What changed in this filing

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Item 1. Financial Statements

2022-10-27 compared with 2022-07-28 · 81 added, 44 removed, 308 unchanged (29% of the section changed)

3 unchanged sentences

(In thousands, except per share data)

Three Months Ended Six Months Ended

June 30, June 30,

Three Months Ended Nine Months Ended

September 30, September 30,

2022 2021 2022 2021

20 unchanged sentences

(In thousands)

Three Months Ended Six Months Ended

June 30, June 30,

Three Months Ended Nine Months Ended

September 30, September 30,

2022 2021 2022 2021

1 unchanged sentence

Other comprehensive (loss) income:

Foreign currency translation (losses) gains ( 7,125 ) 1,302 ( 7,339 ) 34

Change in unrealized gains (losses) on interest rate swaps, net of change in taxes of $( 1,631 ), $ 719 , $( 5,497 ), and $( 2,327 )

Foreign currency translation losses ( 11,152 ) ( 3,555 ) ( 18,491 ) ( 3,522 )

Change in unrealized gains on interest rate swaps, net of change in taxes of $( 2,925 ), $( 491 ), $( 8,422 ), and $( 2,818 )

8,776 1,473 25,267 8,453

5 unchanged sentences

(In thousands, except share data)

June 30, June 30, December 31,

September 30, September 30, December 31,

2022 2021 2021

30 unchanged sentences

39,054,302 , 40,079,584 and 40,192,901 shares issued and

outstanding at June 30, 2022, June 30, 2021 and

outstanding at September 30, 2022, September 30, 2021 and

December 31, 2021, respectively

1 unchanged sentence

Retained earnings 620,692 451,401 526,874

Accumulated other comprehensive income (loss) 1,668 ( 7,005 ) ( 7,484 )

Accumulated other comprehensive loss ( 708 ) ( 9,087 ) ( 7,484 )

Total stockholders’ equity 1,190,878 985,212 1,071,393

4 unchanged sentences

(In thousands)

Six Months Ended

Nine Months Ended

September 30,

Operating activities

16 unchanged sentences

Purchases of property and equipment, net of sale proceeds ( 27,965 ) ( 24,223 )

Other investments, net 1,760 —

Net cash used in investing activities ( 34,514 ) ( 42,110 )

8 unchanged sentences

Payments on short-term borrowings and current portion of long-term debt ( 26,960 ) ( 9,006 )

Payments of deferred financing costs — ( 1,610 )

Payments of deferred and contingent acquisition consideration ( 1,374 ) ( 362 )

2 unchanged sentences

Purchases of treasury stock ( 471,210 ) ( 137,975 )

Net cash provided by (used in) financing activities 64,643 ( 131,061 )

Net cash used in financing activities ( 248,404 ) ( 267,765 )

Effect of exchange rate changes on cash and cash equivalents 206 157

39 unchanged sentences

Balance at June 30, 2022 39,588 40 564,641 662,709 1,668 1,229,058

— — — 190,055 — 190,055

Foreign currency translation

— — — — ( 11,152 ) ( 11,152 )

Interest rate swaps, net of the change in taxes of $( 2,925 )

— — — — 8,776 8,776

Repurchases of common stock, net of retirements

( 549 ) ( 1 ) — ( 192,528 ) — ( 192,529 )

Share-based compensation

— — 4,120 — — 4,120

Issuance of stock under share-based compensation plans

15 — 2,094 — — 2,094

Declaration of cash dividends

— — — ( 39,544 ) — ( 39,544 )

Balance at September 30, 2022 39,054 $ 39 $ 570,855 $ 620,692 $ ( 708 ) $ 1,190,878

Common Stock Additional

31 unchanged sentences

Balance at June 30, 2021 40,131 40 535,046 346,667 ( 7,005 ) 874,748

— — — 184,665 — 184,665

Foreign currency translation

— — — — ( 3,555 ) ( 3,555 )

Interest rate swaps, net of the change in taxes of $( 491 )

— — — — 1,473 1,473

Repurchases of common stock, net of retirements

( 100 ) — — ( 47,840 ) — ( 47,840 )

Share-based compensation

— — 4,206 — — 4,206

Issuance of stock under share-based compensation plans

49 — 3,606 — — 3,606

Declaration of cash dividends

— — — ( 32,091 ) — ( 32,091 )

Balance at September 30, 2021 40,080 $ 40 $ 542,858 $ 451,401 $ ( 9,087 ) $ 985,212

The accompanying Notes are an integral part of the Consolidated Financial Statements.

9 unchanged sentences

You should read the interim Consolidated Financial Statements in conjunction with the Consolidated Financial Statements and accompanying notes in our 2021 Annual Report on Form 10-K.

The results for our three and six-month periods ended June 30, 2022, are not necessarily indicative of the expected results for our fiscal year ending December 31, 2022.

The results for our three and nine-month periods ended September 30, 2022, are not necessarily indicative of the expected results for our fiscal year ending December 31, 2022.

We reduce federal and state income taxes payable by the tax benefits associated with the exercise of nonqualified stock options and the lapse of restrictions on restricted stock awards.

