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Summary of Significant Accounting Policies | 12 Months Ended
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Dec. 30, 2017
Accounting Policies [Abstract] |
Summary of Significant Accounting Policies | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(a) | Basis of Presentation
The consolidated financial statements include the accounts of the company and its wholly-owned subsidiaries. All intercompany accounts and transactions have been eliminated in consolidation. The company's consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of these financial statements requires the company to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses as well as related disclosures. Significant items that are subject to such estimates and judgments include allowances for doubtful accounts, reserves for excess and obsolete inventories, long-lived and intangible assets, warranty reserves, insurance reserves, income tax reserves and post-retirement obligations. On an ongoing basis, the company evaluates its estimates and assumptions based on historical experience and various other factors that are believed to be reasonable under the circumstances. Actual results may differ from these estimates under different assumptions or conditions. The company's fiscal year ends on the Saturday nearest December 31. Fiscal years 2017, 2016, and 2015 ended on December 30, 2017, December 31, 2016 and January 2, 2016, respectively, with each year including 52 weeks. Certain prior year amounts have been reclassified to be consistent with current year presentation, including combining selling and distribution expenses with general and administrative expenses.
(b) | Cash and Cash Equivalents
The company considers all short-term investments with original maturities of three months or less when acquired to be cash equivalents. The company’s policy is to invest its excess cash in interest-bearing deposits with major banks that are subject to minimal credit and market risk.
(c) | Accounts Receivable
Accounts receivable, as shown in the consolidated balance sheets, are net of allowances for doubtful accounts of $13.2 million and $12.6 million at December 30, 2017 and December 31, 2016, respectively. At December 30, 2017, all accounts receivable are expected to be collected within one year. (d) Inventories Inventories are composed of material, labor and overhead and are stated at the lower of cost or market. Costs for inventory have been determined using the first-in, first-out ("FIFO") method. The company estimates reserves for inventory obsolescence and shrinkage based on its judgment of future realization. Inventories at December 30, 2017 and December 31, 2016 are as follows:
| 2017 |  | 2016
| (dollars in thousands)
Raw materials and parts | $ | 180,559 |  |  | $ | 154,647 |
Work in process | 38,917 |  |  | 35,975 |
Finished goods | 205,163 |  |  | 177,621 |
| $ | 424,639 |  |  | $ | 368,243 |
(e) | Property, Plant and Equipment
Property, plant and equipment are carried at cost as follows:
| 2017 |  | 2016
| (dollars in thousands)
Land | $ | 28,996 |  |  | $ | 21,309 |
Building and improvements | 175,678 |  |  | 134,158 |
Furniture and fixtures | 54,362 |  |  | 56,851 |
Machinery and equipment | 165,157 |  |  | 128,688 |
| 424,193 |  |  | 341,006 |
Less accumulated depreciation | (142,278 | ) |  | (119,435 | )
| $ | 281,915 |  |  | $ | 221,571 |
Property, plant and equipment are depreciated or amortized on a straight-line basis over their useful lives based on management's estimates of the period over which the assets will be utilized to benefit the operations of the company. The useful lives are estimated based on historical experience with similar assets, taking into account anticipated technological or other changes. The company periodically reviews these lives relative to physical factors, economic factors and industry trends. If there are changes in the planned use of property and equipment or if technological changes were to occur more rapidly than anticipated, the useful lives assigned to these assets may need to be shortened, resulting in the recognition of increased depreciation and amortization expense in future periods. Following is a summary of the estimated useful lives:
Description |  | Life
Building and improvements |  | 20 to 40 years
Furniture and fixtures |  | 3 to 7 years
Machinery and equipment |  | 3 to 10 years
Depreciation expense amounted to $29.7 million, $26.2 million and $25.5 million in fiscal 2017, 2016 and 2015, respectively. Expenditures which significantly extend useful lives are capitalized. Maintenance and repairs are charged to expense as incurred. Asset impairments are recorded whenever events or changes in circumstances indicate that the recorded value of an asset is greater than the sum of its expected future undiscounted cash flows.
