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Recent Accounting Pronouncements | 9 Months Ended
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Oct. 07, 2017
Accounting Changes And Error Corrections [Abstract] |
Recent Accounting Pronouncements | 3. RECENT ACCOUNTING PRONOUNCEMENTS Recently adopted accounting pronouncements In July 2015, the Financial Accounting Standards Board (“FASB”) issued guidance that entities should measure inventory at the lower of cost and net realizable value. Net realizable value is the estimated selling prices in the ordinary course of business, less reasonably predictable costs of completion, disposal, and transportation. The company adopted this guidance as of January 1, 2017 (the first day of our fiscal 2017) and the guidance was applied on a prospective basis. The impact since adoption has been immaterial. In March 2016, the FASB issued guidance to simplify several aspects of the accounting for employee share-based payment transactions including the accounting for income taxes, forfeitures, and statutory tax withholding requirements, as well as classification in the statements of cash flows. A summary at adoption is presented below:
| • | Accounting for income taxes. The new guidance eliminates the additional paid-in capital pool concept and requires that excess tax benefits and tax deficiencies be recorded in the income statement as a component of income tax expense when awards are settled. The recognition of excess tax benefits and deficiencies in the income statement will be applied prospectively. The company adopted the presentation of excess tax benefits on the statements of cash flows under the retrospective transition method. This is presented as a change from a financing activity to a reconciling cash flow item for operating activities for the forty weeks ended October 8, 2016. The net impact during the twelve weeks ended October 7, 2017 for all exercised and vested awards was a $0.5 million tax benefit. The net impact during the forty weeks ended October 7, 2017 for all exercised and vested awards was a $1.1 million tax expense.
| • | Accounting for share-based payment forfeitures. The new guidance permits entities to make a company-wide accounting policy election to either estimate forfeitures each period, as was required, or to account for forfeitures as they occur. The company’s forfeitures, before adoption, were immaterial and had been recorded as they occurred. At adoption, the company will continue to recognize forfeitures as they occur.
| • | Accounting for statutory tax withholding requirements. The new guidance permits companies to withhold an amount up to the employees’ maximum individual tax rate in the relevant jurisdiction, without resulting in liability classification of the award. The company currently withholds the statutory minimum and will continue to do so until we complete an analysis of the required system changes which will allow the company to change its withholding practices in accordance with the new guidance. This amendment did not impact the company. Amendments related to the presentation of employee taxes paid on the statement of cash flows when the employer withholds shares to meet the minimum statutory did not impact the company since we already reported cash flows in accordance with the new guidance.
The table below presents the impact to the Condensed Consolidated Statements of Cash Flows at adoption (amounts in thousands):
|  | For the Forty Weeks Ended |
|  |  |  |  |  | Post-adoption* |
|  | October 8, 2016 |  |  | October 8, 2016 |
CASH FLOWS PROVIDED BY (DISBURSED FOR) OPERATING ACTIVITIES: |  |  |  |  |  |  |  |
Other |  | $ | (2,988 | ) |  | $ | (422 | )
Net cash provided by operating activities |  |  | 285,009 |  |  |  | 285,823 |
CASH FLOWS PROVIDED BY (DISBURSED FOR) FINANCING ACTIVITIES: |  |  |  |  |  |  |  |
Excess windfall tax benefit related to share-based payment awards |  |  | 2,567 |  |  |  | — |
Net cash disbursed for financing activities |  | $ | (234,601 | ) |  | $ | (237,168 | )
* | The “Post-adoption” column in the table above presents the amounts inclusive of the revisions discussed in Note 2, Financial Statement Revisions.
See Note 14, Stock-Based Compensation, for details of our awards. Accounting pronouncements not yet adopted In May 2014, the FASB issued guidance for recognizing revenue in contracts with customers. This guidance requires entities to recognize revenue to depict the transfer of 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. There are five steps outlined in the guidance to achieve this core principle. This guidance was originally effective January 1, 2017, the first day of our fiscal 2017. In July 2015, the FASB issued a deferral for one year, making the effective date December 31, 2017, the first day of our fiscal 2018. In March 2016, the FASB amended the initial guidance to clarify the implementation guidance on principal versus agent considerations. In April 2016, the FASB amended the initial guidance to clarify the identification of performance conditions and the licensing implementation guidance. In May 2016, the FASB amended the initial guidance to update certain narrow scopes within the revenue recognition guidance. In December 2016, the FASB amended the initial guidance for technical corrections and improvements. Early application is permitted, but not before January 1, 2017. Entities will have the option to apply the final standard retrospectively or use a modified retrospective method, recognizing the cumulative effect of the standards in retained earnings at the date of initial application. An entity will not restate prior periods if it uses the modified retrospective method, but will be required to disclose the amount by which each financial statement line item is affected in the current reporting period by the application of the standard as compared to the guidance in effect prior to the change, as well as reasons for significant changes. The company intends to report revenue under the updated standard in its first quarter filing of fiscal 2018. The company has selected the modified retrospective transition method. The company has completed its study on the impact that implementing this standard will have on its financial statements, related disclosures and our internal control over financial reporting as well as whether the effect will be material to our revenue. The standard will not be material to our revenue at adoption. Changes will need to be made to our current internal control over financial reporting processes to ensure all contracts are reviewed for each of the five revenue recognition steps. Additionally, the company’s revenue disclosures will change in fiscal 2018 and beyond. The new disclosures will require more granularity into our sources of revenue, as well as the assumptions about recognition timing, and include our selection of certain practical expedients and policy elections. We are developing draft disclosures to ensure all of the requirements can be met with our current technology platforms. We do not believe our technology platforms require a material change. The study included how to account for pay-by-scan sales and estimated stale charges, whether revenue for a transaction involving a third party is reported net or gross, and the timing of income recognition on the sale of territories. These are not intended to be a complete inventory of the potentially impacted types of transactions. More impacted revenue sources may be discovered as we continue updating our internal control over financial reporting processes and preparing the draft disclosures. In February 2016, the FASB issued guidance that requires an entity to recognize lease liabilities and a right-of-use asset for virtually all leases (other than those that meet the definition of a short-term lease) on the balance sheet and to disclose key information about the entity’s leasing arrangements. This guidance is effective for annual reporting periods beginning after December 15, 2018, including interim periods within those periods, with earlier adoption permitted. This guidance must be adopted using a modified retrospective approach for all leases existing at, or entered into after, the date of initial adoption, with an option to elect to use certain transition relief. The company intends to adopt the updated standard in the first quarter of fiscal 2019. The company currently has significant operating leases with our fiscal 2016 lease expense totaling $97.4 million. We are in the final stages of selecting a new software tool to assist us in the abstracting process of our leases. This process will begin in our fourth quarter of fiscal 2017 and is anticipated to be complete in the second half of fiscal 2018. The company expects a significant impact to our Consolidated Financial Statements as a result of this guidance. In August 2016, the FASB issued guidance on the classification of certain cash receipts and payments in the statements of cash flows. The guidance is effective for fiscal years beginning after December 15, 2017, and interim periods within those years. Early adoption is permitted. The guidance must be applied retrospectively to all periods presented but may be applied prospectively if retrospective application would be impracticable. The adoption of this new guidance will not be material to our Consolidated Financial Statements. In January 2017, the FASB issued guidance to 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 assets or businesses. This guidance is effective for annual reporting periods beginning after December 15, 2017, including interim periods within those period. Early application is allowed for transactions that have not been reported in financial statements that have been issued or made available for issuance. This guidance shall be applied prospectively