1 unchanged sentence

We record all excess tax benefits as a component of income tax benefit or expense on the Consolidated Statements of Income in the period in which stock options are exercised or restrictions on restricted stock awards lapse.

We recorded excess tax benefits of $ 1.6 million in the second quarter of 2022 compared to $ 7.7 million in the second quarter of 2021 and $ 8.9 million in the six months ended June 30, 2022, compared to $ 11.7 million in the six months ended June 30, 2021.

We recorded excess tax benefits of $ 0.6 million in the third quarter of 2022 compared to $ 4.2 million in the third quarter of 2021 and $ 9.5 million in the nine months ended September 30, 2022, compared to $ 15.9 million in the nine months ended September 30, 2021.

Retained Earnings

We account for the retirement of treasury shares as a reduction of Retained earnings.

As of June 30, 2022, the Retained earnings on our Consolidated Balance Sheets reflects cumulative net income, the cumulative impact of adjustments for changes in accounting pronouncements, treasury share retirements since the inception of our share repurchase programs of $ 1.9 billion and cumulative dividends of $ 862.4 million.

Accumulated Other Comprehensive Income (Loss)

The table below presents the components of our Accumulated other comprehensive income (loss) balance (in thousands):

June 30, December 31,

As of September 30, 2022, the Retained earnings on our Consolidated Balance Sheets reflects cumulative net income, the cumulative impact of adjustments for changes in accounting pronouncements, treasury share retirements since the inception of our share repurchase programs of $ 2.1 billion and cumulative dividends of $ 902.0 million.

Accumulated Other Comprehensive Loss

The table below presents the components of our Accumulated other comprehensive loss balance (in thousands):

September 30, December 31,

2022 2021 2021

2 unchanged sentences

27,363 ( 650 ) 2,096

Accumulated other comprehensive income (loss) $ 1,668 $ ( 7,005 ) $ ( 7,484 )

Accumulated other comprehensive loss $ ( 708 ) $ ( 9,087 ) $ ( 7,484 )

Recent Accounting Pronouncements Pending Adoption

17 unchanged sentences

Our participating securities include share-based payment awards that contain a non-forfeitable right to receive dividends and are considered to participate in undistributed earnings with common shareholders.

Participating securities excluded from weighted average common shares outstanding were 218 thousand in the second quarter of 2022 and 229 thousand for the six months ended June 30, 2022.

Participating securities excluded from weighted average common shares outstanding were 213 thousand in the third quarter of 2022 and 223 thousand for the nine months ended September 30, 2022.

The table below presents the computation of earnings per share, including the reconciliation of basic and diluted weighted average shares outstanding (in thousands, except per share data):

Three Months Ended Six Months Ended

June 30, June 30,

Three Months Ended Nine Months Ended

September 30, September 30,

2022 2021 2022 2021

28 unchanged sentences

Note 4 – Fair Value Measurements and Interest Rate Swaps

Our assets and liabilities that are measured at fair value on a recurring basis include the unrealized gains or losses on our interest rate swap contracts and contingent consideration related to recent acquisitions.

The three levels of the fair value hierarchy under the accounting guidance are described below:

7 unchanged sentences

Recurring Fair Value Measurements

The table below presents the estimated fair values of our interest rate swap contracts, our forward-starting interest rate swap contracts and our contingent consideration liabilities (in thousands):

Fair Value at June 30,

The table below presents the estimated fair values of our interest rate swap contracts, our forward-starting interest rate swap contract and our contingent consideration liabilities (in thousands):

Fair Value at September 30,

Unrealized gains on interest rate swaps $ 36,529 $ 5,488

7 unchanged sentences

We recognize any differences between the variable interest rate in effect and the fixed interest rates per our swap contracts as an adjustment to interest expense over the life of the swaps.

To the extent our derivatives are effective in offsetting the variability of the hedged cash flows, we record the changes in the estimated fair value of our interest rate swap contracts to Accumulated other comprehensive income (loss) on the Consolidated Balance Sheets.

We currently have three interest rate swap contracts in place, two of which became effective on November 20, 2020, and terminate on September 29, 2022, and a third that became effective on February 26, 2021, and terminates on February 28, 2025.

These swap contracts were previously forward-starting and convert the variable interest rate to a fixed interest rate on our variable rate borrowings.

Interest expense related to the notional amounts under these swap contracts is based on the fixed rates plus the applicable margin on our variable rate borrowings.

Changes in the estimated fair value of these interest rate swap contracts are recorded to Accumulated other comprehensive income (loss) on the Consolidated Balance Sheets.

The following table provides additional details related to these swap contracts:

In the third quarter of 2022, two of our interest rate swap contracts terminated on September 29, 2022.

These former swap contracts were previously forward-starting and converted the variable interest rate to a fixed interest rate on a portion of our variable rate borrowings.

Interest expense related to the notional amounts under these swap contracts was based on the fixed rates plus the applicable margin on our variable rate borrowings.

The following table provides additional details related to these former swap contracts:

Derivative Inception Date Effective Date Termination Date Notional Amount

2 unchanged sentences

Interest rate swap 2 July 25, 2019 November 20, 2020 September 29, 2022 $ 75.0 1.5500 %

We currently have two swap contracts in place.

