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Nature of Operations and Summary of Significant Accounting Policies | 12 Months Ended
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Jan. 03, 2015
Accounting Policies [Abstract] |
Nature of Operations and Summary of Significant Accounting Policies | 1. Nature of Operations and Summary of Significant Accounting Policies Nature of Operations Kadant Inc. was incorporated in Delaware in November 1991 and currently trades on the New York Stock Exchange under the ticker symbol "KAI." Kadant Inc. and its subsidiaries' (collectively, the Company) continuing operations include two reportable operating segments, Papermaking Systems and Wood Processing Systems, and a separate product line, Fiber-based Products. Through its Papermaking Systems segment, the Company develops, manufactures, and markets a range of equipment and products primarily for the global papermaking, paper recycling and other process industries. The Company's principal products in this segment include custom-engineered stock-preparation systems and equipment for the preparation of wastepaper for conversion into recycled paper; fluid-handling systems used primarily in the dryer section of the papermaking process and during the production of corrugated boxboard, metals, plastics, rubber, textiles, chemicals, and food; doctoring systems and equipment and related consumables important to the efficient operation of paper machines; and cleaning and filtration systems essential for draining, purifying, and recycling process water and cleaning paper machine fabrics and rolls. Through its Wood Processing Systems segment, the Company designs and manufactures stranders and related equipment used in the production of oriented strand board (OSB), an engineered wood panel product used primarily in home construction. This segment also supplies debarking and wood chipping equipment used in the forest products and the pulp and paper industries. Through its Fiber-based Products business, the Company manufactures and sells granules derived from papermaking byproducts primarily for use as agricultural carriers and for home lawn and garden applications, as well as for oil and grease absorption. Principles of Consolidation The accompanying consolidated financial statements of the Company include the accounts of its wholly and majority-owned subsidiaries. All material intercompany accounts and transactions have been eliminated. Fiscal Year Typically, the Company's fiscal quarters and fiscal year consist of 13 and 52 weeks, respectively, ending on the Saturday closest to the end of the corresponding calendar quarter for the Company's fiscal quarters and on the Saturday closest to December 31 for the Company's fourth fiscal quarter and fiscal year. As a result of the difference between the fiscal and calendar periods, a 53rd week is added to the Company's fiscal year every five or six years. In a 53-week fiscal year, the Company's fourth fiscal quarter contains 14 weeks. The Company's fiscal year ending January 3, 2015 (fiscal 2014) contains 53 weeks and the Company's fiscal years ending December 28, 2013 (fiscal 2013) and December 29, 2012 (fiscal 2012) contain 52 weeks. Each quarter of fiscal 2014, 2013 and 2012 contains 13 weeks, except the fourth quarter of 2014, which contains 14 weeks. Use of Estimates and Critical Accounting Policies The preparation of financial statements in conformity with U.S. generally accepted accounting principles (GAAP) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, 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. Critical accounting policies are defined as those that entail significant judgments and estimates, and could potentially result in materially different results under different assumptions and conditions. The Company believes that the most critical accounting policies upon which its financial position depends, and which involve the most complex or subjective decisions or assessments, concern revenue recognition and accounts receivable, warranty obligations, income taxes, the valuation of goodwill and intangible assets, inventories, and pension obligations. A discussion on the application of these and other accounting policies is included in Notes 1 and 3. Although the Company makes every effort to ensure the accuracy of the estimates and assumptions used in the preparation of its consolidated financial statements or in the application of accounting policies, if business conditions were different, or if the Company were to use different estimates and assumptions, it is possible that materially different amounts could be reported in the Company's consolidated financial statements. Revenue