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Accounting Policies | 12 Months Ended
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Dec. 31, 2015
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 2015, 2014, and 2013, 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. The changes in the carrying amount of goodwill by geographic segment are as follows:
|  | Year Ended December 31, 2015 |
|  | Gross Balance |  | Accumulated Impairment Losses |  | Net Goodwill |
|  | Balance January 1, 2015 |  | Acquired During the Period |  | Foreign Currency Translation and Other |  | Balance December 31, 2015 |  | Balance January 1, 2015 |  | Impairment Loss During the Period |  | Balance December 31, 2015 |  | December 31, 2015 |
|  | (in millions) |
Americas |  | $ | 398.0 |  |  | — |  |  | (6.8 | ) |  | 391.2 |  | $ | (24.5 | ) |  | — |  |  | (24.5 | ) |  | 366.7 |
EMEA |  |  | 265.5 |  |  | — |  |  | (26.9 | ) |  | 238.6 |  |  | — |  |  | (129.7 | ) |  | (129.7 | ) |  | 108.9 |
Asia-Pacific |  |  | 12.9 |  |  | 12.9 |  |  | 0.5 |  |  | 26.3 |  |  | (12.9 | ) |  | — |  |  | (12.9 | ) |  | 13.4 |
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Total |  | $ | 676.4 |  |  | 12.9 |  |  | (33.2 | ) |  | 656.1 |  | $ | (37.4 | ) |  | (129.7 | ) |  | (167.1 | ) |  | 489.0 |
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|  | 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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On November 30, 2015, the Company completed the acquisition of 80% of the outstanding shares of Apex Valves Limited ("Apex"), a New Zealand company, with a commitment to purchase the remaining 20% ownership within three years of closing. The aggregate purchase price was approximately $20.4 million and the Company recorded a liability of $5.5 million as the estimate of the acquisition date fair value on the contractual call option to purchase the remaining 20%. The Company accounted for the transaction as a business combination. The Company completed a purchase price allocation that resulted in the recognition of $12.9 million in goodwill and $10.1 million in intangible assets. On December 1, 2014, the Company completed the acquisition of AERCO International, Inc. ("AERCO"), in a share purchase transaction. The aggregate purchase price recorded, including an estimated working capital adjustment, was approximately $272.2 million and was subject to a final post-closing working capital adjustment. The Company accounted for the transaction as a business combination and the acquisition was financed from a borrowing under the Company's Credit Agreement. 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 December 31, 2014. In 2015, the working capital adjustment was finalized resulting in a total purchase price of $271.5 million and the recognition of $173.3 million in goodwill. During the second quarter of 2015, $4.1 million of goodwill in the Americas segment was reclassified to assets held for sale and included in the net assets sold during the third quarter of 2015. This reduction to goodwill was included in the "Foreign Currency Translation and Other" category in the table above. Refer to Note 5 Sale of Business, for further discussion. Impairment of Goodwill and Long-Lived Assets 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. In the fourth quarter of 2015, the Company performed a quantitative impairment analysis for the EMEA reporting unit in connection with the annual strategic plan and due to the underperformance to budget, primarily caused by the continued challenging European macroeconomic environment. The Company estimated the fair value of the reporting unit using a weighted calculation of the income approach and the market approach. The income approach calculated the present value of expected future cash flows and included the impact of recent underperformance of the reporting unit due to the continued challenging macroeconomic environment in Europe and our lowered expectations for the reporting unit going forward included in the strategic plan. The guideline public company method (market approach) calculated estimated fair values based on valuation multiples derived from stock prices and enterprise values of publicly traded companies that are comparable to our Company. In the second step of the impairment test, the carrying value of the goodwill exceeded the implied fair value of goodwill, resulting in a pre-tax impairment charge of $129.7 million. There was a tax benefit associated with the impairment of $3.4 million, resulting in a net impairment charge of $126.3 million. 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. 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 2015, 2014 and 2013 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 2015, 2014 and 2013 of approximately $0.6 million, $1.3 million and $0.7 million, respectively. The impairment charge of $0.6 million consists of a $0.5 million impairment charge for a trade name in the Americas segment and a $0.1 million impairment charge for a trade name in the EMEA segment. 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, |
