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Summary Of Significant Accounting Policies | 12 Months Ended
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Sep. 30, 2016
Summary Of Significant Accounting Policies [Abstract] |
Summary Of Significant Accounting Policies | 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Business Johnson Outdoors Inc. (the “Company”) is an integrated, global outdoor recreation products company engaged in the design, manufacture and marketing of brand name outdoor equipment, diving, watercraft and marine electronics products. Principles of Consolidation The consolidated financial statements include the accounts of Johnson Outdoors Inc. and all majority owned subsidiaries and are stated in conformity with U.S. generally accepted accounting principles. Intercompany accounts and transactions have been eliminated upon consolidation. ﻿ Use of Estimates The preparation of financial statements requires management to make estimates and assumptions that impact the reported amounts of assets, liabilities and operating results and the disclosure of commitments and contingent liabilities. Actual results could differ significantly from those estimates. ﻿ Fiscal Year The Company’s fiscal year ends on the Friday nearest September 30. The fiscal year ended September 30, 2016 (hereinafter 2016) comprised 52 weeks. The fiscal year ended October 2, 2015 (hereinafter 2015) comprised 52 weeks. The fiscal year ended October 3, 2014 (hereinafter 2014) comprised 53 weeks. ﻿ Cash and Cash Equivalents The Company considers all short-term investments in interest-bearing bank accounts, and all securities and other instruments with an original maturity of three months or less, to be equivalent to cash. Cash equivalents are stated at cost which approximates market value. ﻿ The Company maintains cash in bank accounts in excess of insured limits. The Company has not experienced any losses and does not believe that significant credit risk exists as a result of this practice. Accounts Receivable Accounts receivable are recorded at face value less an allowance for doubtful accounts. The allowance for doubtful accounts is based on a combination of factors. In circumstances where specific collection concerns exist, a reserve is established to reduce the amount recorded to an amount the Company believes will be collected. For all other customers, the Company recognizes allowances for doubtful accounts based on historical experience of bad debts as a percent of outstanding accounts receivable for each business unit. Uncollectible accounts are written off against the allowance for doubtful accounts after collection efforts have been exhausted. The Company typically does not require collateral on its accounts receivable. Inventories The Company values inventory at the lower of cost (determined using the first-in first-out method) or market. Management’s judgment is required to determine the reserve for obsolete or excess inventory. Inventory on hand may exceed future demand either because the product is outdated or because the amount on hand is more than will be used to meet future needs. Inventory reserves are estimated by the individual operating companies using standard quantitative measures based on criteria established by the Company. The Company also considers current forecast plans, as well as market and industry conditions in establishing reserve levels. Though the Company considers these reserve balances to be adequate, changes in economic conditions, customer inventory levels or competitive conditions could have a favorable or unfavorable effect on required reserve balances. ﻿ Inventories at the end of the respective fiscal years consisted of the following:
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﻿ | September 30 | October 2
﻿ | 2016 | 2015
﻿Raw materials | $ | 26,379 | $ | 34,711
﻿Work in process |  | 34 |  | 24
﻿Finished goods |  | 41,984 |  | 45,184
﻿ | $ | 68,397 | $ | 79,919
﻿ Property, Plant and Equipment Property, plant and equipment are stated at cost less accumulated depreciation. Depreciation of property, plant and equipment is determined by straight-line methods over the following estimated useful lives:
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﻿Property improvements |  |  |  | 5-20 years
﻿Buildings and improvements |  |  |  | 20-40 years
﻿Furniture, fixtures and equipment |  |  |  | 3-10 years
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Upon retirement or disposition of any of the foregoing types of assets, cost and the related accumulated depreciation are removed from the applicable account and any resulting gain or loss is recognized in the results of operations. ﻿ Property, plant and equipment at the end of the respective years consisted of the following:
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﻿ | 2016 | 2015
﻿Property improvements | $ | 590 | $ | 588
﻿Buildings and improvements |  | 21,631 |  | 21,127
﻿Furniture, fixtures and equipment |  | 150,698 |  | 140,474
﻿ |  | 172,919 |  | 162,189
﻿Less accumulated depreciation |  | 123,921 |  | 116,902
﻿ | $ | 48,998 | $ | 45,287
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Goodwill The Company applies a fair value-based impairment test to the carrying value of goodwill on an annual basis as of the last day of the eleventh month of the Company’s fiscal year and, if certain events or circumstances indicate that an impairment loss may have been incurred, on an interim basis. ﻿ During the third quarter of fiscal 2016, the Company re-evaluated its projections for its Diving reporting unit, based on lower than anticipated results due to a sustained decline in sales and unfavorable operating margins resulting from various geopolitical and economic factors as well as due to a lack of new product acceptance by consumers. The revised projections were considered an indicator of potential goodwill impairment, and accordingly, the Company performed an impairment analysis on the goodwill of the Diving reporting unit. ﻿ The analysis of potential impairment of goodwill requires a two-step process. The first step is the estimation of the fair value of the applicable reporting unit. Estimated fair value is based on management judgments and assumptions. The fair values as determined by management are compared with the aggregate carrying values of the reporting units. If the fair value of the reporting unit is greater than its carrying amount, there is no impairment. If the reporting unit carrying amount is greater than the fair value, then the second step must be completed to measure the amount of impairment, if any. ﻿ The second step measures the amount of the impairment loss by comparing the implied fair value of reporting unit goodwill with the carrying amount of that goodwill. The implied fair value is determined by a purchase price allocation approach in which the fair value of both recognized and unrecognized (if any) net assets is subtracted from the fair value of the reporting unit. The excess of the fair value of the reporting unit over the amounts assigned to its assets and liabilities is the implied fair value of goodwill for that reporting unit. If the carrying amount of goodwill exceeds the implied fair value of that goodwill, an impairment loss should be recognized in an amount equal to that excess. ﻿ In conducting its analysis, the Company used the income approach to compare the reporting unit’s carrying value to its indicated fair value. Fair value is determined primarily by using a discounted cash flow methodology that requires considerable management judgment and long-term assumptions and is considered a Level 3 (unobservable) fair value determination in the fair value hierarchy (see Note 4 below). ﻿ The Company’s step one analysis indicated the carrying value of the Diving reporting unit exceeded its indicated fair value as of the measurement date of June 3, 2016. As a result, the Company performed the second step and based on the results, the Company recognized an impairment charge in the third quarter of fiscal 2016 of $6,197 in “Goodwill and other intangible assets impairment” in the accompanying Condensed Consolidated Statements of Operations in the Diving segment, thereby reducing its carrying value to $0. ﻿ See Note 17 below for a discussion of Company acquisitions and their impact on increasing the Company’s goodwill balance during the year ended September 30, 2016. The results of the impairment tests performed in 2015 indicated no impairment to the Company’s goodwill. ﻿ For the year ended October 3, 2014, the Company recognized an impairment charge of $6,475 in the Outdoor Equipment segment. Due to a decline in forecasted cash flows related to Jetboil, the Company performed an interim impairment test on the goodwill related to the Outdoor Equipment-Consumer reporting unit using the income approach based on estimated cash flows. As of the measurement date of June 27, 2014, the carrying value of the reporting unit exceeded its indicated fair value. As a result, the Company proceeded to Step 2 of the impairment test and determined an impairment charge of $6,475 was required bringing the carrying value to its implied fair value of $0. The charge is included in “Goodwill and other intangible asset impairment” in the accompanying Consolidated Statements of Operations in the Outdoor Equipment segment. ﻿ The Company’s impairment analysis is based on management’s estimates. Due to the uncertainty of future events, the Company cannot assure that growth rates will not be lower than expected, that discount rates will not increase or that projected cash flows of the individual reporting units will not decline, all of which factors could impact the carrying value of any remaining goodwill (or portion thereof) in future periods, and accordingly, whether any impairment losses need to be recorded in future periods. ﻿ The changes in the carrying amount of those segments with goodwill and the composition of consolidated net goodwill for fiscal 2016 and 2015 were as follows:
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﻿ | Segment |  |  |  | Consolidated
﻿ | Marine Electronics | Diving | Consolidated |  | Gross Goodwill | Accumulated Impairment | Total
﻿Balance at October 3, 2014 | $ | 10,367 | $ | 4,049 | $ | 14,416 |  | $ | 60,806 | $ | (46,390) | $ | 14,416
﻿Amount attributable to movements in foreign currency rates |  | - |  | (124) |  | (124) |  |  | (124) |  | - |  | (124)
﻿Balance at October 2, 2015 | $ | 10,367 | $ | 3,925 | $ | 14,292 |  | $ | 60,682 | $ | (46,390) | $ | 14,292
﻿Acquisitions |  | 827 |  | 2,219 |  | 3,046 |  |  | 3,046 |  | - |  | 3,046
﻿Impairment |  | - |  | (6,197) |  | (6,197) |  |  | - |  | (6,197) |  | (6,197)
﻿Amount attributable to movements in foreign currency rates |  | 2 |  | 53 |  | 55 |  |  | 55 |  | - |  | 55
﻿Balance at September 30, 2016 | $ | 11,196 | $ | - | $ | 11,196 |  | $ | 63,783 | $ | (52,587) | $ | 11,196
﻿ Other Intangible Assets Indefinite-lived intangible assets are also tested for impairment annually and, if certain events or circumstances indicate that an impairment loss may have been incurred, on an interim basis. There were no impairment losses recognized in fiscal 2016 or 2015. ﻿ During fiscal 2014, due to a decline in forecasted cash flows related to the Jetboil acquisition, the Company performed an interim impairment test on the acquired indefinite lived intangible asset, the Jetboil tradename, by comparing its carrying value to its fair value which was determined using a relief from royalty method under the income approach. As a result of this analysis, the Company recognized an impairment charge of $2,000 in “Goodwill and other intangible assets impairment” in the accompanying Consolidated Statements of Operations in the Outdoor Equipment segment reducing the fair value of the tradename to $3,400. There was no additional impairment of indefinite-lived intangible assets recorded for fiscal 2014. ﻿ Intangible assets with definite lives are stated at cost less accumulated amortization. Amortization is computed using the straight-line method over periods ranging from 4 to 15 years. Amortization of patents and other intangible assets with definite lives was $1,179, $856 and $765 for 2016, 2015 and 2014, respectively. Amortization of these definite-lived intangible assets is expected to be approximately $1,224, $1,024, 1,010, $945 and $811 for fiscal years 2017, 2018, 2019, 2020 and 2021, respectively. ﻿ Intangible assets at the end of the last two years consisted of the following: ﻿
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﻿ | 2016 |  | 2015
﻿ | Gross Intangible | Accumulated Amortization | Net |  | Gross Intangible | Accumulated Amortization | Net
﻿Amortized other intangible assets: |  |  |  |  |  |  |  |  |  |  |  |  |
﻿Patents and trademarks | $ | 4,155 | $ | (4,026) | $ | 129 |  | $ | 4,149 | $ | (3,929) | $ | 220
﻿Other amortizable intangibles |  | 10,804 |  | (3,496) |  | 7,308 |  |  | 6,746 |  | (2,303) |  | 4,443
﻿Non-amortized trademarks |  | 7,025 |  | - |  | 7,025 |  |  | 7,025 |  | - |  | 7,025
﻿ | $ | 21,984 | $ | (7,522) | $ | 14,462 |  | $ | 17,920 | $ | (6,232) | $ | 11,688
﻿ Impairment of Long-Lived Assets The Company reviews long-lived assets for impairment whenever events or changes in business circumstances such as unplanned negative cash flow indicate that the carrying amount of these assets may not be fully recoverable. In such an event, the carrying amount of the asset group is compared to the future undiscounted cash flows expected to be generated by the asset group to determine if impairment exists on these assets. If impairment is determined to exist, any related impairment loss is calculated based on the difference between the fair value and the carrying value on these assets. The Company p erformed an impairment analysis on the long-lived assets in its Diving segment during the third quarter of fiscal 2016. No impairment was indicated. ﻿ Warranties The Company provides for warranties of certain products as they are sold. Warranty reserves are estimated using standard quantitative measures based on criteria established by the Company. Estimates of costs to service its warranty obligations are based on historical experience, expectation of future conditions and known product issues. The following table summarizes the warranty activity for the three years in the period ended September 30, 2016. ﻿
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﻿Balance at September 27, 2013 | $ | 5,214
﻿Expense accruals for warranties issued during the period |  | 3,717
﻿Less current period warranty claims paid |  | 4,853
﻿Balance at October 3, 2014 | $ | 4,078
﻿Expense accruals for warranties issued during the period |  | 5,631
﻿Less current period warranty claims paid |  | 5,408
﻿Balance at October 2, 2015 | $ | 4,301
﻿Expense accruals for warranties issued during the period |  | 4,699
﻿Less current period warranty claims paid |  | 4,674
﻿Balance at September 30, 2016 | $ | 4,326
﻿ Accumulated Other Comprehensive Income (Loss) The components of “Accumulated other comprehensive income (loss)” on the accompanying Consolidated Balance Sheets as of the end of fiscal year 2016, 2015 and 201 4 were as follows:
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﻿ | 2016 | 2015 | 2014
﻿ | Pre-Tax Amount | Tax Effect | Net of Tax Effect | Pre-Tax Amount | Tax Effect | Net of Tax Effect | Pre-Tax Amount | Tax Effect | Net of Tax Effect
﻿Foreign currency translation adjustment | $ | 10,525 |  | - | $ | 10,525 | $ | 10,253 | $ | - | $ | 10,253 | $ | 18,424 | $ | - | $ | 18,424
﻿Unamortized loss on pension plans |  | (10,999) |  | 2,828 |  | (8,171) |  | (8,492) |  | 1,876 |  | (6,616) |  | (6,981) |  | 1,335 |  | (5,646)
﻿Accumulated other comprehensive income | $ | (474) | $ | 2,828 | $ | 2,354 | $ | 1,761 | $ | 1,876 | $ | 3,637 | $ | 11,443 | $ | 1,335 | $ | 12,778
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﻿ ﻿
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﻿The reclassifications out of AOCI for the year ended September 30, 2016 were as follows:
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﻿ |  |  |  |  | Statement of Operations
﻿ |  |  |  |  | Presentation
﻿Unamortized loss on defined benefit pension plans |  |  |  |  |
﻿Amortization of loss |  | $ | 566 |  | Cost of sales / Operating expense
﻿Tax effects |  |  | (215) |  | Income tax expense
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﻿Foreign currency translation adjustments |  |  |  |  |
﻿Write off of currency translation amounts |  |  | (249) |  | Other income and expense
﻿Total reclassifications for the period |  | $ | 102 |  |
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﻿The reclassifications out of AOCI for the year ended October 2, 2015 were as follows:
﻿ |  |  |  |  |
﻿ |  |  |  |  | Statement of Operations
﻿ |  |  |  |  | Presentation
﻿Unamortized loss on defined benefit pension plans: |  |  |  |  |
﻿Amortization of loss |  | $ | 622 |  | Cost of sales / Operating expense
﻿Tax effects |  |  | (237) |  | Income tax expense
﻿ |  |  |  |  |
﻿Foreign currency translation adjustments: |  |  |  |  |
﻿Write off of currency translation amounts |  |  | 177 |  | Other income and expense
﻿Total reclassifications for the period |  | $ | 562 |  |
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﻿The reclassifications out of AOCI for the year ended October 3, 2014 were as follows:
﻿ |  |  |  |  |
﻿ |  |  |  |  | Statement of Operations
﻿ |  |  |  |  | Presentation
﻿Unamortized loss on defined benefit pension plans: |  |  |  |  |
﻿Amortization of loss |  | $ | 341 |  | Cost of sales / Operating expense
﻿Tax effects |  |  | (130) |  | Income tax expense
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﻿Foreign currency translation adjustments |  |  |  |  |
﻿Write off of currency translation amounts |  |  | 135 |  | Other income and expense
﻿Total reclassifications for the period |  | $ | 346 |  |
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﻿
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﻿The changes in AOCI by component, net of tax, for the year ended September 30, 2016 were as follows:
﻿ |  |  |  |  |  |
﻿ | Foreign Currency Translation Adjustment | Unamortized Loss on Defined Benefit Pension Plans | Accumulated Other Comprehensive Income (Loss)
﻿Balance at October 2, 2015 | $ | 10,253 | $ | (6,616) | $ | 3,637
﻿Other comprehensive income (loss) before reclassifications |  | 521 |  | (3,073) |  | (2,552)
﻿Amounts reclassified from accumulated other comprehensive income |  | (249) |  | 566 |  | 317
﻿Tax effects |  | - |  | 952 |  | 952
﻿Balance at September 30, 2016 | $ | 10,525 | $ | (8,171) | $ | 2,354
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﻿The changes in AOCI by component, net of tax, for the year ended October 2, 2015 were as follows:
﻿ |  |  |  |  |  |
﻿ | Foreign Currency Translation Adjustment | Unamortized Loss on Defined Benefit Pension Plans | Accumulated Other Comprehensive Income (Loss)
﻿Balance at October 3, 2014 | $ | 18,424 | $ | (5,646) | $ | 12,778
﻿Other comprehensive income before reclassifications |  | (8,348) |  | (2,133) |  | (10,481)
﻿Amounts reclassified from accumulated other comprehensive income |  | 177 |  | 622 |  | 799
﻿Tax effects |  | - |  | 541 |  | 541
﻿Balance at October 2, 2015 | $ | 10,253 | $ | (6,616) | $ | 3,637
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Earnings per Share (“EPS”) Net income or loss per share of Class A common stock and Class B common stock is computed using the two-class method. Grants of restricted stock (whether vested or unvested) which receive non-forfeitable dividends are required to be included as part of the basic weighted average share calculation under the two-class method. ﻿ Holders of Class A common stock are entitled to cash dividends equal to 110% of all dividends declared and paid on each share of Class B common stock. The Company grants shares of unvested restricted stock in the form of Class A shares, which carry the same distribution rights as the Class A common stock described above. As such, the undistributed earnings for each period are allocated to each class of common stock based on the proportionate share of the amount of cash dividends that each such class is entitled to receive. ﻿ Basic EPS Basic net income or loss per share is computed by dividing net income or loss allocated to Class A common stock and Class B common stock by the weighted-average number of shares of Class A common stock and Class B common stock outstanding, respectively. In periods with cumulative year to date net income and undistributed income, the undistributed income for each period is allocated to each class of common stock based on the proportionate share of the amount of cash dividends that each such class is entitled to receive. In periods where there is a cumulative year to date net loss or no undistributed income because distributions through dividends exceed net income, Class B shares are treated as anti-dilutive and, therefore, net losses are allocated equally on a per share basis among all participating securities. ﻿ For the years ended September 30, 2016, October 2, 2015 and October 3, 2014, basic income per share for Class A and Class B shares has been presented using the two class method as described above. ﻿ Diluted EPS Diluted net income per share is computed by dividing allocated net income by the weighted-average number of common shares outstanding, adjusted for the effect of dilutive stock options, restricted stock units and non-vested restricted stock. Anti-dilutive stock options, restricted stock units and non-vested stock are excluded from the calculation of diluted EPS. The computation of diluted net income per share of Class A common stock assumes that Class B common stock is converted into Class A common stock. Therefore, diluted net income per share is the same for both Class A and Class B common shares. In periods where the Company reports a net loss, the effect of anti-dilutive stock options, restricted stock units and non-vested stock is excluded and diluted loss per share is equal to basic loss per share. ﻿ For the years ended September 30, 2016, October 2, 2015 and October 3, 2014, diluted net income per share reflects the effect of dilutive stock options and restricted stock units and assumes the conversion of Class B common stock into Class A common stock. ﻿ There were no stock options that could potentially dilute earnings per share in the future which were not included in the fully diluted computation because they would have been anti-dilutive for the years ended September 30, 2016, October 2, 2015 and October 3, 2014. Non-vested stock that could potentially dilute earnings per share in the future which were not included in the fully diluted computation because they would have been anti-dilutive totaled 162,472, 214,027 and 319,632 shares for the years ended September 30, 2016, October 2, 2015 and October 3, 2014, respectively. ﻿ The following table sets forth a reconciliation of net income to dilutive earnings used in the diluted earnings per common share calculations and the computation of basic and diluted earnings per common share:
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﻿ | 2016 | 2015 | 2014
﻿Net income | $ | 13,501 | $ | 10,616 | $ | 9,123
﻿Less: Undistributed earnings reallocated to non-vested shareholders |  | (258) |  | (191) |  | (304)
﻿Dilutive earnings | $ | 13,243 | $ | 10,425 | $ | 8,819
﻿Weighted average common shares – Basic: |  |  |  |  |  |
﻿Class A |  | 8,627 |  | 8,515 |  | 8,420
﻿Class B |  | 1,212 |  | 1,212 |  | 1,212
﻿Dilutive stock options and restricted stock units |  | 16 |  | - |  | 3