(f) | Goodwill and Other Intangibles
In accordance with ASC 350 “Goodwill-Intangibles and Other”, the company’s goodwill and other indefinite lived intangibles are reviewed for impairment annually on the first day of the fourth quarter and whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. In assessing the recoverability of goodwill and other indefinite lived intangibles, the company considers changes in economic conditions and makes assumptions regarding estimated future cash flows and other factors. Estimates of future cash flows are judgments based on the company’s experience and knowledge of operations. These estimates can be significantly impacted by many factors including changes in global and local business and economic conditions, operating costs, inflation, competition, and consumer and demographic trends. If the company’s estimates or the underlying assumptions change in the future, the company may be required to record impairment charges. Any such charge could have a material adverse effect on the company’s reported net earnings. Goodwill is allocated to the business segments as follows (in thousands):
| Commercial Foodservice |  | Food Processing |  | Residential Kitchen |  | Total
Balance as of January 2, 2016 | $ | 473,127 |  |  | $ | 134,092 |  |  | $ | 376,120 |  |  | $ | 983,339 |
Goodwill acquired during the year | 76,972 |  |  | 1,958 |  |  | — |  |  | 78,930 |
Measurement period adjustments to goodwill acquired in prior year | (503 | ) |  | — |  |  | 86,822 |  |  | 86,319 |
Exchange effect | (7,506 | ) |  | (1,370 | ) |  | (46,990 | ) |  | (55,866 | )
Balance as of December 31, 2016 | $ | 542,090 |  |  | $ | 134,680 |  |  | $ | 415,952 |  |  | $ | 1,092,722 |
Goodwill acquired during the year | 118,419 |  |  | 58,899 |  |  | — |  |  | 177,318 |
Measurement period adjustments to goodwill acquired in prior year | (36,408 | ) |  | 41 |  |  | — |  |  | (36,367 | )
Exchange effect | 7,350 |  |  | 4,658 |  |  | 19,129 |  |  | 31,137 |
Balance as of December 30, 2017 | $ | 631,451 |  |  | $ | 198,278 |  |  | $ | 435,081 |  |  | $ | 1,264,810 |
The company has not recognized any goodwill impairments and therefore no accumulated impairment loss. Intangible assets consist of the following (in thousands):
| December 30, 2017 |  | December 31, 2016
| Estimated Weighted Avg Remaining Life |  | Gross Carrying Amount |  | Accumulated Amortization |  |  | Estimated Weighted Avg Remaining Life |  | Gross Carrying Amount |  | Accumulated Amortization |
Amortized intangible assets: |  |  |  |  |  |  |  |  |  |  |
Customer lists | 5.2 |  | $ | 330,496 |  |  | $ | (171,005 | ) |  | 5.5 |  | $ | 251,025 |  |  | $ | (136,895 | )
Backlog | 0.8 |  | 19,689 |  |  | (18,081 | ) |  | 0.0 |  | 13,550 |  |  | (13,550 | )
Developed technology | 4.2 |  | 22,485 |  |  | (18,248 | ) |  | 4.8 |  | 24,874 |  |  | (17,924 | )
|  |  | $ | 372,670 |  |  | $ | (207,334 | ) |  |  |  | $ | 289,449 |  |  | $ | (168,369 | )
Indefinite-lived assets: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Trademarks and tradenames |  |  | $ | 615,090 |  |  |  |  |  |  |  | $ | 575,091 |  |  |  |
The company performed its annual impairment for trademarks and tradenames (indefinite-lived intangible assets) on the first day of the fourth quarter and based on the results the company determined that the Viking tradename within the Residential Kitchen Equipment Group was impaired. The company estimated the fair value of tradenames using a relief from royalty method under the income approach. The decline in fair value of the Viking tradename was primarily the result of weaker than expected revenue performance in the current year and a corresponding reduction of future revenue expectations. The impairment resulted from the decline in revenues attributable, in part, to the product recall announced in 2015 related to products manufactured prior to the acquisition of Viking. The fair value of the Viking tradename was estimated to be $93.0 million as compared to the carrying value of $151.0 million and resulted in a $58.0 million indefinite-lived intangible asset impairment charge. The aggregate intangible amortization expense was $38.6 million, $29.9 million and $27.4 million in 2017, 2016 and 2015, respectively. The estimated future amortization expense of intangible assets is as follows (in thousands):
