XML 22 R9.htm IDEA: XBRL DOCUMENT
v3.19.2

New Accounting Pronouncements | 9 Months Ended
--- | ---
May 31, 2019
Accounting Changes and Error Corrections [Abstract] |
New Accounting Pronouncements | New Accounting Pronouncements Accounting Standards Adopted in Fiscal 2019 ASU 2017-01 -— Clarifying the Definition of a Business In January 2017, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2017-01, Business Combinations (Topic 805): Clarifying the Definition of a Business (“ASU 2017-01”), which requires an evaluation of whether substantially all of the fair value of assets obtained in an acquisition is concentrated in a single identifiable asset or a group of similar identifiable assets. If so, the transaction does not qualify as a business. The guidance also requires an acquired business to include at least one substantive process and narrows the definition of outputs. We adopted ASU 2017-01 effective September 1, 2018 and applied the guidance prospectively. The provisions of ASU 2017-01 did not have a material effect on our financial condition, results of operations, or cash flows. ASU 2016-15 — Statement of Cash Flows In August 2016, the FASB issued ASU No. 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments (“ASU 2016-15”), which is intended to reduce the diversity in practice in how certain cash receipts and cash payments are presented and classified in the statement of cash flows. These cash flows include debt prepayment and extinguishment costs, contingent consideration payments made after a business combination, proceeds from the settlement of insurance claims, and proceeds from the settlement of corporate-owned life insurance. We adopted ASU 2016-15 effective September 1, 2018 and applied the changes retrospectively. We maintain life insurance policies on certain former employees primarily to satisfy obligations under certain deferred compensation plans. As required by the standard, proceeds from these policies are now classified as cash inflows from investing activities. We received $0.8 million and $1.0 million from corporate-owned life insurance policies during the nine months ended May 31, 2019 and 2018, respectively. As such, cash flows from operations for the nine months ended May 31, 2018 decreased $1.0 million, with a corresponding increase to cash flows from investing activities, compared to amounts previously reported. The remaining provisions of ASU 2016-15 did not impact our financial statements for the periods presented. ASU 2017-07 — Presentation of Net Periodic Pension Cost In March 2017, the FASB issued ASU No. 2017-07, Compensation — Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost (“ASU 2017-07”), which changes the presentation of net periodic pension cost related to employer sponsored defined benefit plans and other postretirement benefits. Service cost is now included within the same income statement line item as other compensation costs arising from services rendered during the period, while other components of net periodic pension cost are presented separately outside of operating income. Additionally, only service costs may be capitalized in assets. We adopted ASU 2017-07 effective as of September 1, 2018. We applied the standard retrospectively for the presentation of the service cost component and the other components of net periodic pension cost within our income statements. As a practical expedient, we used amounts previously disclosed in the Pension and Defined Contribution Plans footnote of the Notes to Consolidated Financial Statements within our Form 10-K as the basis for retrospective application because amounts capitalized in inventory at a given point in time are de minimis and determining these amounts was impractical. Upon adoption of ASU 2017-07, our previously reported Operating profit for the three and nine months ended May 31, 2018 increased $1.5 million and $4.6 million, respectively, with a corresponding increase to Miscellaneous expense (income), net. The provisions of ASU 2017-07 have no impact to our net income or earnings per share. The impact of the provisions of ASU 2017-07 on the Consolidated Statement of Comprehensive Income for the three and nine months ended May 31, 2018 are as follows (in millions):
| Three Months Ended May 31, 2018 |  | Nine Months Ended May 31, 2018