|  | 2015 |  | 2014 |
|  | Gross Carrying Amount |  | Accumulated Amortization |  | Net Carrying Amount |  | Gross Carrying Amount |  | Accumulated Amortization |  | Net Carrying Amount |
|  | (in millions) |
Patents |  | $ | 16.1 |  | $ | (14.1 | ) | $ | 2.0 |  | $ | 16.2 |  | $ | (13.3 | ) | $ | 2.9 |
Customer relationships |  |  | 212.5 |  |  | (102.1 | ) |  | 110.4 |  |  | 206.7 |  |  | (87.5 | ) |  | 119.2 |
Technology |  |  | 41.3 |  |  | (16.1 | ) |  | 25.2 |  |  | 42.1 |  |  | (12.9 | ) |  | 29.2 |
Trade names |  |  | 21.9 |  |  | (6.4 | ) |  | 15.5 |  |  | 20.6 |  |  | (4.2 | ) |  | 16.4 |
Other |  |  | 9.4 |  |  | (5.9 | ) |  | 3.5 |  |  | 9.5 |  |  | (5.7 | ) |  | 3.8 |
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Total amortizable intangibles |  |  | 301.2 |  |  | (144.6 | ) |  | 156.6 |  |  | 295.1 |  |  | (123.6 | ) |  | 171.5 |
Indefinite-lived intangible assets |  |  | 36.2 |  |  | — |  |  | 36.2 |  |  | 38.6 |  |  | — |  |  | 38.6 |
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Total |  | $ | 337.4 |  | $ | (144.6 | ) | $ | 192.8 |  | $ | 333.7 |  | $ | (123.6 | ) | $ | 210.1 |
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The Company acquired $10.1 million in intangible assets as part of the APEX acquisition, consisting primarily of customer relationships valued at $8.4 million and the trade name of $1.7 million. The weighted-average amortization period in total and by asset category of customer relationships and the trade name is 13 years, 10 years and 15 years, respectively. Aggregate amortization expense for amortized intangible assets for 2015, 2014 and 2013 was $20.9 million, $15.2 million and $14.7 million, respectively. Additionally, future amortization expense on amortizable intangible assets is expected to be $20.1 million for 2016, $19.5 million for 2017, $16.2 million for 2018, $12.5 million for 2019, and $12.2 million for 2020. 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 11.9 years. Patents, customer relationships, technology, trade names and other amortizable intangibles have weighted-average remaining lives of 4.0 years, 11.5 years, 9.6 years, 14.5 years and 32.5 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 2015, unrecognized tax benefits of the Company increased by a net amount of $2.4 million. Unrecognized tax benefits increased by approximately $3.6 million which was mainly related to European tax positions. Unrecognized tax benefits decreased by $1.2 million, whereby approximately $0.8 million was primarily related to a settlement from the completion of a European audit. As of December 31, 2015, the Company had gross unrecognized tax benefits of approximately $4.2 million, approximately $1.8 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 and allowable correlative adjustments that are available for certain jurisdictions. A reconciliation of the beginning and ending amount of unrecognized tax is as follows:
|  | (in millions) |
Balance at January 1, 2015 |  | $ | 1.8 |
Increases related to prior year tax positions |  |  | 0.7 |
Increases related to current year tax positions |  |  | 2.9 |
Decreases related to statute expirations |  |  | (0.3 | )
Settlements |  |  | (0.8 | )
Currency movement |  |  | (0.1 | )
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Balance at December 31, 2015 |  | $ | 4.2 |
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The Company estimates that it is reasonably possible that the balance of unrecognized tax benefits as of December 31, 2015 may decrease by approximately $0.7 million in the next twelve months, as a result of settlements with tax authorities. 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., France, Germany, Canada, and the Netherlands. The statute of limitations in the U.S. is subject to tax examination for 2012 and later; France, Germany, Canada and the Netherlands are subject to tax examination for 2011-2013 and later. All other jurisdictions, with few exceptions, are no longer subject to tax examinations in state and local, or international jurisdictions for tax years before 2011. 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, 2015, the Company had one stock-based compensation plan with total unrecognized compensation costs related to unvested stock-based compensation arrangements of approximately $21.1 million and a total weighted average remaining term of 1.6 years. For 2015, 2014 and 2013, the Company recognized compensation costs related to stock-based programs of approximately $10.9 million, $8.6 million and $9.6 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 2015 and 2014 stock compensation expense, $0.4 million and $0.6 million, respectively, was recorded in cost of goods sold and $10.5 million and $8.0 million, respectively, was recorded in selling, general and administrative expenses. In 2013, the compensation costs were recognized in selling, general and administrative expenses. For 2015, 2014 and 2013, the Company recorded approximately $0.3 million, $0.7 million and $1.2 million, respectively, of tax benefits for the compensation expense relating to its stock options. For 2015, 2014 and 2013, the Company recorded approximately $2.0 million, $1.6 million and $1.9 million, respectively, of tax benefit for its other stock-based plans. For 2015, 2014 and 2013, the recognition of total stock-based compensation expense impacted both basic and diluted net income per common share by $0.25, $0.10 and $0.14, 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 (loss) income per share assumes the conversion of all dilutive securities (see Note 12). Net (loss) income and number of shares used to compute net (loss) income per share, basic and assuming full dilution, are reconciled below:
|  | Years Ended December 31, |
|  | 2015 |  | 2014 |  | 2013 |
|  | Net Loss |  | 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 |  | $ | (112.9 | ) |  | 34.9 |  | $ | (3.24 | ) | $ | 50.3 |  |  | 35.3 |  | $ | 1.42 |  | $ | 58.6 |  |  | 35.5 |  | $ | 1.65 |
Dilutive securities, principally common stock options |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 0.1 |  |  | — |  |  | — |  |  | 0.1 |  |  | — |
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Diluted EPS |  | $ | (112.9 | ) |  | 34.9 |  | $ | (3.24 | ) | $ | 50.3 |  |  | 35.4 |  | $ | 1.42 |  | $ | 58.6 |  |  | 35.6 |  | $ | 1.65 |
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The computation of diluted net (loss) income per share for the years ended December 31, 2015, 2014 and 2013 excludes the effect of the potential exercise of options to purchase approximately 0.3 million, 0.3 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. 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, 2015 or December 31, 2014. 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 $53.5 million, $61.8 million and $61.3 million for the years ended December 31, 2015, 2014 and 2013, respectively. Research and Development Research and development costs included in selling, general, and administrative expense amounted to $23.5 million, $22.5 million and $21.5 million for the years ended December 31, 2015, 2014 and 2013, 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. 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 November 2015, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2015-17, "Income Taxes: Balance Sheet Classification of Deferred Taxes". ASU 2015-17 requires that deferred tax liabilities and assets be classified as noncurrent in a classified statement of financial position. ASU 2015-17 is effective for financial statements issued for annual periods beginning after December 15, 2016 and all interim periods thereafter. Earlier application is permitted for all entities as of the beginning of an interim or annual reporting period and can be applied either prospectively or retrospectively to all periods presented. The adoption of this guidance is not expected to have a material impact on the Company's financial statements. In September 2015, the FASB issued ASU 2015-16, "Business Combinations: Simplifying the Accounting for Measurement-Period Adjustments". ASU 2015-16 eliminates the requirement to retrospectively adjust the financial statements for measurement-period adjustments that occur in periods after a business combination is consummated. ASU 2015-16 is effective in the first quarter of 2016 for public companies with calendar year ends, and should be applied prospectively with early adoption permitted. The adoption of this guidance is not expected to have a material impact on the Company's financial statements. In July 2015, the FASB issued ASU 2015-11, "Inventory: Simplifying the Measurement of Inventory". This new standard changes inventory measurement from lower of cost or market to lower of cost and net realizable value. The standard eliminates the requirement to consider replacement cost or net realizable value less a normal profit margin when measuring inventory. ASU 2015-11 is effective in the first quarter of 2017 for public companies with calendar year ends, and should be applied prospectively with early adoption permitted. The adoption of this guidance is not expected to have a material impact on the Company's financial statements. In April 2015, the FASB issued ASU 2015-03, "Interest—Imputation of Interest: Simplifying the Presentation of Debt Issuance Costs". Under ASU 2015-03, debt issuance costs related to a recognized debt liability will be presented on the balance sheet as a direct deduction from the debt liability, similar to the presentation of debt discounts. The cost of issuing debt will no longer be recorded as a separate asset, except when incurred before receipt of the funding from the associated debt liability. ASU 2015-03 is effective in the first quarter of 2016 for public companies with calendar year ends, with early adoption permitted. The ASU requires retrospective application to all prior periods presented in the financial statements. The adoption of this guidance is not expected to have a material impact on the Company's financial statements. In January 2015, the FASB issued 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.

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