2018 | $ | 39,017 |
2019 | 29,423 |
2020 | 28,560 |
2021 | 25,153 |
2022 | 21,056 |
2023 and thereafter | 22,127 |
| $ | 165,336 |
(g) | Accrued Expenses
Accrued expenses consist of the following at December 30, 2017 and December 31, 2016, respectively:
| 2017 |  | 2016
| (dollars in thousands)
Accrued payroll and related expenses | $ | 67,935 |  |  | $ | 74,505 |
Accrued warranty | 52,834 |  |  | 40,851 |
Accrued customer rebates | 48,590 |  |  | 49,923 |
Advanced customer deposits | 31,069 |  |  | 41,735 |
Accrued sales and other tax | 20,881 |  |  | 13,565 |
Accrued professional fees | 18,250 |  |  | 16,605 |
Accrued product liability and workers compensation | 11,976 |  |  | 11,417 |
Accrued agent commission | 11,035 |  |  | 12,834 |
Product recall | 6,068 |  |  | 7,003 |
Restructuring | 1,715 |  |  | 2,295 |
Other accrued expenses | 51,818 |  |  | 64,872 |
| $ | 322,171 |  |  | $ | 335,605 |
(h) | Litigation Matters
From time to time, the company is subject to proceedings, lawsuits and other claims related to products, suppliers, employees, customers and competitors. The company maintains insurance to partially cover product liability, workers compensation, property and casualty, and general liability matters. The company is required to assess the likelihood of any adverse judgments or outcomes to these matters as well as potential ranges of probable losses. A determination of the amount of accrual required, if any, for these contingencies is made after assessment of each matter and the related insurance coverage. The required accrual may change in the future due to new developments or changes in approach such as a change in settlement strategy in dealing with these matters. The company does not believe that any such matter will have a material adverse effect on its financial condition, results of operations or cash flows of the company.
(i) | Accumulated Other Comprehensive Income (Loss)
The following table summarizes the components of accumulated other comprehensive income (loss) as reported in the consolidated balance sheets:
| 2017 |  | 2016
| (dollars in thousands)
Unrecognized pension benefit costs, net of tax of ($43,592) and ($38,004) | $ | (203,063 | ) |  | $ | (173,394 | )
Unrealized gain on interest rate swap, net of tax of $4,243 and $3,655 | 6,365 |  |  | 5,482 |
Currency translation adjustments | (69,721 | ) |  | (116,411 | )
| $ | (266,419 | ) |  | $ | (284,323 | )
Changes in accumulated other comprehensive income (loss) were as follows (in thousands):
| Currency Translation Adjustment |  | Pension Benefit Costs(1) |  | Unrealized Gain/(Loss) Interest Rate Swap(1) |  | Total
Balance as of January 2, 2016 | $ | (52,842 | ) |  | $ | (23,579 | ) |  | $ | 9 |  |  | $ | (76,412 | )
Other comprehensive income before reclassification | (63,569 | ) |  | (149,907 | ) |  | 6,703 |  |  | (206,773 | )
Amounts reclassified from accumulated other comprehensive income | — |  |  | 92 |  |  | (1,230 | ) |  | (1,138 | )
Net current-period other comprehensive income | $ | (63,569 | ) |  | $ | (149,815 | ) |  | $ | 5,473 |  |  | $ | (207,911 | )
Balance as of December 31, 2016 | $ | (116,411 | ) |  | $ | (173,394 | ) |  | $ | 5,482 |  |  | $ | (284,323 | )
Other comprehensive income before reclassification | 46,690 |  |  | (31,683 | ) |  | 1,822 |  |  | 16,829 |
Amounts reclassified from accumulated other comprehensive income | — |  |  | 2,014 |  |  | (939 | ) |  | 1,075 |
Net current-period other comprehensive income | $ | 46,690 |  |  | $ | (29,669 | ) |  | $ | 883 |  |  | $ | 17,904 |
Balance as of December 30, 2017 | $ | (69,721 | ) |  | $ | (203,063 | ) |  | $ | 6,365 |  |  | $ | (266,419 | )
(1) Pension and interest rate swap amounts are net of tax.
