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Accounting Policies | 12 Months Ended
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Dec. 31, 2014
Accounting Policies |
Accounting Policies | 2) Accounting Policies Principles of Consolidation The consolidated financial statements include the accounts of the Company and its majority and wholly owned subsidiaries. Upon consolidation, all significant intercompany accounts and transactions are eliminated. Cash Equivalents Cash equivalents consist of instruments with remaining maturities of three months or less at the date of purchase and consist primarily of certificates of deposit and money market funds, for which the carrying amount is a reasonable estimate of fair value. Allowance for Doubtful Accounts Allowance for doubtful accounts includes reserves for bad debts, sales returns and allowances and cash discounts. The Company analyzes the aging of accounts receivable, individual accounts receivable, historical bad debts, concentration of receivables by customer, customer credit worthiness, current economic trends, and changes in customer payment terms. The Company specifically analyzes individual accounts receivable and establishes specific reserves against financially troubled customers. In addition, factors are developed in certain regions utilizing historical trends of sales and returns and allowances and cash discount activities to derive a reserve for returns and allowances and cash discounts. Concentration of Credit The Company sells products to a diversified customer base and, therefore, has no significant concentrations of credit risk. In 2014, 2013, and 2012, no customer accounted for 10% or more of the Company's total sales. Inventories Inventories are stated at the lower of cost or market, using primarily the first-in, first-out method. Market value is determined by replacement cost or net realizable value. Historical usage is used as the basis for determining the reserve for excess or obsolete inventories. Goodwill and Other Intangible Assets Goodwill is recorded when the consideration paid for acquisitions exceeds the fair value of net tangible and intangible assets acquired. Goodwill and other intangible assets with indefinite useful lives are not amortized, but rather are tested at least annually for impairment. Impairment of Goodwill and Long-Lived Assets The changes in the carrying amount of goodwill by geographic segment are as follows:
|  | Year Ended December 31, 2014 |
|  | Gross Balance |  | Accumulated Impairment Losses |  | Net Goodwill |
|  | Balance January 1, 2014 |  | Acquired During the Period |  | Foreign Currency Translation and Other |  | Balance December 31, 2014 |  | Balance January 1, 2014 |  | Impairment Loss During the Period |  | Balance December 31, 2014 |  | December 31, 2014 |
|  | (in millions) |
Americas |  | $ | 224.7 |  | $ | 174.3 |  | $ | (1.0 | ) | $ | 398.0 |  | $ | (24.5 | ) | $ | — |  | $ | (24.5 | ) | $ | 373.5 |
EMEA |  |  | 301.3 |  |  | — |  |  | (35.8 | ) |  | 265.5 |  |  | — |  |  | — |  |  | — |  |  | 265.5 |
Asia-Pacific |  |  | 13.3 |  |  | — |  |  | (0.4 | ) |  | 12.9 |  |  | — |  |  | (12.9 | ) |  | (12.9 | ) |  | — |
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Total |  | $ | 539.3 |  | $ | 174.3 |  | $ | (37.2 | ) | $ | 676.4 |  | $ | (24.5 | ) | $ | (12.9 | ) | $ | (37.4 | ) | $ | 639.0 |
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|  | Year Ended December 31, 2013 |
|  | Gross Balance |  | Accumulated Impairment Losses |  | Net Goodwill |
|  | Balance January 1, 2013 |  | Acquired During the Period |  | Foreign Currency Translation and Other |  | Balance December 31, 2013 |  | Balance January 1, 2013 |  | Impairment Loss During the Period |  | Balance December 31, 2013 |  | December 31, 2013 |
|  | (in millions) |
Americas |  | $ | 225.6 |  | $ | — |  | $ | (0.9 | ) | $ | 224.7 |  | $ | (24.2 | ) | $ | (0.3 | ) | $ | (24.5 | ) | $ | 200.2 |
EMEA |  |  | 289.7 |  |  | — |  |  | 11.6 |  |  | 301.3 |  |  | — |  |  | — |  |  | — |  |  | 301.3 |
Asia-Pacific |  |  | 12.9 |  |  | — |  |  | 0.4 |  |  | 13.3 |  |  | — |  |  | — |  |  | — |  |  | 13.3 |
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Total |  | $ | 528.2 |  | $ | — |  | $ | 11.1 |  | $ | 539.3 |  | $ | (24.2 | ) | $ | (0.3 | ) | $ | (24.5 | ) | $ | 514.8 |