Recognition and Accounts Receivable The Company recognizes revenue under Accounting Standards Codification (ASC) 605, "Revenue Recognition," (ASC 605) when the following criteria have been met: persuasive evidence of an arrangement exists, delivery has occurred or service has been rendered, the sales price is fixed or determinable, and collectability is reasonably assured. When the terms of the sale include customer acceptance provisions, and compliance with those provisions cannot be demonstrated until customer acceptance, revenues are recognized upon such acceptance. The Company includes in revenue amounts invoiced for shipping and handling with the corresponding costs reflected in cost of revenues. Provisions for discounts, warranties, returns and other adjustments are provided for in the period in which the related sales are recorded. Most of the Company's revenue is recognized in accordance with the accounting policies in the preceding paragraph. However, when a sale arrangement involves multiple elements, such as equipment and installation, the Company considers the guidance in ASC 605. Such transactions are evaluated to determine whether the deliverables in the arrangement represent separate units of accounting based on the following criteria: the delivered item has value to the customer on a stand-alone basis, and if the contract includes a general right of return relative to the delivered item, delivery or performance of the undelivered item is considered probable and substantially under the control of the Company. Revenue is allocated to each unit of accounting or element based on relative selling prices. The Company determines relative selling prices by using either vendor-specific objective evidence (VSOE) if that exists, or third-party evidence of selling price. When neither VSOE nor third-party evidence of selling price exists for a deliverable, the Company uses its best estimate of the selling price for that deliverable. In cases in which elements cannot be treated as separate units of accounting, the elements are combined into a single unit of accounting for revenue recognition purposes. In addition, revenues and profits on certain long-term contracts are recognized using the percentage-of-completion method or the completed contract method of accounting pursuant to ASC 605. Revenues recorded under the percentage-of-completion method were $19,078,000 in 2014, $19,758,000 in 2013, and $42,190,000 in 2012. The percentage of completion is determined by comparing the actual costs incurred to date to an estimate of total costs to be incurred on each contract. If a loss is indicated on any contract in process, a provision is made currently for the entire estimated loss. The Company's contracts generally provide for billing of customers upon the attainment of certain milestones specified in each contract. Revenues earned on contracts in process in excess of billings are classified as unbilled contract costs and fees, and amounts billed in excess of revenues earned are classified as billings in excess of contract costs and fees, which are included in other current liabilities in the accompanying balance sheet. There are no significant amounts included in the accompanying balance sheet that are not expected to be recovered from existing contracts at current contract values, or that are not expected to be collected within one year, including amounts that are billed but not paid under retainage provisions. For long-term contracts that do not meet the criteria under ASC 605-35 to be accounted for under the percentage-of-completion method, the Company recognizes revenue using the completed contract method. When using the completed contract method, the Company recognizes revenue when the contract has been substantially completed, the product has been delivered, and, if applicable, the customer acceptance criteria have been met. Accounts receivable are recorded at the invoiced amount and do not bear interest. The Company exercises judgment in determining its allowance for bad debts, which is based on its historical collection experience, current trends, credit policies, specific customer collection issues, and accounts receivable aging categories. In determining this allowance, the Company looks at historical writeoffs of its receivables. The Company also looks at current trends in the credit quality of its customer base as well as changes in its credit policies. The Company performs ongoing credit evaluations of its customers and adjusts credit limits based upon payment history and each customer's current creditworthiness. The Company continuously monitors collections and payments from its customers. Account balances are