(j) | Fair Value Measures
ASC 820 “Fair Value Measurements and Disclosures” defines fair value as the price that would be received for an asset or paid to transfer a liability (an exit price) in the principal most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. ASC 820 establishes a fair value hierarchy, which prioritizes the inputs used in measuring fair value into the following levels: Level 1 – Quoted prices in active markets for identical assets or liabilities Level 2 – Inputs, other than quoted prices in active markets, that are observable either directly or indirectly Level 3 – Unobservable inputs based on our own assumptions The company’s financial assets and liabilities that are measured at fair value are categorized using the fair value hierarchy at December 30, 2017 and December 31, 2016 are as follows (in thousands):
| Fair Value Level 1 |  | Fair Value Level 2 |  | Fair Value Level 3 |  | Total
As of December 30, 2017 |  |  |  |  |  |  |  |  |  |  |
Financial Assets: |  |  |  |  |  |  |  |  |  |  |
Interest rate swaps | $ | — |  |  | $ | 10,266 |  |  | $ | — |  |  | $ | 10,266 |
Financial Liabilities: |  |  |  |  |  |  |  |  |  |  |
Interest rate swaps | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |
Contingent consideration | $ | — |  |  | $ | — |  |  | $ | 1,780 |  |  | $ | 1,780 |
As of December 31, 2016 |  |  |  |  |  |  |  |  |  |  |
Financial Assets: |  |  |  |  |  |  |
Interest rate swaps | $ | — |  |  | $ | 8,842 |  |  | $ | — |  |  | $ | 8,842 |
Financial Liabilities: |  |  |  |  |  |  |  |  |  |  |
Interest rate swaps | $ | — |  |  | $ | 100 |  |  | $ | — |  |  | $ | 100 |
Contingent consideration | $ | — |  |  | $ | — |  |  | $ | 6,612 |  |  | $ | 6,612 |
The contingent consideration as of December 30, 2017 relates to the earnout provisions recorded in conjunction with the acquisitions of Desmon and Scanico. The contingent consideration as of December 31, 2016 relates to the earnout provisions recorded in conjunction with the acquisitions of PES, Desmon, Goldstein Eswood and Induc. The earnout provisions associated with these acquisitions are based upon performance measurements related to sales and earnings, as defined in the respective purchase agreements. On a quarterly basis the company assesses the projected results for each of the acquisitions in comparison to the earnout targets and adjusts the liability accordingly.
(k) | Foreign Currency
Foreign currency transactions are accounted for in accordance with ASC 830 “Foreign Currency Translation”. The income statements of the company’s foreign operations are translated at the monthly average rates. Assets and liabilities of the company’s foreign operations are translated at exchange rates at the balance sheet date. These translation adjustments are not included in determining net income for the period but are disclosed and accumulated in a separate component of stockholders’ equity. Exchange gains and losses on foreign currency transactions are included in determining net income for the period in which they occur. These transactions amounted to a loss of $2.4 million, $1.9 million and $6.8 million in 2017, 2016 and 2015, respectively, and are included in other expense on the statements of earnings.
(l) | Revenue Recognition
At the Commercial Foodservice Equipment Group and Residential Kitchen Equipment Group, the company recognizes revenue on the sale of its products where title transfers and when risk of loss has passed to the customer, which occurs at the time of shipment, and collectibility is reasonably assured. The sale prices of the products sold are fixed and determinable at the time of shipment. Sales are reported net of sales returns, sales incentives and cash discounts based on prior experience and other quantitative and qualitative factors. At the Food Processing Equipment Group, the company enters into long-term sales contracts for certain products. Revenue under these long-term sales contracts is recognized using the percentage of completion method defined within ASC 605-35 “Construction-Type and Production-Type Contracts” due to the length of time to fully manufacture and assemble the equipment. The company measures revenue recognized based on the ratio of actual labor hours incurred in relation to the total estimated labor hours to be incurred related to the contract. Because estimated labor hours to complete a project are based upon forecasts using the best available information, the actual hours may differ from original estimates. Under ASC 605, the company records the asset for revenue recognized but not yet billed on contracts accounted for under the percentage of completion method in Prepaid Expenses and Other on the consolidated balance sheets. For 2017 and 2016, the amount of this asset was $19.5 million and $12.2 million, respectively. The percentage of completion method of accounting for these contracts most accurately reflects the status of these uncompleted contracts in the company's financial statements and most accurately measures the matching of revenues with expenses. At the time a loss on a contract becomes known, the amount of the estimated loss is recognized in the consolidated financial statements.
(m) | Shipping and Handling Costs
Fees billed to the customer for shipping and handling are classified as a component of net revenues. Shipping and handling costs are included in cost of products sold.
(n) | Warranty Costs
In the normal course of business the company issues product warranties for specific product lines and provides for the estimated future warranty cost in the period in which the sale is recorded. The estimate of warranty cost is based on contract terms and historical warranty loss experience that is periodically adjusted for recent actual experience. Because warranty estimates are forecasts that are based on the best available information, claims costs may differ from amounts provided. Adjustments to initial obligations for warranties are made as changes in the obligations become reasonably estimable. A rollforward of the warranty reserve for the fiscal years 2017 and 2016 are as follows:
| 2017 |  | 2016
| (dollars in thousands)
Beginning balance | $ | 40,851 |  |  | $ | 37,901 |
Warranty reserve related to acquisitions | 7,769 |  |  | 2,446 |
Warranty expense | 58,398 |  |  | 48,975 |
Warranty claims paid | (54,184 | ) |  | (48,471 | )
Ending balance | $ | 52,834 |  |  | $ | 40,851 |
(o) | Research and Development Costs
Research and development costs, included in cost of sales in the consolidated statements of earnings, are charged to expense when incurred. These costs were $29.1 million, $26.3 million and $22.4 million in fiscal 2017, 2016 and 2015, respectively. (p) Non-Cash Sh a re-Based Compensation The company estimates the fair value of restricted share grants and stock options at the time of grant and recognizes compensation costs over the vesting period of the awards and options. Non-cash share-based compensation expense of $6.2 million, $27.9 million and $15.9 million was recognized for fiscal 2017, 2016 and 2015, respectively, associated with restricted share grants. The company recorded a related tax benefit of $2.4 million, $10.5 million and $6.0 million in fiscal 2017, 2016 and 2015, respectively. As of December 30, 2017, there was $6.8 million of total unrecognized compensation cost related to nonvested restricted share grant compensation arrangements, which will be recognized over a weighted average life of 1.2 years. Share grant awards not subject to market conditions for vesting are valued at the closing share price of the company’s stock as of the date of the grant. The company issued 76,788 and 382,125 restricted share grant awards in 2017 and 2016, respectively with a fair value of $10.5 million and $36.0 million, respectively. Share grant awards issued in 2017 and 2016 are performance based and were not subject to market conditions. The fair value of $136.29 and $94.19 per share for the awards for 2017 and 2016, respectively, represent the closing share price of the company’s stock as of the date of grant.
