2017 Q3 Form 10-Q Financial Statement

#000162828017008496 Filed on August 10, 2017

View on sec.gov

Income Statement

Concept 2017 Q3 2017 Q2 2016 Q2
Revenue $30.39M $29.26M $25.00M
YoY Change 12.14% 17.02% 48.81%
Cost Of Revenue $23.00M $22.87M $19.53M
YoY Change 10.05% 17.09% 42.13%
Gross Profit $7.253M $6.385M $5.456M
YoY Change 16.44% 17.03% 79.59%
Gross Profit Margin 23.87% 21.82% 21.82%
Selling, General & Admin $4.700M $4.100M $3.400M
YoY Change 14.63% 20.59% 47.83%
% of Gross Profit 64.8% 64.21% 62.32%
Research & Development
YoY Change
% of Gross Profit
Depreciation & Amortization $460.0K $510.0K $414.0K
YoY Change -36.99% 23.19% 8180.0%
% of Gross Profit 6.34% 7.99% 7.59%
Operating Expenses $5.200M $4.600M $3.800M
YoY Change 6.12% 21.05% 65.22%
Operating Profit $2.149M $1.753M $1.668M
YoY Change 62.19% 5.1% 118.61%
Interest Expense -$600.0K $219.0K $206.0K
YoY Change 6.31% 795.65%
% of Operating Profit -27.92% 12.49% 12.35%
Other Income/Expense, Net -$340.0K -$269.0K -$374.0K
YoY Change -37.27% -28.07% 1000.0%
Pretax Income $1.809M $1.484M $1.294M
YoY Change 131.03% 14.68% 77.5%
Income Tax $769.0K $539.0K $518.0K
% Of Pretax Income 42.51% 36.32% 40.03%
Net Earnings $1.040M $945.0K $776.0K
YoY Change -56.43% 21.78% 77.57%
Net Earnings / Revenue 3.42% 3.23% 3.1%
Basic Earnings Per Share $0.09 $0.08 $0.08
Diluted Earnings Per Share $0.08 $0.08 $0.07
COMMON SHARES
Basic Shares Outstanding 11.60M shares 11.30M shares 10.15M shares
Diluted Shares Outstanding 12.45M shares 11.31M shares

Balance Sheet

Concept 2017 Q3 2017 Q2 2016 Q2
SHORT-TERM ASSETS
Cash & Short-Term Investments $4.900M $4.600M $2.800M
YoY Change 44.12% 64.29% -40.43%
Cash & Equivalents $4.930M $4.601M $2.820M
Short-Term Investments
Other Short-Term Assets $598.0K $620.0K $1.299M
YoY Change 10.33% -52.27% 210.77%
Inventory
Prepaid Expenses
Receivables $11.91M $8.624M $7.276M
Other Receivables $0.00 $0.00 $0.00
Total Short-Term Assets $17.44M $13.85M $12.38M
YoY Change 64.43% 11.86% 48.78%
LONG-TERM ASSETS
Property, Plant & Equipment $1.391M $1.163M $691.0K
YoY Change 115.99% 68.31% 269.52%
Goodwill $25.99M $25.99M $43.01M
YoY Change -25.2% -39.57% 400.4%
Intangibles $15.13M
YoY Change -64.24%
Long-Term Investments
YoY Change
Other Assets $9.800M $10.50M $9.000M
YoY Change -14.78% 16.67% 114.29%
Total Long-Term Assets $52.29M $53.24M $52.73M
YoY Change -4.01% 0.95% 305.26%
TOTAL ASSETS
Total Short-Term Assets $17.44M $13.85M $12.38M
Total Long-Term Assets $52.29M $53.24M $52.73M
Total Assets $69.72M $67.08M $65.11M
YoY Change 7.15% 3.03% 205.24%
SHORT-TERM LIABILITIES
YoY Change
Accounts Payable $5.205M $5.001M $2.983M
YoY Change 20.37% 67.65% 2230.47%
Accrued Expenses $3.700M $3.400M $3.800M
YoY Change 2.78% -10.53% 80.95%
Deferred Revenue
YoY Change
Short-Term Debt $0.00 $0.00 $0.00
YoY Change
Long-Term Debt Due $3.600M $3.600M $4.400M
YoY Change 0.0% -18.18%
Total Short-Term Liabilities $21.44M $16.11M $16.02M
YoY Change 47.71% 0.59% 137.28%
LONG-TERM LIABILITIES
Long-Term Debt $15.10M $16.22M $22.18M
YoY Change -19.25% -26.89%
Other Long-Term Liabilities $12.43M $200.0K $150.0K
YoY Change -33.84% 33.33% 1400.0%
Total Long-Term Liabilities $12.43M $16.22M $22.33M
YoY Change -33.84% -27.38% 223180.0%
TOTAL LIABILITIES
Total Short-Term Liabilities $21.44M $16.11M $16.02M
Total Long-Term Liabilities $12.43M $16.22M $22.33M
Total Liabilities $33.87M $32.33M $38.35M
YoY Change 1.71% -15.69% 467.18%
SHAREHOLDERS EQUITY
Retained Earnings -$46.84M -$47.88M -$52.52M
YoY Change -6.56% -8.83% -14.96%
Common Stock $82.70M $82.64M $79.28M
YoY Change 0.97% 4.23% 3.87%
Preferred Stock
YoY Change
Treasury Stock (at cost)
YoY Change
Treasury Stock Shares
Shareholders Equity $35.86M $34.75M $26.76M
YoY Change
Total Liabilities & Shareholders Equity $69.72M $67.08M $65.11M
YoY Change 7.15% 3.03% 205.24%