charged off against the allowance when the Company believes it is probable the receivable will not be recovered. In some instances, the Company utilizes letters of credit as a way to mitigate its credit exposure. The Company's Chinese subsidiaries may receive banker's acceptance drafts from customers as payment for their trade accounts receivable. The banker's acceptance drafts are non-interest bearing obligations of the issuing bank and mature within six months of the origination date. The Company has the ability to sell the drafts at a discount to a third-party financial institution or transfer the drafts to vendors in settlement of current accounts payable prior to the scheduled maturity date. These drafts, which totaled $6,334,000 and $10,765,000 at year-end 2014 and year-end 2013, respectively, are included in accounts receivable in the accompanying consolidated balance sheet until the subsidiary sells the drafts to a bank and receives a discounted amount, transfers the banker's acceptance drafts in settlement of current accounts payable prior to maturity, or obtains cash payment on the scheduled maturity date. Warranty Obligations The Company provides for the estimated cost of product warranties at the time of sale based on the actual historical occurrence rates and repair costs, as well as knowledge of any specific warranty problems that indicate that projected warranty costs may vary from historical patterns. The Company typically negotiates the terms regarding warranty coverage and length of warranty depending on the products and applications. While the Company engages in extensive product quality programs and processes, the Company's warranty obligation is affected by product failure rates, repair costs, service delivery costs incurred in correcting a product failure, and supplier warranties on parts delivered to the Company. Should actual product failure rates, repair costs, service delivery costs, or supplier warranties on parts differ from the Company's estimates, revisions to the estimated warranty liability would be required. The changes in the carrying amount of accrued warranty costs are as follows:
(In thousands) |  | 2014 |  | 2013
Balance at Beginning of Year |  | $ | 4,571 |  |  | $ | 4,462 |
Provision charged to income |  | 2,075 |  |  | 1,565 |
Usage |  | (2,562 | ) |  | (2,114 | )
Acquired |  | 150 |  |  | 567 |
Currency translation |  | (359 | ) |  | 91 |
Balance at End of Year |  | $ | 3,875 |  |  | $ | 4,571 |
Income Taxes In accordance with ASC 740, "Income Taxes," (ASC 740), the Company recognizes deferred income taxes based on the expected future tax consequences of differences between the financial statement basis and the tax basis of assets and liabilities, calculated using enacted tax rates in effect for the year in which these differences are expected to reverse. A tax valuation allowance is established, as needed, to reduce deferred tax assets to the amount expected to be realized. In the period in which it becomes more likely than not that some or all of the deferred tax assets will be realized, the valuation allowance will be adjusted. It is the Company's policy to provide for uncertain tax positions and the related interest and penalties based upon management's assessment of whether a tax benefit is more likely than not to be sustained upon examination by tax authorities. The Company recognizes accrued interest and penalties related to unrecognized tax benefits in the provision for income taxes. At January 3, 2015, the Company believes that it has appropriately accounted for any liability for unrecognized tax benefits. To the extent the Company prevails in matters for which a liability for an unrecognized tax benefit is established, the statute of limitations expires for a tax jurisdiction year, or the Company is required to pay amounts in excess of the liability, its effective tax rate in a given financial statement period may be affected. Earnings per Share Basic earnings per share has been computed by dividing net income attributable to Kadant by the weighted average number of shares outstanding during the year. Diluted earnings per share was computed using the treasury stock method assuming the effect of all potentially dilutive securities, including stock options, restricted stock units and employee stock purchase plan shares, as well as their related tax effects. Cash and Cash Equivalents At year-end 2014 and 2013, the Company's cash equivalents included investments in money market funds and other marketable securities, which had maturities of three months or less at the date of purchase. The carrying amounts of cash equivalents approximate their fair values due to the short-term nature of these instruments. Restricted Cash At year-end 2014 and 2013, the Company had approximately $415,000 and $168,000 of restricted cash, respectively. This cash serves as collateral for bank guarantees primarily associated with providing assurance to customers that the Company will fulfill certain customer obligations entered into in the normal course of business. All of the bank guarantees will expire by the end of 2015. Supplemental Cash Flow Information