﻿Weighted average common shares - Dilutive |  | 9,855 |  | 9,727 |  | 9,635
﻿Net income per common share – Basic: |  |  |  |  |  |
﻿Class A | $ | 1.36 | $ | 1.08 | $ | 0.93
﻿Class B | $ | 1.24 | $ | 0.98 | $ | 0.84
﻿Net income per common share – Diluted: |  |  |  |  |  |
﻿Class A | $ | 1.34 | $ | 1.06 | $ | 0.90
﻿Class B | $ | 1.34 | $ | 1.06 | $ | 0.90
﻿ ﻿ Stock-Based Compensation Stock-based compensation cost is recorded for all option grants and awards of non-vested stock and restricted stock units based on their grant-date fair value. Stock-based compensation expense is recognized on a straight-line basis over the vesting period of each award. No stock options were granted in 2016, 2015 or 2014. See Note 10 of these Notes to Consolidated Financial Statements for information regarding the Company’s stock-based incentive plans, including stock options, non-vested stock, and employee stock purchase plans. ﻿ Income Taxes The Company provides for income taxes currently payable and deferred income taxes resulting from temporary differences between financial statement income/loss and taxable income/loss. Accrued interest and penalties related to unrecognized tax benefits are recognized as a component of income tax expense. Deferred income tax assets and liabilities are determined based on the difference between the amounts reported in the financial statements and the tax basis of assets and liabilities, using enacted tax rates in effect in the years in which the differences are expected to reverse. Deferred income tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment. A valuation allowance is established if it is more likely than not that some portion or all of a deferred income tax asset will not be realized. See Note 6 of these Notes to Consolidated Financial Statements for further discussion. ﻿ Employee Benefits The Company and certain of its subsidiaries have various retirement and profit sharing plans. The Company does not have any significant foreign retirement plans. Pension obligations, which are generally based on compensation and years of service, are funded by payments to pension fund trustees. The Company’s policy is to annually fund the minimum amount required under the Employee Retirement Income Security Act of 1974 for plans subject thereto. Other retirement costs are funded at least annually. See Note 7 of these Notes to Consolidated Financial Statements for additional discussion. ﻿ Foreign Operations and Related Derivative Financial Instruments The functional currencies of the Company’s foreign operations are the local currencies. Accordingly, assets and liabilities of foreign operations are translated into U.S. dollars at the rate of exchange existing at the end of the year. Results of operations are translated at monthly average exchange rates. Adjustments resulting from the translation of foreign currency financial statements are classified as “Accumulated other comprehensive income (loss),” a separate component of Shareholders’ equity. ﻿ Currency gains and losses are recognized when assets and liabilities of foreign operations, denominated in other than their local currency, are converted into the local currency of the entity. Additionally, currency gains and losses are recognized through the settlement of transactions denominated in other than the local currency. The Company recognized currency gains from transactions of $277 and $427 in 2016 and 2014, respectively, and currency losses from transactions of $1,196 in 2015, all of which were included in Other (income) expense, net. ﻿ Because the Company operates internationally, it has exposure to market risk from movements in foreign currency exchange rates. Approximately 17% of the Company’s revenues for the year ended September 30, 2016 were denominated in currencies other than the U.S. dollar. Approximately 7% were denominated in euros and approximately 6% were denominated in Canadian dollars, with the remaining 4% denominated in various other foreign currencies. The Company may mitigate the impact on its operating results of a portion of the fluctuations in certain foreign currencies through the purchase of foreign currency swaps, forward contracts and options to hedge known commitments denominated in foreign currencies or borrowings in foreign currencies. The Company did not use foreign currency forward contracts in 2016, 2015 or 2014. The Company does not enter into foreign exchange contracts for trading or speculative purposes. Revenue Recognition The Company recognizes revenue when all of the following criteria have been met:
| · |  | Persuasive evidence of an arrangement exists. Contracts, internet commerce agreements, and customer purchase orders are generally used to determine the existence of an arrangement.