Cashflow Statement

Concept 2017 Q3 2017 Q2 2016 Q2
OPERATING ACTIVITIES
Net Income $1.040M $945.0K $776.0K
YoY Change -56.43% 21.78% 77.57%
Depreciation, Depletion And Amortization $460.0K $510.0K $414.0K
YoY Change -36.99% 23.19% 8180.0%
Cash From Operating Activities $1.550M $2.480M $1.920M
YoY Change -41.73% 29.17% 225.42%
INVESTING ACTIVITIES
Capital Expenditures -$270.0K -$120.0K -$420.0K
YoY Change 575.0% -71.43% 500.0%
Acquisitions
YoY Change
Other Investing Activities $0.00 $0.00 -$32.27M
YoY Change -100.0% -100.0%
Cash From Investing Activities -$270.0K -$120.0K -$32.69M
YoY Change 2600.0% -99.63% 46600.0%
FINANCING ACTIVITIES
Cash Dividend Paid
YoY Change
Common Stock Issuance & Retirement, Net
YoY Change
Debt Paid & Issued, Net
YoY Change
Cash From Financing Activities -950.0K -860.0K 26.66M
YoY Change -53.43% -103.23%
NET CHANGE
Cash From Operating Activities 1.550M 2.480M 1.920M
Cash From Investing Activities -270.0K -120.0K -32.69M
Cash From Financing Activities -950.0K -860.0K 26.66M
Net Change In Cash 330.0K 1.500M -4.110M
YoY Change -45.9% -136.5% -890.38%
FREE CASH FLOW
Cash From Operating Activities $1.550M $2.480M $1.920M
Capital Expenditures -$270.0K -$120.0K -$420.0K
Free Cash Flow $1.820M $2.600M $2.340M
YoY Change -32.59% 11.11% 254.55%