(q) | Earnings Per Share
“Basic earnings per share” is calculated based upon the weighted average number of common shares actually outstanding, and “diluted earnings per share” is calculated based upon the weighted average number of common shares outstanding and other dilutive securities. The company’s potentially dilutive securities consist of shares issuable on exercise of outstanding options and vesting of restricted stock grants computed using the treasury method and amounted to 4,000, 55,000, and 22,000 for fiscal 2017, 2016 and 2015, respectively. There were no anti-dilutive equity awards excluded from common stock equivalents for 2017, 2016 or 2015.
(r) | Consolidated Statements of Cash Flows
Cash paid for interest was $25.9 million, $21.0 million and $14.8 million in fiscal 2017, 2016 and 2015, respectively. Cash payments totaling $123.3 million, $89.0 million, and $94.6 million were made for income taxes during fiscal 2017, 2016 and 2015, respectively.
(s) | New Accounting Pronouncements
Accounting Pronouncements - Recently Adopted In July 2015, the FASB issued ASU 2015-11, “Simplifying the Measurement of Inventory,” which is intended to simplify the subsequent measurement of inventories by replacing the current lower of cost or market test with a lower of cost and net realizable value test. The guidance applies only to inventories for which cost is determined by methods other than last-in first-out and the retail inventory method. Application of the standard, which should be applied prospectively, is required for the annual and interim periods beginning after December 15, 2016. Early adoption was permitted. We adopted this guidance on January 1, 2017 and it did not have an impact on the company's financial position, results of operations or cash flows. In November 2015, the FASB issued ASU 2015-17 "Income Taxes (Topic 740): Balance Sheet Classification of Deferred Taxes". The amendments in ASU 2015-17 simplify the accounting for, and presentation of, deferred taxes by eliminating the need to separately classify the current amount of deferred tax assets or liabilities. Instead, aggregated deferred tax assets and liabilities are classified and reported as non-current assets or liabilities. The update is effective for annual reporting periods, and interim periods within those reporting periods, beginning after December 15, 2016. The company early adopted ASU 2015-17 effective April 3, 2016 on a prospective basis. Adoption of this ASU resulted in a reclassification of the company's net current deferred tax asset to the net non-current deferred tax liability in the company's Consolidated Balance Sheet as of July 2, 2016. In March 2016, the FASB issued ASU No. 2016-05, "Derivatives and Hedging (Topic 815): Effect of Derivative Contract Novations on Existing Hedge Accounting Relationships". The amendments in ASU 2016-05 clarify that a change in the counterparty to a derivative instrument that has been designated as the hedging instrument under Topic 815 does not, in and of itself, require dedesignation of the hedging relationship provided that all other hedge accounting criteria continue to be met. The amendments in this update may be applied on either a prospective basis or a modified retrospective basis. This ASU is effective for annual reporting periods, and interim periods with those reporting periods, beginning after December 15, 2016. We adopted this guidance on January 1, 2017 and it did not have an impact on the company's financial position, results of operations or cash flows. In March 2016, the FASB issued ASU No. 2016-09, "Compensation - Stock Compensation (Topic 718)". The amendments in ASU-09 simplify the accounting for share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities, and classification on the statement of cash flows. This ASU is effective for annual reporting periods, and interim periods with those reporting periods, beginning after December 15, 2016. The company adopted ASU No. 2016-09 effective January 1, 2017 on a prospective basis. The adoption of this guidance resulted in the recognition of excess tax benefits in the company's provision for income taxes within the Condensed Consolidated Statements of Comprehensive Income rather than paid-in-capital of approximately $8.1 million for the twelve months period ended December 30, 2017. Additionally, the company's Condensed Consolidated Statement of Cash Flows now presents excess tax benefits as an operating activity rather than a financing activity. Accounting Pronouncements - To be adopted In May 2014, the Financial Accounts Standards Board ("FASB") issued ASU No. 2014-09, “Revenue from Contracts with Customers”. This update amends the current guidance on revenue recognition related to contracts with customers. Under ASU No. 2014-09, an entity should recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. ASU No. 2014-09 also requires additional disclosure about the nature, amount, timing, and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments and changes in judgments and assets recognized from costs incurred