Stockholders' Equity | 12 Months Ended |
Dec. 31, 2013 |
Stockholders' Equity | ' |
Stockholders' Equity | ' |
NOTE 9—Stockholders’ Equity |
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Changes in the components of stockholders’ equity are as follows (in thousands, except per share amounts): |
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| | Common | | Class A | | Additional | | Retained | | Accumulated | |
Stock | Common | Paid-in | Earnings | Other |
| Stock | Capital | | Comprehensive |
| | | | Loss |
Balance at December 31, 2010 | | $ | 1,564 | | $ | 1,660 | | $ | 2,721 | | $ | 106,432 | | $ | (1,626 | ) |
Cumulative effect of accounting change for adoption of ASU 2010-16 | | — | | — | | — | | 187 | | — | |
Balance at January 1, 2011 | | 1,564 | | 1,660 | | 2,721 | | 106,619 | | (1,626 | ) |
Net earnings | | — | | — | | — | | 5,359 | | — | |
Dividends paid, $0.12 per share | | — | | — | | — | | (3,888 | ) | — | |
Issuance of nonvested stock awards, net of forfeitures | | 16 | | — | | (16 | ) | — | | — | |
Stock-based compensation | | — | | — | | 905 | | — | | — | |
Unrealized gain on interest rate swap, net of income tax expense of $179 | | — | | — | | — | | — | | 272 | |
Change in net actuarial loss and prior service cost, net of income tax benefit of $609 | | — | | — | | — | | — | | (925 | ) |
Unrealized loss on available-for-sale securities, net of income tax benefit of $4 | | — | | — | | — | | — | | (5 | ) |
Repurchase and retirement of common stock | | (4 | ) | — | | (146 | ) | — | | — | |
Balance at December 31, 2011 | | 1,576 | | 1,660 | | 3,464 | | 108,090 | | (2,284 | ) |
Net earnings | | — | | — | | — | | 4,807 | | — | |
Dividends paid, $0.11 per share | | — | | — | | — | | (3,575 | ) | — | |
Issuance of nonvested stock awards, net of forfeitures | | 19 | | — | | (19 | ) | — | | — | |
Stock-based compensation | | — | | — | | 793 | | — | | — | |
Unrealized gain on interest rate swap, net of income tax expense of $64 | | — | | — | | — | | — | | 83 | |
Change in net actuarial loss and prior service cost, net of income tax benefit of $699 | | — | | — | | — | | — | | (1,059 | ) |
Unrealized gain on available-for-sale securities, net of income tax expense of $8 | | — | | — | | — | | — | | 12 | |
Repurchase and retirement of common stock | | (5 | ) | — | | (102 | ) | — | | — | |
Balance at December 31, 2012 | | 1,590 | | 1,660 | | 4,136 | | 109,322 | | (3,248 | ) |
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| | Common | | Class A | | Additional | | Retained | | Accumulated | |
Stock | Common | Paid-in | Earnings | Other |
| Stock | Capital | | Comprehensive |
| | | | Loss |
Net earnings | | — | | — | | — | | 13 | | — | |
Issuance of nonvested stock awards, net of forfeitures | | 17 | | — | | (17 | ) | — | | — | |
Stock-based compensation | | — | | — | | 682 | | — | | — | |
Change in net actuarial loss and prior service cost, net of income tax expense of $1,413 | | — | | — | | — | | — | | 2,142 | |
Unrealized gain on available-for-sale securities, net of income tax expense of $8 | | — | | — | | — | | — | | 11 | |
Conversion of Class A common stock to common stock | | 173 | | (173 | ) | — | | — | | — | |
Repurchase and retirement of common stock | | (6 | ) | — | | (138 | ) | — | | — | |
Balance at December 31, 2013 | | $ | 1,774 | | $ | 1,487 | | $ | 4,663 | | $ | 109,335 | | $ | (1,095 | ) |
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As of December 31, 2013 and 2012, accumulated other comprehensive loss consists of the following: |
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| | 2013 | | 2012 | | | | | | | | | | |
Net actuarial loss and prior service cost not yet recognized in net periodic benefit cost, net of income tax benefit of $772,000 and $2,185,000, respectively | | $ | (1,123,000 | ) | $ | (3,265,000 | ) | | | | | | | | | |
Accumulated unrealized gain on available-for-sale securities, net of income tax expense of $20,000 and $12,000, respectively | | 28,000 | | 17,000 | | | | | | | | | | |
Accumulated other comprehensive loss | | $ | (1,095,000 | ) | $ | (3,248,000 | ) | | | | | | | | | |
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We have 125,000,000 shares of authorized capital stock which consists of 74,000,000 shares of common stock, par value $.10 per share; 50,000,000 shares of Class A common stock, par value $.10 per share; and 1,000,000 shares of preferred stock, par value $.10 per share. |
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The holders of common stock are entitled to one vote per share and the holders of our Class A common stock are entitled to 10 votes per share. There is no cumulative voting. Shares of Class A common stock are convertible at any time into our shares of common stock on a one-for-one basis at the option of the stockholder. Subject to rights of any preferred stockholder, holders of our common stock and Class A common stock are entitled to receive on a pro rata basis such dividends, if any, as may be declared from time to time by the Board of Directors out of funds legally available for that purpose. At the discretion of our Board of Directors, we may pay to the holders of common stock a cash dividend greater than the dividend, if any, paid to the holders of Class A common stock. |
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Under Delaware law, a change of ownership of a Licensed Agent will automatically terminate its license 90 days after the change of ownership occurs, unless the Director of the Delaware State Lottery Office determines after application to issue a new license to the new owners. Change of ownership may occur if any new individual or entity acquires, directly or indirectly, 10% or more of the Licensed Agent or if more than 20% of the legal or beneficial interest in the Licensed Agent is transferred, whether by direct or indirect means. The Commission may require extensive background investigations of any new owner acquiring a 10% or greater interest in a Licensed Agent, including criminal background checks. Accordingly, we have a restrictive legend on our shares of common stock which require that (a) any holders of common stock found to be disqualified or unsuitable or not possessing the qualifications required by any appropriate gaming authority could be required to dispose of such stock and (b) any holder of common stock intending to acquire 10% or more of our outstanding common stock must first obtain prior written approval from the Delaware State Lottery Office. |