Facts In Submission

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CY2017Q2 us-gaap Increase Decrease In Derivative Assets And Liabilities
IncreaseDecreaseInDerivativeAssetsAndLiabilities
3000 USD
us-gaap Increase Decrease In Derivative Assets And Liabilities
IncreaseDecreaseInDerivativeAssetsAndLiabilities
-49000 USD
us-gaap Increase Decrease In Other Current Assets
IncreaseDecreaseInOtherCurrentAssets
870000 USD
us-gaap Increase Decrease In Other Current Assets
IncreaseDecreaseInOtherCurrentAssets
78000 USD
CY2017Q2 us-gaap Other Accrued Liabilities Current
OtherAccruedLiabilitiesCurrent
949000 USD
CY2016Q3 us-gaap Other Assets
OtherAssets
105000 USD
CY2017Q2 us-gaap Other Assets
OtherAssets
105000 USD
us-gaap Increase Decrease In Other Noncurrent Liabilities
IncreaseDecreaseInOtherNoncurrentLiabilities
63000 USD
us-gaap Increase Decrease In Other Noncurrent Liabilities
IncreaseDecreaseInOtherNoncurrentLiabilities
145000 USD
CY2016Q2 us-gaap Incremental Common Shares Attributable To Share Based Payment Arrangements
IncrementalCommonSharesAttributableToShareBasedPaymentArrangements
1157000 shares
us-gaap Incremental Common Shares Attributable To Share Based Payment Arrangements
IncrementalCommonSharesAttributableToShareBasedPaymentArrangements
1043000 shares
CY2017Q2 us-gaap Incremental Common Shares Attributable To Share Based Payment Arrangements
IncrementalCommonSharesAttributableToShareBasedPaymentArrangements
1146000 shares
us-gaap Incremental Common Shares Attributable To Share Based Payment Arrangements
IncrementalCommonSharesAttributableToShareBasedPaymentArrangements
1167000 shares
CY2016Q3 us-gaap Intangible Assets Gross Excluding Goodwill
IntangibleAssetsGrossExcludingGoodwill
324000 USD
CY2016Q3 us-gaap Intangible Assets Net Including Goodwill
IntangibleAssetsNetIncludingGoodwill
42304000 USD
CY2017Q2 us-gaap Intangible Assets Net Including Goodwill
IntangibleAssetsNetIncludingGoodwill
41557000 USD
CY2015 us-gaap Interest Expense
InterestExpense
206000 USD
CY2016Q2 us-gaap Interest Expense
InterestExpense
206000 USD
CY2017Q2 us-gaap Interest Expense
InterestExpense
219000 USD
us-gaap Interest Expense
InterestExpense
662000 USD
us-gaap Interest Paid
InterestPaid
105000 USD
us-gaap Interest Paid
InterestPaid
662000 USD
CY2016Q3 us-gaap Leasehold Improvements Gross
LeaseholdImprovementsGross
38000 USD
CY2017Q2 us-gaap Leasehold Improvements Gross
LeaseholdImprovementsGross
85000 USD
CY2016Q3 us-gaap Liabilities
Liabilities
33298000 USD
CY2017Q2 us-gaap Liabilities
Liabilities
32329000 USD
CY2016Q3 us-gaap Liabilities And Stockholders Equity
LiabilitiesAndStockholdersEquity
65074000 USD
CY2017Q2 us-gaap Liabilities And Stockholders Equity
LiabilitiesAndStockholdersEquity
67081000 USD
CY2016Q3 us-gaap Liabilities Current
LiabilitiesCurrent
14516000 USD
CY2017Q2 us-gaap Liabilities Current
LiabilitiesCurrent
16114000 USD
CY2017Q2 us-gaap Line Of Credit Facility Current Borrowing Capacity
LineOfCreditFacilityCurrentBorrowingCapacity
6700000 USD
CY2016Q3 us-gaap Loans Payable Current
LoansPayableCurrent
3560000 USD
CY2017Q2 us-gaap Loans Payable Current
LoansPayableCurrent
3590000 USD
CY2017Q2 us-gaap Long Term Debt
LongTermDebt
20625000 USD
CY2017Q2 us-gaap Long Term Debt Maturing In Years Four And Five
LongTermDebtMaturingInYearsFourAndFive
9375000 USD
CY2017Q2 us-gaap Long Term Debt Maturing In Years Two And Three
LongTermDebtMaturingInYearsTwoAndThree
7500000 USD
CY2017Q2 us-gaap Long Term Debt Maturities Repayments Of Principal In Next Twelve Months
LongTermDebtMaturitiesRepaymentsOfPrincipalInNextTwelveMonths
3750000 USD
CY2017Q2 us-gaap Long Term Debt Noncurrent
LongTermDebtNoncurrent
16215000 USD
us-gaap Net Cash Provided By Used In Financing Activities
NetCashProvidedByUsedInFinancingActivities
26610000 USD
us-gaap Net Cash Provided By Used In Financing Activities
NetCashProvidedByUsedInFinancingActivities
-2762000 USD
us-gaap Net Cash Provided By Used In Investing Activities