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Goodwill is tested for impairment at least annually or more frequently if events or circumstances indicate that it is "more likely than not" that goodwill might be impaired, such as a change in business conditions. The Company performs its annual goodwill impairment assessment in the fourth quarter of each year. On December 1, 2014, the Company completed the acquisition of AERCO International, Inc. ("AERCO"), in a share purchase transaction. The aggregate purchase price, including an estimated working capital adjustment, was approximately $272.2 million and is subject to a final post-closing working capital adjustment. The Company accounted for the transaction as a business combination. The Company completed a purchase price allocation that resulted in the recognition of $174.3 million in goodwill and $102.4 million in intangible assets. As of the end of the fourth quarter of 2014, management determined that it was "more likely than not" that a significant portion of the Asia-Pacific reporting unit's third party and intersegment net sales were expected to decline as a result of the initial phase of the Americas and Asia-Pacific transformation and restructuring program. Based on this factor, the Company performed a quantitative impairment analysis for the Asia-Pacific reporting unit. The Company completed a fair value assessment of the net assets of the reporting unit and recorded an impairment of $12.9 million in the fourth quarter of 2014. The Company estimated the fair value of the reporting unit using the present value of expected future cash flows that reflect the impact of certain product line rationalization efforts associated with the initial phase of the Americas and Asia-Pacific transformation and restructuring program, including the sale of certain assets. In the second step of the impairment test, the carrying value of the goodwill exceeded the implied fair value of goodwill, resulting in a full impairment. There was no tax benefit associated with the impairment and the $12.9 million charge eliminated all goodwill on the Asia-Pacific reporting unit. See Note 19 for further discussion on the Company's exit plans impacting the Americas and Asia-Pacific. The Company recorded pre-tax goodwill impairment charges of $0.3 million and $1.0 million in 2013 and 2012, respectively, for the Blue Ridge Atlantic Enterprises, Inc. (BRAE) reporting unit. The Company had determined that the future prospects for its Blue Ridge Atlantic Enterprises, Inc. (BRAE) reporting unit in the Americas were lower than originally estimated as future sales growth expectations had been reduced a number of times since the 2010 acquisition of BRAE. The BRAE goodwill balance was fully impaired in 2013. The goodwill impairment charges were offset by the reduction in anticipated earnout payments of equal amounts, with no remaining earnout liability as of December 31, 2013. The Company estimated the fair value of the reporting unit using the expected present value of future cash flows. The EMEA reporting unit represents the EMEA geographic segment excluding the Blücher reporting unit and had a goodwill balance of $195.8 million as of December 31, 2014. The Company continues to monitor the EMEA reporting unit's performance considering the current economic environment in Europe and impact on operating results and growth expectations. At the annual impairment date of October 26, 2014, the Company performed a qualitative fair value assessment, including an evaluation of certain key assumptions. The Company concluded that the fair value of the EMEA reporting unit continued to exceed its carrying value. Indefinite-lived intangibles are tested for impairment at least annually or more frequently if events or circumstances, such as a change in business conditions, indicate that it is "more likely than not" that an intangible asset might be impaired. The Company performs its annual indefinite-lived intangibles impairment assessment in the fourth quarter of each year. For the 2014, 2013 and 2012 impairment assessments, the Company performed quantitative assessments for all indefinite-lived intangible assets. The methodology employed was the relief from royalty method, a subset of the income approach. Based on the results of the assessment, the Company recognized non-cash pre-tax impairment charges in 2014, 2013 and 2012 of approximately $1.3 million, $0.7 million and $0.4 million, respectively. The impairment charge of $1.3 million in 2014 consists of a $0.5 million impairment charge for a trade name in the Americas segment and a $0.8 million impairment charge for a trade name in the EMEA segment. The gross carrying amount in the table below reflects the impairment charges. Intangible assets with estimable lives and other long-lived assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset or asset group may not be recoverable. Recoverability of intangible assets with estimable lives and other long-lived assets is measured by a comparison of the carrying amount of an asset or asset group to future net undiscounted pretax cash flows expected to be generated by the asset or asset group. If these comparisons indicate that an asset is not recoverable, the impairment loss recognized is the amount by which the carrying amount of the asset or asset group exceeds the related estimated fair value. Estimated fair value is based on either discounted future pretax operating cash flows or appraised values, depending on the nature of the asset. The Company determines the discount rate for this analysis based on the weighted average cost of capital using the market and guideline public companies for the related businesses and does not allocate interest charges to the asset or asset group being measured. Judgment is required to estimate future operating cash flows. Intangible assets include the following:
|  | December 31, |
|  | 2014 |  | 2013 |
|  | Gross Carrying Amount |  | Accumulated Amortization |  | Net Carrying Amount |  | Gross Carrying Amount |  | Accumulated Amortization |  | Net Carrying Amount |
|  | (in millions) |
Patents |  | $ | 16.2 |  | $ | (13.3 | ) | $ | 2.9 |  | $ | 16.6 |  | $ | (12.6 | ) | $ | 4.0 |
Customer relationships |  |  | 206.7 |  |  | (87.5 | ) |  | 119.2 |  |  | 133.0 |  |  | (76.4 | ) |  | 56.6 |
Technology |  |  | 42.1 |  |  | (12.9 | ) |  | 29.2 |  |  | 26.9 |  |  | (10.9 | ) |  | 16.0 |
Trade names |  |  | 20.6 |  |  | (4.2 | ) |  | 16.4 |  |  | 13.7 |  |  | (3.0 | ) |  | 10.7 |
Other |  |  | 9.5 |  |  | (5.7 | ) |  | 3.8 |  |  | 8.8 |  |  | (5.6 | ) |  | 3.2 |
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Total amortizable intangibles |  |  | 295.1 |  |  | (123.6 | ) |  | 171.5 |  |  | 199.0 |  |  | (108.5 | ) |  | 90.5 |
Indefinite-lived intangible assets |  |  | 38.6 |  |  | — |  |  | 38.6 |  |  | 41.9 |  |  | — |  |  | 41.9 |
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Total |  | $ | 333.7 |  | $ | (123.6 | ) | $ | 210.1 |  | $ | 240.9 |  | $ | (108.5 | ) | $ | 132.4 |
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The Company acquired $102.4 million in intangible assets as part of the AERCO acquisition, consisting primarily of customer relationships valued at $78.5 million, developed technology of $15.8 million and the trade name of $7.4 million. The weighted-average amortization period in total and by asset category of customer relationships, developed technology and trade name are 15 years, 16 years, 10 years and 20 years, respectively. Aggregate amortization expense for amortized intangible assets for 2014, 2013 and 2012 was $15.2 million, $14.7 million and $15.4 million, respectively. Additionally, future amortization expense on amortizable intangible assets is expected to be $20.5 million for 2015, $20.1 million for 2016, $19.7 million for 2017, $16.2 million for 2018, and $14.0 million for 2019. Amortization expense is provided on a straight-line basis over the estimated useful lives of the intangible assets. The weighted-average remaining life of total amortizable intangible assets is 12.2 years. Patents, customer relationships, technology, trade names and other amortizable intangibles have weighted-average remaining lives of 5.0 years, 11.9 years, 10.3 years, 14.5 years and 33.3 years, respectively. Indefinite-lived intangible assets primarily include trade names and trademarks. Property, Plant and Equipment Property, plant and equipment are recorded at cost. Depreciation is provided on a straight-line basis over the estimated useful lives of the assets, which range from 10 to 40 years for buildings and improvements and 3 to 15 years for machinery and equipment. Leasehold improvements are depreciated over the lesser of the economic useful life of the asset or the remaining lease term. Taxes, Other than Income Taxes Taxes assessed by governmental authorities on sale transactions are recorded on a net basis and excluded from sales in the Company's consolidated statements of operations. Income Taxes Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carry forwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. The Company recognizes tax benefits when the item in question meets the more-likely-than-not (greater than 50% likelihood of being sustained upon examination by the taxing authorities) threshold. During 2014, unrecognized tax benefits of the Company increased by a net amount of $1.0 million. Unrecognized tax benefits increased by approximately $1.3 million primarily due to findings during a European audit, whereby unrecognized tax benefits decreased by approximately $0.2 million related to a settlement from the completion of a state tax audit. As of December 31, 2014, the Company had gross unrecognized tax benefits of approximately $1.8 million, approximately $1.3 million of which, if recognized, would affect the effective tax rate. The difference between the amount of unrecognized tax benefits and the amount that would affect the effective tax rate consists of the federal tax benefit of state income tax items. A reconciliation of the beginning and ending amount of unrecognized tax is as follows:
|  | (in millions) |
Balance at January 1, 2014 |  | $ | 0.8 |
Increases related to prior year tax positions |  |  | 1.3 |
Settlements |  |  | (0.2 | )
Currency movement |  |  | (0.1 | )
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Balance at December 31, 2014 |  | $ | 1.8 |
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The Company conducts business in a variety of locations throughout the world resulting in tax filings in numerous domestic and foreign jurisdictions. The Company is subject to tax examinations regularly as part of the normal course of business. The Company's major jurisdictions are the U.S., Canada, China, Netherlands, U.K., Germany, Italy and France. With few exceptions the Company is no longer subject to U.S. federal, state and local, or non-U.S. income tax examinations for years before 2010. The statute of limitations in our major jurisdictions is open in the U.S. for the year 2011 and later; in Canada for 2011 and later; and in the Netherlands for 2012 and later. The Company accounts for interest and penalties related to uncertain tax positions as a component of income tax expense. Foreign Currency Translation The financial statements of subsidiaries located outside the United States generally are measured using the local currency as the functional currency. Balance sheet accounts, including goodwill, of foreign subsidiaries are translated into United States dollars at year-end exchange rates. Income and expense items are translated at weighted average exchange rates for each period. Net translation gains or losses are included in other comprehensive income, a separate component of stockholders' equity. The Company does not provide for U.S. income taxes on foreign currency translation adjustments since it does not provide for such taxes on undistributed earnings of foreign subsidiaries. Gains and losses from foreign currency transactions of these subsidiaries are included in net earnings. Stock-Based Compensation The Company records compensation expense in the financial statements for share-based awards based on the grant date fair value of those awards. Stock-based compensation expense includes an estimate for pre-vesting forfeitures and is recognized over the requisite service periods of the awards on a straight-line basis, which is generally commensurate with the vesting term. The benefits associated with tax deductions in excess of recognized compensation cost are reported as a financing cash flow. At December 31, 2014, the Company had one stock-based compensation plan with total unrecognized compensation costs related to unvested stock-based compensation arrangements of approximately $20.2 million and a total weighted average remaining term of 1.9 years. For 2014, 2013 and 2012, the Company recognized compensation costs related to stock-based programs of approximately $8.6 million, $9.6 million and $6.6 million, respectively. In 2014, the Company began recognizing certain stock compensation costs in cost of goods sold based on the allocation of costs to its three operating segments. For the 2014 stock compensation expense, $0.6 million was recorded in cost of goods sold and $8.0 million was recorded in selling, general and administrative expenses. In 2013 and 2012, the compensation costs were recognized in selling, general and administrative expenses. For 2014, 2013 and 2012, the Company recorded approximately $0.7 million, $1.2 million and $0.7 million, respectively, of tax benefits for the compensation expense relating to its stock options. For 2014, 2013 and 2012, the Company recorded approximately $1.6 million, $1.9 million and $1.4 million, respectively, of tax benefit for its other stock-based plans. For 2014, 2013 and 2012, the recognition of total stock-based compensation expense impacted both basic and diluted net income per common share by $0.18, $0.14 and $0.10, respectively. Net Income Per Common Share Basic net income per common share is calculated by dividing net income by the weighted average number of common shares outstanding. The calculation of diluted income per share assumes the conversion of all dilutive securities (see Note 12). Net income and number of shares used to compute net income per share, basic and assuming full dilution, are reconciled below:
|  | Years Ended December 31, |
|  | 2014 |  | 2013 |  | 2012 |
|  | Net Income |  | Shares |  | Per Share Amount |  | Net Income |  | Shares |  | Per Share Amount |  | Net Income |  | Shares |  | Per Share Amount |
|  | (Amounts in millions, except per share information) |
Basic EPS |  | $ | 50.3 |  |  | 35.3 |  | $ | 1.42 |  | $ | 58.6 |  |  | 35.5 |  | $ | 1.65 |  | $ | 68.4 |  |  | 36.0 |  | $ | 1.90 |
Dilutive securities, principally common stock options |  |  | — |  |  | 0.1 |  |  | — |  |  | — |  |  | 0.1 |  |  | — |  |  | — |  |  | 0.1 |  |  | — |
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Diluted EPS |  | $ | 50.3 |  |  | 35.4 |  | $ | 1.42 |  | $ | 58.6 |  |  | 35.6 |  | $ | 1.65 |  | $ | 68.4 |  |  | 36.1 |  | $ | 1.90 |