to obtain or fulfill a contract. In early 2016, the FASB issued additional updates: ASU No. 2016-10, 2016-11 and 2016-12. These updates provide further guidance and clarification on specific items within the previously issued update. In July 2015, the FASB decided to delay the effective date of the new revenue standard to be effective for interim and annual periods beginning on or after December 15, 2017 for public companies. The guidance can be applied using one of two retrospective application methods. The company has substantially completed its evaluation of significant contracts and the review of its current accounting policies and practices to identify potential differences that would result from applying the requirements of the new standard to the company's revenue contracts. The company has also identified and implemented appropriate changes to business processes, systems and controls to support recognition and disclosure under the new standard. While the company continues to assess all potential impacts of the new standard, the company will adopt the new revenue standard in the first quarter of 2018 applying the modified retrospective transition method. Under the modified retrospective method, we will recognize the cumulative effect of initially applying the new revenue standard as an adjustment to the opening balance of retained earnings. The company estimates this adjustments to be approximately $4.0 million to $6.0 million. The main impact is related to the deferral of equipment revenue associated with long term contracts for the Food Processing Equipment Group when the contract does not specifically provide for an enforceable right to payment for performance completed to date. We do not expect other significant changes to our business processes, systems or internal controls as a result of the standard. The company is finalizing updates to the accounting policies and processes to address the variations from current practices, inclusive of the required additional disclosures in the period subsequent to adoption. In February 2016, the FASB issued ASU No. 2016-02, "Leases (Topic 842)". The amendments under this pronouncement will change the way all leases with a duration of one year of more are treated. Under this guidance, lessees will be required to capitalize virtually all leases on the balance sheet as a right-of-use asset and an associated financing lease liability or operating lease liability. The right-of-use asset represents the lessee’s right to use, or control the use of, a specified asset for the specified lease term. The lease liability represents the lessee’s obligation to make lease payments arising from the lease, measured on a discounted basis. Based on certain characteristics, leases are classified as financing leases or operating leases. Financing lease liabilities, those that contain provisions similar to capitalized leases, are amortized like capital leases are under current accounting, as amortization expense and interest expense in the statement of operations. Operating lease liabilities are amortized on a straight-line basis over the life of the lease as lease expense in the statement of operations. This update is effective for annual reporting periods, and interim periods within those reporting periods, beginning after December 15, 2018. The ASU requires a modified retrospective transition approach for all leases existing at, or entered into after, the date of initial adoption. The company is currently in process of identifying the population of leases, evaluating technology solutions and collecting lease data. We expect most of our operating lease commitments as disclosed in Note 8 Lease Commitments will be subject to the new standard and recognized as lease liabilities and right-of-use assets upon adoption, increasing our total assets and liabilities reported. The company is evaluating the overall impact this standard will have on its policies and procedures pertaining to its existing and future lease arrangements, disclosure requirements and the company's financial position, results of operations and 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". The amendments in ASU-15 address eight specific cash flow classification issues to reduce current and potential future diversity in practice. This ASU is effective for annual reporting periods, and interim periods with those reporting periods, beginning after December 15, 2017. The company is evaluating the impact the application of this ASU will have, if any, on the company's cash flows. In October 2016, the FASB issued ASU No. 2016-16, "Income Taxes (Topic 740): Intra-Entity Transfers of Assets Other Than Inventory". The amendments in ASU-16 prohibit the recognition of current and deferred income taxes for an intra-entity asset transfer other than inventory until the asset has been sold to an outside party. This ASU is effective for annual reporting periods, and interim periods with those reporting periods, beginning after December 15, 2017. The company is evaluating the impact the application of this ASU will