(In thousands) |  | 2014 |  | 2013 |  | 2012
Cash Paid for Interest |  | $ | 1,081 |  |  | $ | 961 |  |  | $ | 856 |
Cash Paid for Income Taxes |  | $ | 10,035 |  |  | $ | 8,375 |  |  | $ | 9,326 |
Non-Cash Investing Activities: |  |  |  |  |  |
Fair Value of Assets Acquired |  | $ | 14,771 |  |  | $ | 88,398 |  |  | $ | — |
Cash Paid for Acquired Businesses |  | (12,658 | ) |  | (67,453 | ) |  | — |
Liabilities Assumed of Acquired Businesses |  | $ | 2,113 |  |  | $ | 20,945 |  |  | $ | — |
Non-Cash Financing Activities: |  |  |  |  |  |  |  |  |
Issuance of Company Common Stock |  | $ | 3,220 |  |  | $ | 2,677 |  |  | $ | 2,106 |
Dividends Declared but Unpaid |  | $ | 1,630 |  |  | $ | 1,389 |  |  | $ | — |
Inventories Inventories are stated at the lower of cost (on a first-in, first-out; or weighted average basis) or market value and include materials, labor, and manufacturing overhead. The Company regularly reviews its quantities of inventories on hand and compares these amounts to the historical and forecasted usage of and demand for each particular product or product line. The Company records a charge to cost of revenues for excess and obsolete inventory to reduce the carrying value of inventories to net realizable value. The components of inventories are as follows:
(In thousands) |  | 2014 |  | 2013
Raw Materials and Supplies |  | $ | 24,403 |  |  | $ | 20,836 |
Work in Process |  | 11,259 |  |  | 21,051 |
Finished Goods (includes $1,394 and $2,941 at customer locations) |  | 19,561 |  |  | 20,918 |
|  | $ | 55,223 |  |  | $ | 62,805 |
Property, Plant, and Equipment Property, plant, and equipment are stated at cost. The costs of additions and improvements are capitalized, while maintenance and repairs are charged to expense as incurred. The Company provides for depreciation and amortization primarily using the straight-line method over the estimated useful lives of the property as follows: buildings, 10 to 40 years; machinery and equipment, 2 to 10 years; and leasehold improvements, the shorter of the term of the lease or the life of the asset. Property, plant, and equipment consist of the following:
(In thousands) |  | 2014 |  | 2013
Land |  | $ | 4,315 |  |  | $ | 4,797 |
Buildings |  | 38,067 |  |  | 38,363 |
Machinery, Equipment, and Leasehold Improvements |  | 76,520 |  |  | 74,837 |
|  | 118,902 |  |  | 117,997 |
Less: Accumulated Depreciation and Amortization |  | 73,937 |  |  | 73,112 |
|  | $ | 44,965 |  |  | $ | 44,885 |
Depreciation and amortization expense related to property, plant, and equipment was $5,661,000, $5,088,000, and $5,015,000 in 2014, 2013, and 2012, respectively. Intangible Assets Intangible assets in the accompanying balance sheet include the costs of acquired intellectual property, tradenames, patents, customer relationships, non-compete agreements and other specifically identifiable intangible assets. An intangible asset of $8,100,000 associated with the acquisition of the Johnson tradename as part of the Company's acquisition of The Johnson Corporation in 2005 has an indefinite life and is not being amortized. The remaining intangible assets have been amortized as the underlying economic benefits are realized with a weighted-average amortization period of 11 years. The intangible asset lives have been determined based on the anticipated period over which the Company will derive future cash flow benefits from the intangible assets. The Company has considered the effects of legal, regulatory, contractual, competitive, and other economic factors in determining these useful lives. Acquired intangible assets are as follows:
(In thousands) |  | 2014 |  | 2013
Indefinite-Lived Intangible Asset |  | $ | 8,100 |  |  | $ | 8,100 |
Definite-Lived Intangible Assets, Gross |  | $ | 77,052 |  |  | $ | 69,409 |
Accumulated Amortization |  | (35,901 | ) |  | (30,373 | )
Currency Translation |  | (2,297 | ) |  | 714 |
Definite-Lived Intangible Assets, Net |  | $ | 38,854 |  |  | $ | 39,750 |
Total Intangible Assets, Net |  | $ | 46,954 |  |  | $ | 47,850 |
Acquired intangible assets by major asset class are as follows:
(In thousands) |  | Gross |  | Currency Translation |  | Accumulated Amortization |  | Net
January 3, 2015 |  |  |  |  |  |  |  |
Customer relationships |  | $ | 43,271 |  |  | $ | (1,022 | ) |  | $ | (14,180 | ) |  | $ | 28,069 |
Intellectual property |  | 22,899 |  |  | (977 | ) |  | (14,256 | ) |  | 7,666 |
Tradenames |  | 10,269 |  |  | (228 | ) |  | (480 | ) |  | 9,561 |
Non-compete agreements |  | 3,548 |  |  | (37 | ) |  | (3,239 | ) |  | 272 |
Distribution network |  | 2,400 |  |  | — |  |  | (1,360 | ) |  | 1,040 |
Licensing agreements |  | 400 |  |  | — |  |  | (193 | ) |  | 207 |
Other |  | 2,365 |  |  | (33 | ) |  | (2,193 | ) |  | 139 |
|  | $ | 85,152 |  |  | $ | (2,297 | ) |  | $ | (35,901 | ) |  | $ | 46,954 |
December 28, 2013 |  |  |  |  |  |  |  |  |  |  |  |
Customer relationships |  | $ | 37,964 |  |  | $ | 1,074 |  |  | $ | (11,446 | ) |  | $ | 27,592 |
Intellectual property |  | 20,350 |  |  | (225 | ) |  | (12,276 | ) |  | 7,849 |
Tradenames |  | 10,198 |  |  | (60 | ) |  | (252 | ) |  | 9,886 |
Non-compete agreements |  | 3,388 |  |  | (10 | ) |  | (3,203 | ) |  | 175 |
Distribution network |  | 2,400 |  |  | — |  |  | (1,238 | ) |  | 1,162 |
Licensing agreements |  | 400 |  |  | — |  |  | (173 | ) |  | 227 |
Other |  | 2,809 |  |  | (65 | ) |  | (1,785 | ) |  | 959 |
|  | $ | 77,509 |  |  | $ | 714 |  |  | $ | (30,373 | ) |  | $ | 47,850 |
Amortization of acquired intangible assets was $5,528,000 in 2014, $4,687,000 in 2013, and $3,369,000 in 2012. The estimated future amortization expense of acquired definite-lived intangible assets is $5,287,000 in 2015; $4,931,000 in 2016; $4,721,000 in 2017; $4,525,000 in 2018; $4,164,000 in 2019; and $15,226,000 in the aggregate thereafter. Goodwill The changes in the carrying amount of goodwill by segment are as follows:
(In thousands) |  | Papermaking Systems Segment |  | Wood Processing Systems Segment |  | Total
Balance as of December 29, 2012 |  |  |  |  |  |
Gross Balance |  | $ | 193,456 |  |  | $ | — |  |  | $ | 193,456 |
Accumulated Impairment Losses |  | (85,509 | ) |  | — |  |  | (85,509 | )
Net Balance |  | 107,947 |  |  | — |  |  | 107,947 |
Increase due to acquisitions |  | 2,545 |  |  | 21,480 |  |  | 24,025 |
Currency translation adjustment |  | 338 |  |  | (395 | ) |  | (57 | )
Total 2013 Adjustments |  | 2,883 |  |  | 21,085 |  |  | 23,968 |
Balance at December 28, 2013 |  |  |  |  |  |  |  |  |
Gross Balance |  | 196,339 |  |  | 21,085 |  |  | 217,424 |
Accumulated Impairment Losses |  | (85,509 | ) |  | — |  |  | (85,509 | )
Net Balance |  | 110,830 |  |  | 21,085 |  |  | 131,915 |
Increase due to acquisitions |  | 3,288 |  |  | 894 |  |  | 4,182 |
Currency translation adjustment |  | (6,348 | ) |  | (1,867 | ) |  | (8,215 | )
Total 2014 Adjustments |  | (3,060 | ) |  | (973 | ) |  | (4,033 | )
Balance at January 3, 2015 |  |  |  |  |  |  |  |  |
Gross Balance |  | 193,279 |  |  | 20,112 |  |  | 213,391 |
Accumulated Impairment Losses |  | (85,509 | ) |  | — |  |  | (85,509 | )
Net Balance |  | $ | 107,770 |  |  | $ | 20,112 |  |  | $ | 127,882 |
Impairment of Long-Lived Assets The Company evaluates the recoverability of goodwill and intangible assets with indefinite useful lives as of the end of each fiscal year, or more frequently if events or changes in circumstances, such as a significant decline in sales, earnings, or cash flows, or material adverse changes in the business climate, indicate that the carrying value of an asset might be impaired. Testing goodwill for impairment involves a two-step quantitative process. However, prior to performing the two-step quantitative goodwill impairment test, the Company has the option to first perform an assessment of qualitative factors to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount. At January 3, 2015, the Company performed a quantitative goodwill impairment assessment for all of its reporting units, which indicated that the fair value of each reporting unit exceeded its carrying value and, as a result, the second step of the quantitative process was not required. At December 28, 2013, the Company performed a qualitative goodwill impairment analysis. This impairment analysis included an assessment of certain qualitative factors including, but not limited to, the results of prior fair value calculations, the movement of the Company's share price and market capitalization, the reporting unit and overall financial performance, and macroeconomic and industry conditions. The Company considered the qualitative factors and weighed the evidence obtained, and determined that it was not more likely than not that the fair value of any of the reporting units was less than its carrying amount. Although the Company believes the factors considered in the impairment analysis are reasonable, significant changes in any one of the assumptions used could have produced a different result. At January 3, 2015 and December 28, 2013, the Company performed a quantitative impairment analysis on its indefinite-lived intangible asset, the Johnson tradename totaling $8,100,000, and determined that the asset was not impaired. Goodwill by reporting unit is as follows:
(In thousands) |  | 2014 |  | 2013
Stock-Preparation |  | $ | 20,081 |  |  | $ | 18,290 |
Doctoring, Cleaning, & Filtration |  | 38,381 |  |  | 34,658 |
Fluid-Handling |  | 49,308 |  |  | 57,882 |
Wood Processing Systems |  | 20,112 |  |  | 21,085 |
|  | $ | 127,882 |  |  | $ | 131,915 |
The Company assesses its long-lived assets, other than goodwill and indefinite-lived intangible assets, for impairment whenever facts and circumstances indicate that the carrying amounts may not be fully recoverable. To analyze recoverability, the Company projects undiscounted net future cash flows over the remaining lives of such assets or asset groups. If these projected cash flows were to be less than the carrying amounts, an impairment loss would be recognized, resulting in a write-down of the assets with a corresponding charge to earnings. The impairment loss would be measured based upon the difference between the carrying amounts and the fair values of the assets. No indicators of impairment were identified in 2014 or 2013. Foreign Currency Translation and Transactions All assets and liabilities of the Company's foreign subsidiaries are translated at year-end exchange rates, and revenues and expenses are translated at average exchange rates for each quarter in accordance with ASC 830, "Foreign Currency Matters." Resulting translation adjustments are reflected in the "accumulated other comprehensive items" component of stockholders' equity (see Note 14). Foreign currency transaction gains and losses are included in the accompanying consolidated statement of income and are not material for the three years presented. Stock-Based Compensation The Company recognizes compensation cost for all stock-based awards granted to employees and directors based on the grant date estimate of fair value for those awards. The fair value of restricted stock units (RSUs) is based on the grant date trading price of the Company's common stock, reduced by the present value of estimated dividends foregone during the requisite service period. The fair value of stock options is based on the Black-Scholes option-pricing model. For stock options and time-based RSUs, compensation expense is recognized ratably over the requisite service period for the entire award net of forfeitures. For performance-based RSUs, compensation expense is recognized ratably over the requisite service period for each separately-vesting portion of the award net of forfeitures and remeasured at each reporting period until the total number of RSUs to be issued is known. Compensation expense related to any modified stock-based awards is based on the fair value for those awards as of the modification date with any remaining incremental compensation expense recognized ratably over the remaining requisite service period. Derivatives The Company uses derivative instruments primarily to reduce its exposure to changes in currency exchange rates and interest rates. When the Company enters into a derivative contract, the Company makes a determination as to whether the transaction is deemed to be a hedge for accounting purposes. For a contract deemed to be a hedge, the Company formally documents the relationship between the derivative instrument and the risk being hedged. In this documentation, the Company specifically identifies the asset, liability, forecasted transaction, cash flow, or net investment that has been designated as the hedged item, and evaluates whether the derivative instrument is expected to reduce the risks associated with the hedged item. To the extent these criteria are not met, the Company does not use hedge accounting for the derivative. The changes in the fair value of a derivative not deemed to be a hedge are recorded currently in earnings. The Company does not hold or engage in transactions involving derivative instruments for purposes other than risk management. ASC 815, "Derivatives and Hedging," requires that all derivatives be recognized on the balance sheet at fair value. For derivatives designated as cash flow hedges, the related gains or losses on these contracts are deferred as a component of accumulated other comprehensive items (AOCI). These deferred gains and losses are recognized in the period in which the underlying anticipated transaction occurs. For derivatives designated as fair value hedges, the unrealized gains and losses resulting from the