| · |  | All substantial risk of ownership transfers to the customer. Shipping documents and customer acceptance, when applicable, are used to verify delivery.
| · |  | The fee is fixed or determinable. This is assessed based on the payment terms associated with the transaction and whether the sales price is subject to refund or adjustment.
| · |  | Collectability is reasonably assured. Collectability is assessed based on the creditworthiness of the customer as determined by credit checks and analysis, as well as by the customer’s payment history.
﻿ Estimated costs of returns and allowances and discounts are accrued as a reduction to sales when revenue is recognized. ﻿ Advertising & Promotions The Company expenses substantially all costs related to the production of advertising the first time the advertising takes place. Cooperative promotional arrangements are accrued as related revenue is earned. ﻿ Advertising and promotions expense in 2016, 2015 and 2014 totaled $23,611, $24,460 and $22,135, respectively. These charges are included in “Marketing and selling expenses.” Capitalized advertising costs, included in Other current assets, totaled $866 and $1,049 at September 30, 2016 and October 2, 2015, respectively, and primarily included catalogs and costs of advertising which have not yet run for the first time. ﻿ Shipping and Handling Costs Shipping and handling fees billed to customers are included in “Net sales.” Shipping and handling costs are included in “Marketing and selling expenses” and totaled $10,240, $10,838 and $10,675 for 2016, 2015 and 2014, respectively. ﻿ Research and Development The Company expenses research and development costs as incurred except for costs of software development for new electronic products which are capitalized once technological feasibility is established and are included in Furniture, Fixtures and Equipment. The gross amount capitalized related to software development was $31,572, less accumulated amortization of $14,597, at September 30, 2016 and $26,487, less accumulated amortization of $11,858, at October 2, 2015. These costs are amortized over the expected life of the software of three to seven years. Amortization expense related to capitalized software in 2016, 2015 and 2014 was $2,738, $2,535 and $2,045, respectively, and is included in depreciation expense on plant, property and equipment. ﻿ Fair Values The carrying amounts of cash, cash equivalents, accounts receivable, and accounts payable approximated fair value at September 30, 2016 and October 2, 2015 due to the short maturities of these instruments. During 2016, 2015 and 2014, the Company held investments in equity and debt securities that were carried at fair value. When indicators of impairment are present, the Company may be required to value certain long-lived assets such as property, plant, and equipment, and other intangibles at fair value. ﻿ Valuation Techniques ﻿ Rabbi Trust Assets Rabbi trust assets, used to fund amounts the Company owes to certain officers and other employees under the Company’s non-qualified deferred compensation plan, are included in “Other assets,” and are classified as trading securities. These assets are comprised of marketable debt and equity securities that are marked to fair value based on unadjusted quoted prices in active markets. ﻿ Goodwill and Other Intangible Assets In assessing the recoverability of the Company’s goodwill and other intangible assets, the Company estimates the future discounted cash flows of the business segments to which the goodwill relates. When estimated future discounted cash flows are less than the carrying value of the net assets and related goodwill, an impairment test is performed to measure and recognize the amount of the impairment loss, if any. In determining estimated future cash flows, the Company makes assumptions regarding anticipated financial position, future earnings and other factors to determine the fair value of the respective assets. ﻿ See Note 2 of these Notes to Consolidated Financial Statements for disclosures regarding the fair value of long-term debt and Note 4 of these Notes to Consolidated Financial Statements for disclosures regarding fair value measurements. ﻿ New Accounting Pronouncements On November 20, 2015, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2015-17, Balance Sheet Classification of Deferred Taxes (Topic 740). Pursuant to this update, all deferred tax assets and liabilities, and any related valuation allowances are required to be classified as non-current on the balance sheet. The classification change for all deferred taxes as non-current simplifies entities’ processes as it eliminates the need to separately identify the net current and net non-current deferred tax asset or liability in each jurisdiction and allocate valuation allowances. The Company elected to retrospectively adopt this accounting standard in the beginning of the first quarter of fiscal 2016 and as a result, prior periods in our Consolidated Financial Statements were adjusted. Pursuant to this standard, $10,649 of deferred tax