These swap contracts were previously forward-starting and convert the variable interest rate to a fixed interest rate on our variable rate borrowings.

Interest expense related to the notional amounts under these swap contracts is based on the fixed rates plus the applicable margin on a portion of our variable rate borrowings.

Changes in the estimated fair value of these interest rate swap contracts are recorded to Accumulated other comprehensive loss on the Consolidated Balance Sheets.

The following table provides additional details related to these swap contracts:

Derivative Inception Date Effective Date Termination Date Notional Amount

(in millions) Fixed Interest Rate

Interest rate swap 3 February 5, 2020 February 26, 2021 February 28, 2025 $ 150.0 1.3800 %

For the interest rate swap contracts in effect at June 30, 2022, a portion of the change in the estimated fair value between periods relates to future interest expense.

Recognition of the change in fair value between periods attributable to accrued interest is reclassified from Accumulated other comprehensive income (loss) on the Consolidated Balance Sheets to Interest and other non-operating expenses, net on the Consolidated Statements of Income.

This amount was not material in the six-month period ended June 30, 2022.

We have entered into forward-starting interest rate swap contracts to extend the hedged period for future interest payments on our variable rate borrowings.

These swap contracts will convert the variable interest rate to a fixed interest rate on our variable rate borrowings.

We record changes in the estimated fair value of these forward-starting interest rate swap contracts to Accumulated other comprehensive income (loss) on the Consolidated Balance Sheets.

The following table provides details related to each of our forward-starting interest rate swap contracts:

Interest rate swap 4 March 9, 2020 September 29, 2022 February 26, 2027 $ 150.0 0.7400 %

For the interest rate swap contracts in effect at September 30, 2022, a portion of the change in the estimated fair value between periods relates to future interest expense.

Recognition of the change in fair value between periods attributable to accrued interest is reclassified from Accumulated other comprehensive loss on the Consolidated Balance Sheets to Interest and other non-operating expenses, net on the Consolidated Statements of Income.

This amount was not material in the three- or nine-month periods ended September 30, 2022.

We have entered into a forward-starting interest rate swap contract to extend the hedged period for future interest payments on our variable rate borrowings.

This swap contract will convert the variable interest rate to a fixed interest rate on a portion of our variable rate borrowings.

We record changes in the estimated fair value of this forward-starting interest rate swap contract to Accumulated other comprehensive loss on the Consolidated Balance Sheets.

The following table provides details related to our forward-starting interest rate swap contract:

Derivative Inception Date Effective Date Termination Date Notional

(in millions) Fixed

Forward-starting interest rate swap 1 March 9, 2020 September 29, 2022 February 26, 2027 $ 150.0 0.7400 %

Forward-starting interest rate swap March 9, 2020 February 28, 2025 February 26, 2027 $ 150.0 0.8130 %

2 unchanged sentences

Additionally, failure of our swap counterparties would not eliminate our obligation to continue to make payments under our existing swap agreements if we were in a net pay position.

Our interest rate swap contracts and forward-starting interest rate swap contracts are subject to master netting arrangements.

Our interest rate swap contracts and forward-starting interest rate swap contract are subject to master netting arrangements.

According to our accounting policy, we do not offset the fair values of assets with the fair values of liabilities related to these contracts.

2 unchanged sentences

Generally, our assets, including long-lived assets, goodwill and intangible assets, are recorded at fair value on a nonrecurring basis as a result of impairment charges or business combinations.

In the six months ended June 30, 2022, we did not record any significant nonrecurring fair value measurements for assets or liabilities in periods subsequent to their initial recognition.

The carrying values of cash, receivables, accounts payable and accrued liabilities approximate fair value due to the short maturity of those instruments.

The carrying value of long-term debt approximates fair value (Level 3 inputs).

In the three- or nine months ended September 30, 2022, we did not record any significant nonrecurring fair value measurements for assets or liabilities in periods subsequent to their initial recognition.

The carrying values of cash and cash equivalents, receivables, accounts payable and accrued liabilities approximate fair value due to the short maturity of those instruments.

The carrying value of our long-term debt approximates its fair value (Level 3 inputs).

Our determination of the estimated fair value reflects a discounted cash flow model using our estimates, including assumptions related to borrowing rates (Level 3 inputs).

1 unchanged sentence

The table below presents the components of our debt (in thousands):

September 30,

Variable rate debt

Short-term borrowings $ 10,152 $ —

Current portion of long-term debt:

10 unchanged sentences

On January 4, 2022, we drew the $ 250.0 million incremental term loan available under our December 30, 2021 amendment to our Second Amended and Restated Credit Agreement (the “Credit Facility”) and used the net proceeds to reduce our revolving borrowings under the Credit Facility.

At June 30, 2022, the $ 500.0 million of term loans available under the Credit Facility were fully drawn.

At September 30, 2022, the $ 500.0 million of term loans available under the Credit Facility were fully drawn.

Our accounts receivable securitization facility (the “Receivables Facility”) provides for the sale of certain of our receivables to a wholly owned subsidiary (the “Securitization Subsidiary”).

5 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements