Note 11: Capital Stock

12 Months Ended

Dec. 31, 2016

Notes

Note 11: Capital Stock

11)               Capital Stock

The Company has one class of preferred stock of $1.00 par value, 5,000,000 shares authorized, of which none are issued. The preferred stock is non-voting.

The Company has two classes of common stock with shares outstanding, Class A common shares and Class C common shares. Class C shares have 10 votes per share on all matters except for the election of one third of the directors who are elected solely by the Class A shares. Class C shares are convertible into Class A shares at any time on a one to one ratio. The decrease in treasury stock was the result of treasury stock being used to fund the company’s 401(k) and Deferred Compensation Plans.

Stockholders of both Class A and Class C common stock have received 5% stock dividends in the years 1990 through 2016, as authorized by the Company’s Board of Directors.

The Company has Class B common stock of $1.00 par value, 5,000,000 shares authorized, of which none are issued. Class B shares are non-voting stock except to any proposed amendment to the Articles of Incorporation which would affect Class B common stock.

On July 2, 2014, the stockholders approved a 1-for-10 reverse stock split of the Company’s Class C common stock at the Annual Meeting of Stockholders.  Concurrently with the approval of the reverse stock split, the stockholders also approved amendments to Article V of the Company’s Articles of Incorporation to provide that each share of Class C common stock will have weighted voting of ten votes per share and that each share of Class C common stock may be converted into one share of Class A common stock.  The Board of Directors had previously approved the reverse stock split and weighted voting of Class C common stock.  Prior to the approval of the reverse stock split and weighted voting of Class C shares, the Company’s Articles of Incorporation provided that each share of Class C common stock had one vote per share and that Class C common shares were convertible into Class A common shares at a conversion ratio of ten shares of Class C common stock for one share of Class A common stock.

The reverse stock split and weighted voting of the Company's Class C common stock became effective on August 1, 2014, when the Articles of Restatement and Amendment to the Company's Articles of Incorporation were filed with the Utah Division of Corporations and Commercial Code. The reverse stock split affected all of the holders of the Company's Class C common stock uniformly but did not affect any Class C stockholder's percentage ownership interest in the Company or proportionate voting power, except for insignificant changes that resulted from the rounding up of fractional shares. Additionally, the reverse stock split did not impact the existing shares of Class A common stock.

The following table summarizes the activity in shares of capital stock for the three-year period ended December 31, 2016:

	Class A	Class C (1)
Balance at December 31, 2013	11,807,287	1,330,191
Exercise of stock options	54,412	-
Stock dividends	595,020	66,384
Reverse stock split true up	-	15
Conversion of Class C to Class A	2,521	(2,521)
Balance at December 31, 2014	12,459,240	1,394,069
Exercise of stock options	23,961	241,652
Stock dividends	624,483	75,335
Conversion of Class C to Class A	1,416	(1,416)
Balance at December 31, 2015	13,109,100	1,709,640
Exercise of stock options	42,634	104,975
Stock dividends	657,919	96,967
Conversion of Class C to Class A	9,353	(9,353)
Balance at December 31, 2016	13,819,006	1,902,229

(1) Class C shares have been retroactively adjusted for the effect of the 1-for-10 reverse stock split that was approved by the stockholders in 2014.

Earnings per share amounts have been retroactively adjusted for the effect of annual stock dividends. In accordance with accounting principles generally accepted in the United States of America, the basic and diluted earnings per share amounts were calculated as follows:

	2016	2015	2014
Numerator:
Net earnings	$   14,279,504	$   13,478,857	$  8,024,233
Denominator:
Denominator for basic earnings
per share-weighted-average shares	14,806,290	14,439,274	13,893,260
Effect of dilutive securities
Employee stock options	320,914	512,559	451,215
Dilutive potential common shares	320,914	512,559	451,215
Denominator for diluted earnings
per share-adjusted weighted-average
shares and assumed conversions	15,127,204	14,951,833	14,344,475
Basic earnings per share	$0.96	$0.93	$0.58
Diluted earnings per share	$0.94	$0.90	$0.56