NetCashProvidedByUsedInInvestingActivities
-32728000 USD
us-gaap Net Cash Provided By Used In Investing Activities
NetCashProvidedByUsedInInvestingActivities
-1035000 USD
us-gaap Net Cash Provided By Used In Operating Activities
NetCashProvidedByUsedInOperatingActivities
3380000 USD
us-gaap Net Cash Provided By Used In Operating Activities
NetCashProvidedByUsedInOperatingActivities
4971000 USD
CY2016Q2 us-gaap Nonoperating Income Expense
NonoperatingIncomeExpense
-374000 USD
us-gaap Nonoperating Income Expense
NonoperatingIncomeExpense
-1076000 USD
CY2017Q2 us-gaap Nonoperating Income Expense
NonoperatingIncomeExpense
-269000 USD
us-gaap Nonoperating Income Expense
NonoperatingIncomeExpense
-888000 USD
CY2016Q2 us-gaap Operating Income Loss
OperatingIncomeLoss
1668000 USD
us-gaap Operating Income Loss
OperatingIncomeLoss
2739000 USD
CY2017Q2 us-gaap Operating Income Loss
OperatingIncomeLoss
1753000 USD
us-gaap Operating Income Loss
OperatingIncomeLoss
4481000 USD
CY2017Q2 us-gaap Operating Leases Future Minimum Payments Due
OperatingLeasesFutureMinimumPaymentsDue
4300000 USD
CY2016Q3 us-gaap Other Accrued Liabilities Current
OtherAccruedLiabilitiesCurrent
126000 USD
us-gaap Share Based Compensation Arrangement By Share Based Payment Award Options Grants In Period Gross
ShareBasedCompensationArrangementByShareBasedPaymentAwardOptionsGrantsInPeriodGross
400000 shares
CY2016Q3 us-gaap Other Assets Current
OtherAssetsCurrent
542000 USD
CY2017Q2 us-gaap Other Assets Current
OtherAssetsCurrent
620000 USD
CY2016Q3 us-gaap Other Liabilities Noncurrent
OtherLiabilitiesNoncurrent
18782000 USD
CY2015 us-gaap Other Nonoperating Income Expense
OtherNonoperatingIncomeExpense
-820000 USD
CY2016Q2 us-gaap Other Nonoperating Income Expense
OtherNonoperatingIncomeExpense
-118000 USD
CY2017Q2 us-gaap Other Nonoperating Income Expense
OtherNonoperatingIncomeExpense
17000 USD
us-gaap Other Nonoperating Income Expense
OtherNonoperatingIncomeExpense
17000 USD
CY2016Q3 us-gaap Other Prepaid Expense Current
OtherPrepaidExpenseCurrent
374000 USD
CY2017Q2 us-gaap Other Prepaid Expense Current
OtherPrepaidExpenseCurrent
249000 USD
us-gaap Payments Of Debt Issuance Costs
PaymentsOfDebtIssuanceCosts
1333000 USD
us-gaap Payments Of Debt Issuance Costs
PaymentsOfDebtIssuanceCosts
0 USD
us-gaap Payments To Acquire Businesses Net Of Cash Acquired
PaymentsToAcquireBusinessesNetOfCashAcquired
32266000 USD
us-gaap Payments To Acquire Businesses Net Of Cash Acquired
PaymentsToAcquireBusinessesNetOfCashAcquired
250000 USD
us-gaap Payments To Acquire Productive Assets
PaymentsToAcquireProductiveAssets
462000 USD
us-gaap Payments To Acquire Productive Assets
PaymentsToAcquireProductiveAssets
785000 USD
CY2016Q3 us-gaap Preferred Stock Par Or Stated Value Per Share
PreferredStockParOrStatedValuePerShare
0.1
CY2017Q2 us-gaap Preferred Stock Par Or Stated Value Per Share
PreferredStockParOrStatedValuePerShare
0.1
CY2016Q3 us-gaap Preferred Stock Shares Authorized
PreferredStockSharesAuthorized
5000 shares
CY2017Q2 us-gaap Preferred Stock Shares Authorized
PreferredStockSharesAuthorized
5000 shares
CY2016Q3 us-gaap Preferred Stock Shares Issued
PreferredStockSharesIssued
0 shares
CY2017Q2 us-gaap Preferred Stock Shares Issued
PreferredStockSharesIssued
0 shares
CY2016Q3 us-gaap Preferred Stock Shares Outstanding
PreferredStockSharesOutstanding
0 shares
CY2017Q2 us-gaap Preferred Stock Shares Outstanding
PreferredStockSharesOutstanding
0 shares
CY2016Q3 us-gaap Preferred Stock Value
PreferredStockValue
0 USD
CY2017Q2 us-gaap Preferred Stock Value
PreferredStockValue
0 USD
us-gaap Proceeds From Issuance Of Common Stock
ProceedsFromIssuanceOfCommonStock
13000 USD
us-gaap Proceeds From Issuance Of Common Stock
ProceedsFromIssuanceOfCommonStock
113000 USD
us-gaap Proceeds From Other Debt
ProceedsFromOtherDebt
2500000 USD
us-gaap Proceeds From Other Debt
ProceedsFromOtherDebt
0 USD
us-gaap Proceeds From Repayments Of Notes Payable
ProceedsFromRepaymentsOfNotesPayable
25500000 USD