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The computation of diluted net income per share for the years ended December 31, 2014, 2013 and 2012 excludes the effect of the potential exercise of options to purchase approximately 0.3 million, 0.2 million and 0.2 million shares, respectively, because the exercise price of the option was greater than the average market price of the Class A common stock and the effect would have been anti-dilutive. On April 30, 2013, the Board of Directors authorized the repurchase of up to $90.0 million of the Company's Class A common stock from time to time on the open market or in privately negotiated transactions. The timing and number of any shares repurchased will be determined by the Company's management based on its evaluation of market conditions. Repurchases may also be made under a Rule 10b5-1 plan, which would permit shares to be repurchased when the Company might otherwise be precluded from doing so under insider trading laws. The repurchase program may be suspended or discontinued at any time, subject to the terms of any Rule 10b5-1 plan the Company may enter into with respect to the repurchase program. During 2014, the Company repurchased approximately 670,000 shares of Class A common stock at a cost of approximately $39.6 million. During 2013, the Company repurchased approximately 454,000 shares of Class A common stock at a cost of approximately $23.0 million. On May 16, 2012, the Board of Directors authorized a stock repurchase program of up to two million shares of the Company's Class A common stock. The stock repurchase program was completed in July 2012, as the Company repurchased the entire two million shares of Class A common stock at a cost of approximately $65.8 million. Financial Instruments In the normal course of business, the Company manages risks associated with commodity prices, foreign exchange rates and interest rates through a variety of strategies, including the use of hedging transactions, executed in accordance with the Company's policies. The Company's hedging transactions include, but are not limited to, the use of various derivative financial and commodity instruments. As a matter of policy, the Company does not use derivative instruments unless there is an underlying exposure. Any change in value of the derivative instruments would be substantially offset by an opposite change in the value of the underlying hedged items. The Company does not use derivative instruments for trading or speculative purposes. Derivative instruments may be designated and accounted for as either a hedge of a recognized asset or liability (fair value hedge) or a hedge of a forecasted transaction (cash flow hedge). For a fair value hedge, both the effective and ineffective portions of the change in fair value of the derivative instrument, along with an adjustment to the carrying amount of the hedged item for fair value changes attributable to the hedged risk, are recognized in earnings. For a cash flow hedge, changes in the fair value of the derivative instrument that are highly effective are deferred in accumulated other comprehensive income or loss until the underlying hedged item is recognized in earnings. There were no cash flow hedges as of December 31, 2014 or December 31, 2013. If a fair value or cash flow hedge were to cease to qualify for hedge accounting or be terminated, it would continue to be carried on the balance sheet at fair value until settled, but hedge accounting would be discontinued prospectively. If a forecasted transaction were no longer probable of occurring, amounts previously deferred in accumulated other comprehensive income would be recognized immediately in earnings. On occasion, the Company may enter into a derivative instrument that does not qualify for hedge accounting because it is entered into to offset changes in the fair value of an underlying transaction which is required to be recognized in earnings (natural hedge). These instruments are reflected in the Consolidated Balance Sheets at fair value with changes in fair value recognized in earnings. Foreign currency derivatives include forward foreign exchange contracts primarily for Canadian dollars. Metal derivatives include commodity swaps for copper. Portions of the Company's outstanding debt are exposed to interest rate risks. The Company monitors its interest rate exposures on an ongoing basis to maximize the overall effectiveness of its interest rates. Fair Value Measurements Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. An entity is required to maximize the use of observable inputs, where available, and minimize the use of unobservable inputs when measuring fair value. The Company has certain financial assets and liabilities that are measured at fair value on a recurring basis and certain nonfinancial assets and liabilities that may be measured at fair value on a nonrecurring basis. The fair value disclosures of these assets and liabilities are based on a three-level hierarchy, which is defined as follows:
Level 1 |  | Quoted prices in active markets for identical assets or liabilities that the entity has the ability to access at the measurement date.