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We adopted a stockholder rights plan in 2012. The rights are attached to and trade in tandem with our common stock and Class A common stock. Each right entitles the registered holder to purchase from us one share of common stock. The rights, unless earlier redeemed by our Board of Directors, will detach and trade separately from our common stock upon the occurrence of certain events such as the unsolicited acquisition by a third party of beneficial ownership of 10% or more of our outstanding combined common stock and Class A common stock or the announcement by a third party of the intent to commence a tender or exchange offer for 10% or more of our outstanding combined common stock and Class A common stock. After the rights have detached, the holders of such rights would generally have the ability to purchase such number of either shares of our common stock or stock of an acquirer of ours having a market value equal to twice the exercise price of the right being exercised, thereby causing substantial dilution to a person or group of persons attempting to acquire control of us. The rights may serve as a significant deterrent to unsolicited attempts to acquire control of us, including transactions involving a premium to the market price of our stock. This rights agreement expires on January 1, 2022, unless earlier redeemed. |
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On January 23, 2013, our Board of Directors suspended the quarterly dividend. In addition, our credit facility prohibits the payment of dividends. See NOTE 6 — Credit Facility. |
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On October 23, 2002, our Board of Directors authorized the repurchase of up to 3,000,000 shares of our outstanding common stock. The purchases may be made in the open market or in privately negotiated transactions as conditions warrant. The repurchase authorization has no expiration date, does not obligate us to acquire any specific number of shares and may be suspended at any time. No purchases of our equity securities were made pursuant to this authorization during 2013 or 2012. At December 31, 2013, we had remaining repurchase authority of 1,653,333 shares. At present we are not permitted to make such purchases under our credit facility. |
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During the years ended December 31, 2013, 2012 and 2011, we purchased and retired 61,869, 49,590 and 43,427 shares of our outstanding common stock for $144,000, $107,000 and $150,000, respectively. These purchases were made from employees in connection with the vesting of restricted stock awards under our stock incentive plan and were not pursuant to the aforementioned repurchase authorization. Since the vesting of a restricted stock award is a taxable event to our employees for which income tax withholding is required, the plan allows employees to surrender to us some of the shares that would otherwise have vested in satisfaction of their tax liability. The surrender of these shares is treated by us as a purchase of the shares. |
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We have a stock incentive plan which provides for the grant of up to 2,000,000 shares of common stock to our officers and key employees through stock options and/or awards valued in whole or in part by reference to our common stock, such as nonvested restricted stock awards. Under the plan, nonvested restricted stock vests an aggregate of twenty percent each year beginning on the second anniversary date of the grant. The aggregate market value of the nonvested restricted stock at the date of issuance is being amortized on a straight-line basis over the six-year period. As of December 31, 2013, there were 708,146 shares available for granting options or stock awards. |
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There were no outstanding stock options as of December 31, 2011 or thereafter. No stock options were granted or exercised during the three year period ending December 31, 2013. No compensation expense related to stock options was recognized for the years ended December 31, 2013, 2012 or 2011. |
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Nonvested restricted stock activity for the year ended December 31, 2013 was as follows: |
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| | Number of | | Weighted | | | | | | | | | | | |
Shares | Average | | | | | | | | | | |
| Grant Date | | | | | | | | | | |
| Fair Value | | | | | | | | | | |
Nonvested at December 31, 2012 | | 753,400 | | $ | 3.85 | | | | | | | | | | | |
Granted | | 205,500 | | $ | 2.32 | | | | | | | | | | | |
Forfeited | | (35,000 | ) | $ | 3.1 | | | | | | | | | | | |
Vested | | (166,000 | ) | $ | 5.5 | | | | | | | | | | | |
Nonvested at December 31, 2013 | | 757,900 | | $ | 3.1 | | | | | | | | | | | |
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The aggregate market value of the nonvested restricted stock at the date of issuance is being amortized on a straight-line basis over the six-year service period or the service period remaining until normal retirement age, if shorter. The total fair value of shares vested during the years ended December 31, 2013, 2012 and 2011 based on the weighted average grant date fair value was $913,000, $986,000 and $1,025,000, respectively. The grant-date fair value of restricted stock awards granted during the years ended December 31, 2013, 2012 and 2011 was $2.32, $2.14 and $3.40, respectively. We recorded, within general and administrative expenses, compensation expense of $682,000, $793,000 and $905,000 related to restricted stock awards for the years ended December 31, 2013, 2012 |
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and 2011, respectively. As of December 31, 2013, there was $1,188,000 of total deferred compensation cost related to nonvested restricted stock awards granted to employees under our stock incentive plan. That cost is expected to be recognized over a weighted-average period of 3.3 years. |