8,335 ) $ (2,691 ) $ (13,038 )
(a) This accumulated other comprehensive income component is reclassified to the unallocated inventory cost pool in the period when the energy consumption takes place.
(b) This accumulated other comprehensive income component is included in the computation of net periodic pension costs as amortization of actuarial loss which are explained in more detail in Note 15. Changes in Accumulated Other Comprehensive Loss by Component
Gains and Losses On Cash Flow Hedges Defined Benefit Pension Items Foreign currency Translation adjustment Total
Beginning balance December 31, 2013 $ 179 $ (6,387 ) $ — $ (6,208 )
Other comprehensive loss before reclassifications (2,350 ) (2,010 ) (915 ) (5,275 )
Amounts reclassified from accumulated other comprehensive loss (c) 34 (d) 593 — 627
Net current-period other comprehensive income (2,316 ) (1,417 ) (915 ) (4,648 )
Ending balance December 31, 2014 $ (2,137 ) $ (7,804 ) $ (915 ) $ (10,856 )
(c) This accumulated other comprehensive loss component is reclassified to the unallocated inventory cost pool in the period when the energy consumption takes place.
(d) This accumulated other comprehensive loss component is included in the computation of net periodic pension costs as amortization of actuarial loss which are explained in more detail in Note 15. Concentrations of Credit Risk Financial instruments that potentially subject the Company to concentrations of credit risk consist principally of cash and trade accounts receivable. The Company’s customer base generally remains consistent from year to year. The Company performs ongoing credit evaluations of its customers and generally does not require material collateral. The Company maintains reserves for potential credit losses and such losses have historically been within management’s expectations. At December 31, 2015, the Company had cash deposits in a few major banks. Earnings per Share Basic earnings per share is calculated by dividing net income allocated to common shares outstanding by the weighted average number of shares of common stock outstanding. Diluted earnings per share assumes the exercise of stock options provided the effect is not anti-dilutive. The Company grants certain incentive compensation awards, including restricted stock, to employees and non-employee directors that are considered to be participating securities. Due to the presence of participating securities, the Company has calculated its earnings per share using the two-class method. See Note 12 – Reconciliation of Basic and Diluted per Share Data. Stock-Based Compensation The Company has a stock-based comp |