assets was reclassified from current deferred tax assets to long-term deferred tax assets. ﻿ In February 2016, the FASB issued ASU No. 2016-02, Leases, which will require lessees to report on their balance sheets a right-of-use asset and a lease liability in connection with most lease agreements classified as operating leases under the current guidance. The lease liability will be measured based on the present value of future lease payments, subject to certain conditions. The right-of-use asset will be measured based on the initial amount of the liability, plus certain initial direct costs. The new guidance will further require that leases be classified at inception as either (a) operating leases or (b) finance leases. For operating leases, periodic expense will generally be flat (straight-line) throughout the life of the lease. For finance leases, periodic expense will decline (similar to capital leases under current rules) over the life of the lease. The new standard must be adopted using a modified retrospective transition method. For public companies, this amendment is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018. Early adoption is permitted. The Company is currently assessing the impact that this standard will have on its consolidated financial statements. ﻿ In March 2016, the FASB issued ASU No. 2016-09, Compensation – Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting, which is intended to simplify several aspects of the accounting for stock-based compensation transactions, including the income tax consequences, classification of awards as either equity or liabilities, and classification on the statements of cash flows. Excess tax benefits for share-based payments will be recorded as a reduction of income taxes and reflected in operating cash flows upon the adoption of this ASU. Excess tax benefits are recorded in equity and as financing activity under the current rules. The guidance will be effective for annual reporting periods beginning after December 15, 2016 and interim periods within those fiscal years with early adoption permitted. The Company will elect early adoption of this standard effective with its first fiscal quarter of 2017 and is currently assessing the impact that this standard will have on its consolidated financial statements. ﻿ In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers, which will supersede ASC Topic 605, Revenue Recognition. In August 2015, the FASB deferred the effective date of this new standard by one year. This standard involves a five-step approach to recognizing revenue based on individual performance obligations in a contract. The new standard will also require additional qualitative and quantitative disclosures about the Company’s contracts with customers, any significant judgments made in applying the revenue guidance, and the Company’s assets recognized from the costs to obtain or fulfill a contract. This guidance becomes effective for the Company at the beginning of its 2019 fiscal year and permits the use of either the retrospective or cumulative effect transition method. For public companies, this amendment is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2017. Early application is permitted, but no earlier than December 16, 2016. The Company is currently evaluating the impact that the adoption of this guidance will have on its consolidated financial statements and its related disclosures. ﻿ In April 2015, the FASB issued ASU No. 2015-05, Customer's Accounting for Fees Paid in Cloud Computing Arrangement. This pronouncement provides guidance to determine whether a cloud-based computing arrangement includes a software license. If a cloud-based computing arrangement includes a software license, the customer must account for the software element of the arrangement consistent with the acquisition of other software licenses. Otherwise, the customer must account for the arrangement as a service contract. The new standard permits the use of either the prospective or retrospective transition method. For public companies, this amendment is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2015. The Company does not anticipate that the adoption of this standard will have a material impact on its consolidated financial statements ﻿ In September 2015, the FASB issued ASU No. 2015-16, Business Combinations (Topic 805): Simplifying the Accounting for Measurement-Period Adjustments, which eliminates the requirement for an acquirer in a business combination to account for measurement-period adjustments retrospectively. Under this ASU, acquirers must recognize measurement-period adjustments in the period in which they determine the amounts, including the effect on earnings of any amounts they would have recorded in previous periods if the accounting had been completed at the acquisition date. This guidance is effective for fiscal years beginning after December 15, 2016. The Company elected to early adopt this accounting standard at the beginning of the second quarter of fiscal 2016.

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