at adoption. This guidance will impact the company’s assessment of the acquisition of either an asset or a business in future transactions beginning in our fiscal 2018. In January 2017, the FASB issued guidance to simplify the accounting for goodwill impairment. The guidance removed Step 2 of the goodwill impairment test, which requires a hypothetical purchase price allocation. A goodwill impairment will now be the amount by which a reporting unit’s carrying value exceeds its fair value, not to exceed the carrying amount of goodwill. Companies will still have the option to perform a qualitative assessment to determine if a quantitative impairment test is necessary. This guidance will be applied prospectively. Companies are required to disclose the nature of and reason for the change in accounting principle upon transition. That disclosure shall be provided in the first annual reporting period and in the interim period within the first annual reporting period when the company adopts this guidance. This change to the guidance is effective for fiscal years beginning after December 15, 2019. Early adoption is permitted after January 1, 2017. The company is currently evaluating when this guidance will be adopted and the impact on our Consolidated Financial Statements. In March 2017, the FASB issued guidance that requires all employers to separately present the service cost component from the other pension and postretirement benefit cost components in the income statement. Service cost will now be presented with other employee compensation costs in operating income or capitalized in assets, as appropriate. The other components reported in the income statement will be reported separate from the service cost and outside of income from operations. The amendments are effective for annual reporting periods beginning after December 15, 2017, including interim periods within those periods. Early adoption was permitted as of the beginning of an annual reporting period for which financial statements were not issued or made available for issuance. However, early adoption is only allowed in the first interim period presented in a fiscal year; therefore, early adoption was only permitted in our first quarter of fiscal 2017. The guidance is required to be applied on a retrospective basis for the presentation of the service cost component and the other components of net benefit cost, and on a prospective basis for the capitalization of only the service cost component of net benefit cost. The company currently does not capitalize our pension cost. This guidance will impact the company. The company plans to adopt this standard in the first quarter of fiscal 2018. Our plan costs (including defined benefit and post-retirement plans) for the twelve and forty weeks ended October 7, 2017 are presented in the table below (amounts in thousands):
|  | For the Twelve Weeks Ended |  |  | For the Forty Weeks Ended |
|  | October 7, 2017 |  |  | October 7, 2017 |
Service cost to be reported in operating income |  | $ | 233 |  |  | $ | 778 |
Components to be reported outside of operating income |  |  | 1,709 |  |  |  | (1,658 | )
Total pension cost (income) |  | $ | 1,942 |  |  | $ | (880 | )
In May 2017, the FASB issued guidance to provide clarity and reduce diversity in practice for changes to the terms and conditions of a share-based payment award. This amendment provides guidance about which changes to the terms or conditions of a share-based payment award require an entity to apply modification accounting. The amendments to this guidance are effective for all entities for annual periods, and interim periods within those annual periods, beginning after December 15, 2017. Early adoption is permitted, including adoption in any interim period, for reporting periods for which financial statements have not yet been issued. The amendments shall be applied prospectively to an award modified on or after the adoption date. The company intends to adopt this guidance in our first quarter of fiscal 2018. This guidance will impact any modified share-based payment awards beginning in our fiscal 2018. In August 2017, the FASB issued guidance to hedge accounting. The new guidance will make more financial and nonfinancial hedging strategies eligible for hedge accounting. It also amends the presentation and disclosure requirements and changes how companies assess effectiveness. It is intended to more closely align hedge accounting with companies’ risk management strategies, simplify the application of hedge accounting, and increase transparency as to the scope and results of hedging programs. The amendments in this guidance are effective for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years. Early application is permitted in any interim period after issuance of the guidance. All transition requirements and elections should be applied to hedging relationships existing on the date of adoption. The effect of the adoption should be reflected as of the beginning of the fiscal year of adoption. The amended presentation and disclosure guidance are required prospectively. An entity may make certain transition elections upon adoption of the amendments. We are still assessing the impact of the guidance at adoption. The company intends to early adopt this guidance beginning in our first quarter of fiscal 2018. Certain transition elections will be made upon adoption of the amendments. We have reviewed other recently issued accounting pronouncements and concluded that either they are not applicable to our business or that no material effect is expected upon future adoption.

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