ARC Document Solutions(US:ARC)2021-11-03 16:00Financial Performance - The Company recorded an income tax provision of $1.3 million and $2.9 million for pretax income of $4.4 million and $9.2 million for the three and nine months ended September 30, 2021, resulting in effective tax rates of 29.3% and 32.2% respectively[59]. - The Company has a valuation allowance of $2.2 million against certain deferred tax assets as of September 30, 2021, which may be adjusted based on future conditions[62]. - The Company is involved in legal proceedings that may seek substantial damages, but does not currently believe these will materially affect its financial condition[73]. Assets and Liabilities - As of September 30, 2021, the Company assessed potential impairments of its long-lived assets and concluded that there was no impairment[53]. - The Company has $119.8 million in amortizable other intangible assets as of September 30, 2021, with a net carrying amount of $355 thousand after accumulated amortization[56]. - The estimated future amortization expense for other intangible assets is projected to be $30 thousand for the remainder of 2021 and $103 thousand for 2022[57]. - Cash equivalents were reported at $13.5 million as of September 30, 2021, compared to $13.2 million as of December 31, 2020[80]. - The carrying amount of borrowings under the 2021 Credit Agreement was $47.5 million as of September 30, 2021, with fair value also determined to be $47.5 million[81]. Financing and Credit Agreements - The Company entered into a Credit Agreement on April 22, 2021, providing for revolving loans up to $70 million, maturing on April 22, 2026[63]. - As of September 30, 2021, the Company's borrowing availability under the revolving loan commitment was $20.3 million after deducting outstanding letters of credit and loans[64]. - The Company maintains a Total Leverage Ratio not to exceed 2.75 to 1.00 and a Fixed Charge Coverage Ratio of at least 1.15 to 1.00 as per the 2021 Credit Agreement[69]. Dividends and Stock Compensation - The Company declared a quarterly cash dividend of $0.02 per share in July 2021, resulting in a dividend payable of $841 thousand as of September 30, 2021[70]. - Stock-based compensation expense was $0.5 million for the three months and $1.2 million for the nine months ended September 30, 2021, compared to $0.4 million and $1.3 million for the same periods in 2020[78]. - As of September 30, 2021, total unrecognized compensation cost related to unvested stock-based payments totaled $2.8 million, expected to be recognized over approximately 2.3 years[78]. Stock Options and Incentive Plans - The Company granted options to acquire a total of 0.7 million shares and 0.9 million shares of restricted stock awards during the nine months ended September 30, 2021[77]. - The Company is authorized to issue up to 3.5 million shares under the 2021 Incentive Plan, with an additional 6,132,593 shares available from the previous plans[75]. - As of September 30, 2021, 2.6 million shares remained available for issuance under the 2021 Incentive Plan[75]. - Stock options generally vest over a period of three to four years from the date of award[76]. - The Company allows for cashless exercises of vested outstanding options[76]. Fair Value of Financial Instruments - The fair value of financial instruments approximates their carrying amounts due to the short maturity of cash equivalents[80].