impact of currency exchange rate movements are recognized in earnings in the period in which the exchange rates change and offset the currency gains and losses on the underlying exposures being hedged. The Company performs an evaluation of the effectiveness of the hedge both at inception and on an ongoing basis. The ineffective portion of a hedge, if any, and changes in the fair value of a derivative not deemed to be a hedge, are recorded in the consolidated statement of income. Recent Accounting Pronouncements Income Taxes (Topic 740): Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists. In July 2013, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2013-11. Currently, GAAP does not include explicit guidance on the financial statement presentation of an unrecognized tax benefit when a net operating loss carryforward, a similar tax loss, or a tax credit carryforward exists. This ASU clarifies that an unrecognized tax benefit, or a portion of an unrecognized tax benefit, should be presented in the financial statements as a reduction to a deferred tax asset for a net operating loss carryforward, a similar tax loss, or a tax credit carryforward, except as follows: to the extent a net operating loss carryforward, a similar tax loss, or a tax credit carryforward is not available at the reporting date under the tax law of the applicable jurisdiction to settle any additional income taxes that would result from the disallowance of a tax position or the tax law of the applicable jurisdiction does not require the entity to use, and the entity does not intend to use, the deferred tax asset for such purpose, the unrecognized tax benefit should be presented in the financial statements as a liability and should not be combined with deferred tax assets. This ASU applies to all entities that have unrecognized tax benefits when a net operating loss carryforward, a similar tax loss, or a tax credit carryforward exists at the reporting date. This ASU is effective for fiscal years, and interim periods within those years, beginning after December 15, 2013, although early adoption is permitted. This ASU will be applied prospectively to all unrecognized tax benefits that exist at the effective date. The Company adopted this ASU in fiscal 2014, which did not have an impact on its consolidated financial statements. Presentation of Financial Statements (Topic 205) and Property, Plant, and Equipment (Topic 360) Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity. In April 2014, the FASB issued ASU No. 2014-08, which provides new guidance on reporting discontinued operations and disclosures of disposals. Under the new guidance, only disposals representing a strategic shift in operations will be presented as discontinued operations. The new guidance also requires disclosure of the pre-tax income attributable to a disposal of a significant part of the company that does not qualify for discontinued operations reporting. This guidance is effective for the Company beginning in fiscal 2015. Adoption of this ASU is not expected to have a material impact on the Company's consolidated financial position, results of operations or cash flows. Revenue from Contracts with Customers (Topic 606) Section A-Summary and Amendments That Create Revenue from Contracts with Customers (Topic 606) and Other Assets and Deferred Costs-Contracts with Customers (Subtopic 340-40). In May 2014, the FASB issued ASU No. 2014-09, which requires an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers. The new guidance provides a five-step analysis of transactions to determine when and how revenue is recognized. The ASU will replace most existing revenue recognition guidance in GAAP when it becomes effective. The new guidance is effective for the Company beginning in fiscal 2017. Early adoption is not permitted. The standard permits the use of either the retrospective or cumulative effect transition method. The Company is currently evaluating the effect that ASU No. 2014-09 will have on its consolidated financial statements and related disclosures. The Company has not yet selected a transition method nor has it determined the effect of the standard on its ongoing financial reporting. Compensation-Stock Compensation (Topic 718) Accounting for Share-Based Payments When the Terms of an Award Provide That a Performance Target Could Be Achieved after the Requisite Service Period. In June 2014, the FASB issued ASU No. 2014-12, which clarifies the proper method of accounting for share-based payments when the terms of an award provide that a performance target could be achieved after the requisite service period. Under the new guidance, a performance target that affects vesting and