| As Revised |  | Previously Reported |  | Higher (Lower) |  | As Revised |  | Previously Reported |  | Higher (Lower)
Cost of products sold | $ | 554.9 |  |  | $ | 554.6 |  |  | $ | 0.3 |  |  | $ | 1,545.4 |  |  | $ | 1,544.4 |  |  | $ | 1.0 |
Selling, distribution, and administrative expenses | 271.8 |  |  | 273.6 |  |  | (1.8 | ) |  | 745.7 |  |  | 751.3 |  |  | (5.6 | )
Miscellaneous expense (income), net | (0.2 | ) |  | (1.7 | ) |  | 1.5 |  |  | 3.8 |  |  | (0.8 | ) |  | 4.6 |
ASC 606 — Revenue from Contracts with Customers In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers (“ASU 2014-09”), which replaced the existing revenue recognition guidance in U.S. GAAP. Since the issuance of ASU 2014-09, the FASB released several amendments to improve and clarify the implementation guidance, as well as to change the effective date. These standards have been collectively codified within Accounting Standards Codification (“ASC”) 606, Revenue from Contracts with Customers (“ASC 606”). ASC 606 outlines a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers. The standard also requires additional disclosures about the nature, timing, and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments and changes in those judgments. We adopted ASC 606 effective September 1, 2018 using the modified retrospective method and recognized a cumulative effect of applying ASC 606 of $13.0 million in Retained earnings on the Consolidated Balance Sheet as of this date. We applied the standard to all contracts as of the transition date. Information for prior years presented has not been restated and continues to reflect the authoritative accounting standards in effect for those periods. Adjustments related to the adoption of ASC 606 include additional deferrals of revenue recognition for service-type warranties and the gross presentation of right of return assets and refund liabilities for sales with a right of return. The effects of the adoption of ASC 606 on our Consolidated Statement of Comprehensive Income for the three and nine months ended May 31, 2019, and the Consolidated Balance Sheet as of May 31, 2019 are as follows (in millions except per share amounts):
Consolidated Statement of Comprehensive Income |  | Three Months Ended May 31, 2019 |  | Nine Months Ended May 31, 2019
|  | As Currently Reported |  | Without ASC 606 Adoption |  | Higher (Lower) |  | As Currently Reported |  | Without ASC 606 Adoption |  | Higher (Lower)
Net sales |  | $ | 947.6 |  |  | $ | 951.4 |  |  | $ | (3.8 | ) |  | $ | 2,734.6 |  |  | $ | 2,742.4 |  |  | $ | (7.8 | )
Cost of products sold |  | 564.0 |  |  | 566.2 |  |  | (2.2 | ) |  | 1,649.6 |  |  | 1,653.6 |  |  | (4.0 | )
Selling, distribution, and administrative expenses |  | 263.4 |  |  | 263.4 |  |  | — |  |  | 751.1 |  |  | 750.9 |  |  | 0.2 |
Operating profit |  | 120.3 |  |  | 121.9 |  |  | (1.6 | ) |  | 332.6 |  |  | 336.6 |  |  | (4.0 | )
Income tax expense |  | 23.4 |  |  | 23.8 |  |  | (0.4 | ) |  | 70.1 |  |  | 71.1 |  |  | (1.0 | )
Net income |  | 88.4 |  |  | 89.6 |  |  | (1.2 | ) |  | 234.3 |  |  | 237.3 |  |  | (3.0 | )
Basic earnings per share |  | $ | 2.23 |  |  | $ | 2.26 |  |  | $ | (0.03 | ) |  | $ | 5.89 |  |  | $ | 5.97 |  |  | $ | (0.08 | )
Diluted earnings per share |  | 2.22 |  |  | 2.25 |  |  | (0.03 | ) |  | 5.87 |  |  | 5.95 |  |  | (0.08 | )
Consolidated Balance Sheet |  | May 31, 2019
|  | As Currently Reported |  | Without ASC 606 Adoption |  | Higher (Lower)
Accounts receivable, net |  | $ | 586.0 |  |  | 564.7 |  |  | $ | 21.3 |
Prepayments and other current assets |  | 69.0 |  |  | 53.7 |  |  | 15.3 |
Other accrued liabilities |  | 176.7 |  |  | 139.8 |  |  | 36.9 |
Deferred income tax liabilities |  | 89.6 |  |  | 94.8 |  |  | (5.2 | )
Other long-term liabilities |  | 98.7 |  |  | 77.8 |  |  | 20.9 |
Retained earnings |  | 2,204.9 |  |  | 2,220.9 |  |  | (16.0 | )