us-gaap Proceeds From Repayments Of Notes Payable
ProceedsFromRepaymentsOfNotesPayable
-2813000 USD
CY2016Q2 us-gaap Profit Loss
ProfitLoss
776000 USD
us-gaap Profit Loss
ProfitLoss
997000 USD
CY2017Q2 us-gaap Profit Loss
ProfitLoss
945000 USD
us-gaap Profit Loss
ProfitLoss
2248000 USD
CY2016Q3 us-gaap Property Plant And Equipment Gross
PropertyPlantAndEquipmentGross
1187000 USD
CY2017Q2 us-gaap Property Plant And Equipment Gross
PropertyPlantAndEquipmentGross
2410000 USD
CY2016Q3 us-gaap Property Plant And Equipment Net
PropertyPlantAndEquipmentNet
644000 USD
CY2017Q2 us-gaap Property Plant And Equipment Net
PropertyPlantAndEquipmentNet
1163000 USD
us-gaap Repayments Of Long Term Capital Lease Obligations
RepaymentsOfLongTermCapitalLeaseObligations
70000 USD
us-gaap Repayments Of Long Term Capital Lease Obligations
RepaymentsOfLongTermCapitalLeaseObligations
62000 USD
CY2016Q3 us-gaap Retained Earnings Accumulated Deficit
RetainedEarningsAccumulatedDeficit
-50132000 USD
CY2017Q2 us-gaap Retained Earnings Accumulated Deficit
RetainedEarningsAccumulatedDeficit
-47884000 USD
us-gaap Share Based Compensation Arrangement By Share Based Payment Award Options Forfeitures In Period
ShareBasedCompensationArrangementByShareBasedPaymentAwardOptionsForfeituresInPeriod
397000 shares
CY2016Q3 us-gaap Share Based Compensation Arrangement By Share Based Payment Award Options Outstanding Intrinsic Value
ShareBasedCompensationArrangementByShareBasedPaymentAwardOptionsOutstandingIntrinsicValue
7581000 USD
us-gaap Weighted Average Number Of Diluted Shares Outstanding
WeightedAverageNumberOfDilutedSharesOutstanding
10855000 shares
CY2017Q2 us-gaap Share Based Compensation Arrangement By Share Based Payment Award Options Outstanding Intrinsic Value
ShareBasedCompensationArrangementByShareBasedPaymentAwardOptionsOutstandingIntrinsicValue
7490000 USD
CY2016Q3 us-gaap Share Based Compensation Arrangement By Share Based Payment Award Options Outstanding Number
ShareBasedCompensationArrangementByShareBasedPaymentAwardOptionsOutstandingNumber
2226000 shares
CY2017Q2 us-gaap Share Based Compensation Arrangement By Share Based Payment Award Options Outstanding Number
ShareBasedCompensationArrangementByShareBasedPaymentAwardOptionsOutstandingNumber
2229000 shares
CY2016Q3 us-gaap Share Based Compensation Arrangement By Share Based Payment Award Options Outstanding Weighted Average Exercise Price
ShareBasedCompensationArrangementByShareBasedPaymentAwardOptionsOutstandingWeightedAverageExercisePrice
1.43
CY2017Q2 us-gaap Share Based Compensation Arrangement By Share Based Payment Award Options Outstanding Weighted Average Exercise Price
ShareBasedCompensationArrangementByShareBasedPaymentAwardOptionsOutstandingWeightedAverageExercisePrice
3.66
CY2016Q3 us-gaap Share Based Compensation Arrangement By Share Based Payment Award Options Vested And Expected To Vest Exercisable Number
ShareBasedCompensationArrangementByShareBasedPaymentAwardOptionsVestedAndExpectedToVestExercisableNumber
1909000 shares
CY2017Q2 us-gaap Share Based Compensation Arrangement By Share Based Payment Award Options Vested And Expected To Vest Exercisable Number
ShareBasedCompensationArrangementByShareBasedPaymentAwardOptionsVestedAndExpectedToVestExercisableNumber
1562000 shares
us-gaap Share Based Compensation Arrangements By Share Based Payment Award Options Forfeitures In Period Weighted Average Exercise Price
ShareBasedCompensationArrangementsByShareBasedPaymentAwardOptionsForfeituresInPeriodWeightedAverageExercisePrice
3.00
us-gaap Share Based Compensation Arrangements By Share Based Payment Award Options Grants In Period Weighted Average Exercise Price
ShareBasedCompensationArrangementsByShareBasedPaymentAwardOptionsGrantsInPeriodWeightedAverageExercisePrice
5.94
CY2016Q3 us-gaap Sharebased Compensation Arrangement By Sharebased Payment Award Options Nonvested Number Of Shares
SharebasedCompensationArrangementBySharebasedPaymentAwardOptionsNonvestedNumberOfShares
317000 shares
