The estimated aggregate amortization expense for intangible assets for the years ending
December 31, 2018 through 2022 is as follows:
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Years Ended December 31,
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2018
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2019
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2020
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2021
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2022
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(Amounts in thousands)
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Amortization expense
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$
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2,727
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$
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2,689
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$
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2,654
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$
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2,625
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$
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2,443
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5. Commitments and Contingencies
Lease Commitments
The Company rents certain office space and equipment under
non-cancelable
leases which provide for
future minimum rental payments. In May 2018, the Company entered into a three-year office lease in Chennai, India to replace a previous lease commitment which expired. The aggregate lease commitment on the new facility totaled $0.8 million.
Except for the Chennai lease, total lease commitments have not materially changed from the amounts disclosed in the Companys Annual Report on Form
10-K
for the year ended December 31, 2017.
Contingencies
In
the ordinary course of our business, the Company is involved in a number of lawsuits and administrative proceedings. While uncertainties are inherent in the final outcome of these matters, the Companys management believes, after consultation
with legal counsel, that the disposition of these proceedings should not have a material adverse effect on our financial position, results of operations or cash flows.
6. Employee Benefit Plan
The Company
provides an Employee Retirement Savings Plan (the Retirement Plan) under Section 401(k) of the Internal Revenue Code of 1986, as amended (the Code), that covers substantially all U.S. based salaried employees. Concurrent
with the acquisition of Hudson IT, the Company expanded employee eligibility under the Retirement Plan to include all U.S. based
W-2
hourly employees. Employees may contribute a percentage of eligible
compensation to the Retirement Plan, subject to certain limits under the Code. For Hudson IT employees enrolled in the Hudson Employee Retirement Savings Plan under the Code at the acquisition date, the Company provides a matching contribution of
50% of the first 6% of the participants contributed pay, subject to vesting based on the combined tenure with Hudson and Mastech Digital. For all other employees, the Company did not provide for any matching contributions for the six months
ended June 30, 2018 and 2017. Mastech Digitals total contributions to the Retirement Plan for the three and six months ended June 30, 2018 related to the former Hudson IT employees totaled approximately $22,000 and $43,000,
respectively. Mastech Digitals total contributions to the Retirement Plan for the three and six months ended June 30, 2017 related to the former Hudson IT employees totaled approximately $24,000 and $54,000, respectively.
7. Stock-Based Compensation
In 2008, the
Company adopted a Stock Incentive Plan (the Plan) which, as amended, provides that up to 1,400,000 shares of the Companys Common Stock shall be allocated for issuance to directors, officers and key personnel. On May 16, 2018,
the Plan was further amended to increase the number of shares of common stock that may be issued pursuant to the Plan by 400,000 shares, to a total of 1,800,000. Grants under the Plan can be made in the form of stock options, stock appreciation
rights, performance shares or stock awards. During the three months ended June 30, 2018, the Company granted no shares under the Plan. During the six months ended June 30, 2018, the Company granted 12,690 restricted share units and 90,000
stock options at a strike price of $14.92. During the three and six months ended June 30, 2017, the Company granted no shares under the Plan. As of June 30, 2018 and December 31, 2017, there were 429,000 shares and 132,000,
respectively available for future grant under the Plan.
Stock-based compensation expense for the three months ended June 30, 2018
and 2017 was $120,000 and $108,000, respectively, and for the six months ended June 30, 2018 and 2017 was $225,000 and $215,000, respectively. Stock-based compensation expense is included in selling, general and administrative expenses in the
Condensed Consolidated Statements of Operations.
During the three and six months ended June 30, 2018, the Company issued 5,125
shares and 6,238 shares, respectively, related to the vesting of restricted stock and the exercise of stock options. During the three and six months ended June 30, 2017, the Company issued 94,138 shares related to the vesting of restricted
stock and the exercise of stock options.
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