Accounting Standards Yet to Be Adopted In August 2018, the FASB issued ASU No. 2018-15, Customer's Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement that is a Service Contract (“ASU 2018-15”), which will require customers to apply internal-use software guidance to determine the implementation costs that are able to be capitalized. Capitalized implementation costs will be required to be amortized over the term of the arrangement, beginning when the cloud computing arrangement is ready for its intended use. ASU 2018-15 is effective for fiscal years (and interim reporting periods within those years) beginning after December 15, 2019. The standard allows changes to be applied either retrospectively or prospectively. We will adopt the standard as required in fiscal 2021. The provisions of ASU 2018-15 are not expected to have a material effect on our financial condition, results of operations, or cash flows. In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”), which requires an entity to assess impairment of its financial instruments based on its estimate of expected credit losses. The provisions of ASU 2016-13 are effective for fiscal years (and interim reporting periods within those years) beginning after December 15, 2019. Entities are required to apply these changes through a cumulative-effect adjustment to retained earnings as of the beginning of the first reporting period in which the guidance is effective. We will adopt the amendments as required in fiscal 2021. The provisions of ASU 2016-13 are not expected to have a material effect on our financial condition, results of operations, or cash flows. In February 2016, the FASB issued ASU No. 2016-02, Leases (“ASU 2016-02”), which requires lessees to include most leases on the balance sheet. ASU 2016-02 is effective for fiscal years (and interim reporting periods within those years) beginning after December 15, 2018. Since the issuance of ASU 2016-02, the FASB released several amendments to improve and clarify the implementation guidance, as well as to change the allowable adoption methods. These standards have been collectively codified within ASC 842, Leases (“ASC 842”). The standard allows entities to present the effects of the accounting change as either a cumulative adjustment as of the beginning of the earliest period presented or as of the date of adoption. We have an implementation team tasked with reviewing our lease obligations and determining the impact of the new standard to our financial statements. The team is also tasked with identifying appropriate changes to our business processes, systems, and controls to support recognition and disclosure under the new standard. Currently, the implementation team has substantially completed its review of outstanding property and equipment leases, which represent our primary outstanding lease obligations. The team is in the process of reviewing and analyzing other contracts that may have ASC 842 impacts, including information technology contracts. The implementation team reports its findings and progress of the project to management on a frequent basis and to the Audit Committee of the Board of Directors on a quarterly basis. Based on our current lease portfolio, we preliminarily expect ASC 842 to have a material impact on our consolidated balance sheets primarily related to the recognition of operating lease assets and liabilities. However, we do not expect the standard to have a material impact on our consolidated statements of comprehensive income or cash flows. Further details regarding our undiscounted future lease payments as well as the timing of those payments are included within the Commitments and Contingencies footnote of the Notes to Consolidated Financial Statements within our Form 10-K. We will adopt the standard as required on September 1, 2019. All other newly issued accounting pronouncements not yet effective have been deemed either immaterial or not applicable.

X
- References No definition available. + Details
Name: | us-gaap_AccountingChangesAndErrorCorrectionsAbstract
Namespace Prefix: | us-gaap_
Data Type: | xbrli:stringItemType
Balance Type: | na
Period Type: | duration

X
- Definition The entire disclosure of changes in accounting principles, including adoption of new accounting pronouncements, that describes the new methods, amount and effects on financial statement line items. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 250 -URI http://asc.fasb.org/topic&trid=2122394 + Details
Name: | us-gaap_NewAccountingPronouncementsAndChangesInAccountingPrinciplesTextBlock
Namespace Prefix: | us-gaap_
Data Type: | nonnum:textBlockItemType
Balance Type: | na
Period Type: | duration