Level 2 |  | Observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities, quoted prices in markets that are not active or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.
Level 3 |  | Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.
Assets and liabilities subject to this hierarchy are classified in their entirety based on the lowest level of input that is significant to the fair value measurement. The Company's assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment and considers factors specific to the asset or liability. Shipping and Handling Shipping and handling costs included in selling, general and administrative expense amounted to $61.8 million, $61.3 million and $58.4 million for the years ended December 31, 2014, 2013 and 2012, respectively. The 2013 and 2012 shipping and handling costs disclosed have been updated to include handling costs in order to be comparable with the current year. Research and Development Research and development costs included in selling, general, and administrative expense amounted to $22.5 million, $21.5 million and $20.4 million for the years ended December 31, 2014, 2013 and 2012, respectively. Revenue Recognition The Company recognizes revenue when all of the following criteria have been met: the Company has entered into a binding agreement, the product has been shipped and title passes, the sales price to the customer is fixed or is determinable, and collectability is reasonably assured. Provisions for estimated returns and allowances are made at the time of sale, and are recorded as a reduction of sales and included in the allowance for doubtful accounts in the Consolidated Balance Sheets. The Company records provisions for sales incentives (primarily volume rebates), as an adjustment to net sales, at the time of sale based on estimated purchase targets. Basis of Presentation Certain amounts in the 2013 and 2012 consolidated financial statements have been reclassified to permit comparison with the 2014 presentation. These reclassifications had no effect on reported results of operations or stockholders' equity. Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. New Accounting Standards In January 2015, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2015-01, "Income Statement—Extraordinary and Unusual Items: Simplifying Income Statement Presentation by Eliminating the Concept of Extraordinary Items". ASU 2015-01 eliminates from U.S. GAAP the concept of extraordinary items as part of its initiative to reduce complexity in accounting standards. ASU 2015-01 is effective in the first quarter of 2016 for public companies with calendar year ends, with early adoption permitted provided that the guidance is applied from the beginning of the fiscal year of adoption. The ASU may be applied prospectively or retrospectively to all prior periods presented. The adoption of this guidance is not expected to have a material impact on the Company's financial statements. In June 2014, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2014-12, "Compensation—Stock Compensation: Accounting for Share Based Payments When the Terms of an Award Provide That a Performance Target Could Be Achieved after the Requisite Service Period". ASU 2014-12 clarifies that performance targets that could be achieved after the requisite period should be treated as performance conditions. Those performance conditions would not be reflected in estimating the grant date fair value of the award, but instead would be accounted for when the achievement of the performance condition becomes probable. ASU 2014-12 is effective in the first quarter of 2016 for public companies with calendar year ends, with early adoption permitted. The adoption of this guidance is not expected to have a material impact on the Company's financial statements. In May 2014, FASB issued ASU 2014-09, "Revenue from Contracts with Customers". ASU 2014-09 converges revenue recognition under U.S. GAAP and International Financial Reporting Standards ("IFRS"). For U.S. GAAP, the standard generally eliminates transaction and industry-specific revenue recognition guidance. This includes current guidance on long-term construction-type contracts, software arrangements, real estate sales, telecommunication arrangements, and franchise sales. Under the new standard, revenue is recognized based on a five-step model. ASU 2014-09 is effective in the first quarter of 2017 for public companies with calendar year ends, and early adoption is not permitted for public companies under U.S. GAAP. The Company is assessing the impact of this standard on the Company's financial statements. In April 2014, FASB issued ASU 2014-08, "Presentation of Financial Statements and Property, Plant, and Equipment: Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity". ASU 2014-08 will change the definition of discontinued operations and limit discontinued operations presentation to disposals of components representing a strategic shift that will have a major effect on the operations and financial results of the issuer. ASU 2014-08 is effective in the first quarter of 2015 for public companies with calendar year ends, with early adoption permitted. The Company early adopted the ASU in 2014. The adoption of this guidance has not had a material impact on the Company's financial statements.

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