have, if any, on the company's financial position, results of operations or cash flows. In January 2017, the FASB issued ASU No. 2017-01, "Business Combinations (Topic 805): Clarifying the Definition of a Business". The amendments in ASU-01 clarify the definition of a business with the objective of adding guidance to assist entities with evaluating whether transactions should be accounted for as acquisitions (or disposals) of businesses. This ASU is effective for annual reporting periods, and interim periods with those reporting periods, beginning after December15, 2017. The company is evaluating the impact the application of this ASU. The company does not expect the adoption of this ASU to have a material impact on its financial position, results of operations or cash flows. In January 2017, the FASB issued ASU No. 2017-04, "Intangibles - Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment". The amendments in ASU-04 simplify the subsequent measurement of goodwill, by removing the second step of the goodwill impairment test. An entity will apply a one-step quantitative test and record the amount of goodwill impairment as the excess of a reporting unit's carrying amount over its fair value. The new guidance does not amend the optional qualitative assessment of goodwill impairment. This ASU is effective for annual reporting periods, and interim reporting periods, beginning after December 15, 2019. Early adoption is permitted for testing dates after January 1, 2017. The company is evaluating the application of this ASU on the company's annual impairment test. The company does not expect the adoption of this ASU to have a material impact on its financial position, results of operations or cash flows. 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". The amendments in ASU-07 require that an employer report the service costs component in the same line item or items as other compensation costs arising from services rendered by the pertinent employees during the period. The other components of net periodic pension cost and net periodic postretirement benefit cost are required to be presented in the income statement separately from the service cost component and outside a subtotal of income from operations. In addition, the new standard will allow only the service cost component to be eligible for capitalization, when applicable. Application of the standard, which should be applied retrospectively for the income statement presentation changes and prospectively for the capitalization changes, is required for the annual and interim reporting periods beginning after December 15, 2017. As reported in Note 10 - Employee Retirement Plans the 2017 and 2016 net periodic pension benefit were $27.3 million and $23.4 million, respectively, and the 2015 net periodic pension costs were $1.5 million. The service cost component of these amounts in 2017, 2016 and 2015, which will remain as a component of operating profit, was $4.4 million, $3.8 million and $1.7 million, respectively. Net income will not change as a result of the adoption of this standard. The company will adopt the standard in the first quarter of 2018. In August 2017, the FASB issued ASU 2017-12, "Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities". The amendments in ASU-12 provide new guidance about income statement classification and eliminates the requirement to separately measure and report hedge ineffectiveness. The entire change in fair value for qualifying hedge instruments included in the effectiveness will be recorded in other comprehensive income (OCI) and amounts deferred in OCI will be reclassified to earnings in the same income statement line item in which the earnings effect of the hedged item is reported. This ASU is effective for annual reporting periods, and interim periods with those reporting periods, beginning after December 15, 2018 with early adoption permitted. The company is currently evaluating the impacts the ASU will have on its condensed consolidated financial statements. In February 2018, the FASB issued ASU 2018-02, "Income Statement-Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income". The amendments in ASU-02 allow a reclassification from accumulated other comprehensive income to retained earnings for stranded tax effects resulting from the Tax Cuts and Jobs Act and require certain disclosures about stranded tax effects. This ASU is effective for annual reporting periods, and interim periods with those reporting periods beginning after December 15, 2018 with early adoption permitted. The company will be adopting the standard in fiscal 2018 retrospectively for the effects recognized in 2017 related to the change in the U.S. federal corporate income tax rate in the Tax Cuts and Jobs Act.

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- Definition The entire disclosure for all significant accounting policies of the reporting entity. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 235 -URI http://asc.fasb.org/topic&trid=2122369 + Details
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