could be achieved after completion of the service period should be treated as a performance condition under FASB Accounting Standards Codification (ASC) 718 and, as a result, should not be included in the estimation of the grant-date fair value of the award. An entity should recognize compensation cost for the award when it becomes probable that the performance target will be achieved. In the event that an entity determines that it is probable that a performance target will be achieved before the end of the service period, the compensation cost of the award should be recognized prospectively over the remaining service period. The new guidance is effective for the Company beginning in fiscal 2016. Early adoption is permitted. Adoption of this ASU is not expected to have a material impact on the Company's consolidated financial position, results of operations or cash flows. Preparation of Financial Statements - Going Concern (Subtopic 205-40), Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern. In August 2014, the FASB issued ASU No. 2014-15, which states that under GAAP, continuation of a reporting entity as a going concern is presumed as the basis for preparing financial statements unless and until the entity’s liquidation becomes imminent. If and when an entity’s liquidation becomes imminent, financial statements should be prepared under the liquidation basis of accounting. Even when an entity’s liquidation is not imminent, there may be conditions or events that raise substantial doubt about the entity’s ability to continue as a going concern. In those situations, financial statements should continue to be prepared under the going concern basis of accounting, but the amendments in this ASU should be followed to determine whether to disclose information about the relevant conditions and events. The new guidance is effective for the Company beginning in fiscal 2017, and for annual periods and interim periods thereafter. Early adoption is permitted. The Company will evaluate the going concern considerations in this ASU; however, management does not currently believe that the Company will meet the conditions that would subject its financial statements to additional disclosure. Business Combinations (Topic 805): Pushdown Accounting. In November 2014, the FASB issued ASU No. 2014-17, which provides companies with the option to apply pushdown accounting in its separate financial statements upon occurrence of an event in which an acquirer obtains control of the acquired entity. The election to apply pushdown accounting can be made either in the period in which the change of control occurred or in a subsequent period. If the election is made in a subsequent period, it would be considered a change in accounting principle and treated in accordance with Topic 250, “Accounting Changes and Error Corrections.” The adoption of this ASU did not have an impact on the Company's consolidated financial statements. Income Statement—Extraordinary and Unusual Items (Subtopic 225-20), Simplifying Income Statement Presentation by Eliminating the Concept of Extraordinary Items. In January 2015, the FASB issued ASU No. 2015-01, which eliminates the concept of extraordinary items in an entity’s income statement. Extraordinary classification outside of income from continuing operations was previously considered only when evidence clearly supported its classification as an extraordinary item. Extraordinary items were events and transactions that were distinguished by their unusual nature and by the infrequency of their occurrence. The ASU eliminates the need to separately classify, present, and disclose extraordinary events. The disclosure of events or transactions that are unusual or infrequent in nature will be included in other guidance. This new guidance is effective for the Company beginning in fiscal 2016. Early adoption is permitted. Adoption of this ASU is not expected to have a material impact on the Company's consolidated financial position, results of operations or cash flows.

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- Definition The entire disclosure for the business description and accounting policies concepts. Business description describes the nature and type of organization including but not limited to organizational structure as may be applicable to holding companies, parent and subsidiary relationships, business divisions, business units, business segments, affiliates and information about significant ownership of the reporting entity. Accounting policies describe all significant accounting policies of the reporting entity. + References No definition available. + Details
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