CY2017Q2 us-gaap Sharebased Compensation Arrangement By Sharebased Payment Award Options Nonvested Number Of Shares
SharebasedCompensationArrangementBySharebasedPaymentAwardOptionsNonvestedNumberOfShares
667000 shares
CY2016 us-gaap Sharebased Compensation Arrangement By Sharebased Payment Award Options Outstanding Weighted Average Remaining Contractual Term2
SharebasedCompensationArrangementBySharebasedPaymentAwardOptionsOutstandingWeightedAverageRemainingContractualTerm2
P5Y9M18D
us-gaap Sharebased Compensation Arrangement By Sharebased Payment Award Options Outstanding Weighted Average Remaining Contractual Term2
SharebasedCompensationArrangementBySharebasedPaymentAwardOptionsOutstandingWeightedAverageRemainingContractualTerm2
P6Y6M
us-gaap Stock Option Plan Expense
StockOptionPlanExpense
384000 USD
us-gaap Stock Option Plan Expense
StockOptionPlanExpense
613000 USD
CY2016Q3 us-gaap Stockholders Equity
StockholdersEquity
31776000 USD
CY2017Q2 us-gaap Stockholders Equity
StockholdersEquity
34752000 USD
CY2016Q2 us-gaap Weighted Average Number Of Diluted Shares Outstanding
WeightedAverageNumberOfDilutedSharesOutstanding
11311000 shares
CY2017Q2 us-gaap Weighted Average Number Of Diluted Shares Outstanding
WeightedAverageNumberOfDilutedSharesOutstanding
12445000 shares
us-gaap Weighted Average Number Of Diluted Shares Outstanding
WeightedAverageNumberOfDilutedSharesOutstanding
12417000 shares
CY2016Q2 us-gaap Weighted Average Number Of Shares Outstanding Basic
WeightedAverageNumberOfSharesOutstandingBasic
10154000 shares
us-gaap Weighted Average Number Of Shares Outstanding Basic
WeightedAverageNumberOfSharesOutstandingBasic
9812000 shares
CY2017Q2 us-gaap Weighted Average Number Of Shares Outstanding Basic
WeightedAverageNumberOfSharesOutstandingBasic
11299000 shares
us-gaap Weighted Average Number Of Shares Outstanding Basic
WeightedAverageNumberOfSharesOutstandingBasic
11250000 shares
us-gaap Use Of Estimates
UseOfEstimates
<div style="font-family:Times New Roman;font-size:10pt;"><div style="line-height:120%;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;text-decoration:underline;">Use of Estimates</font></div><div style="line-height:120%;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">&#160;</font></div><div style="line-height:120%;text-align:left;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">The preparation of financial statements in conformity with accounting principles generally accepted in the United States 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 financial statements and the reported amounts of revenues and expenses during the reporting period. Significant estimates include valuation of goodwill and intangible assets, valuation allowances established against accounts receivable and deferred tax assets,&#160;measurement of loss development on workers&#8217; compensation claims, and fair value of derivatives. We evaluate these estimates and judgments on an ongoing basis and base our estimates on historical experience, current and expected future outcomes, third-party evaluations and various other assumptions that we believe are reasonable under the circumstances. The results of these estimates form the basis for making judgments about the carrying values of assets and liabilities as well as identifying and assessing the accounting treatment with respect to commitments and contingencies. We revise material accounting estimates if changes occur, such as more experience is acquired, additional information is obtained, or there is new information on which an estimate was or can be based. Actual results could differ from those estimates. In particular, a material reduction in the fair value of goodwill could have a material adverse effect on the Company&#8217;s financial position and results of operations. We account for the effect of a change in accounting estimate during the period in which the change occurs. </font></div></div>

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