Significant Accounting Policies (Policies)

12 Months Ended

Dec. 31, 2017

Basis of Accounting, Policy [Policy Text Block]

Basis of Presentation

The consolidated financial statements

and notes include all accounts and subsidiaries of the Company in which it maintains a controlling financial interest. Intercompany accounts and transactions have been eliminated. Investments in entities where the Company is able to exercise significant influence, but

not

control, are accounted for by the equity method. For transactions with entities accounted for under the equity method, any intercompany profits on amounts still remaining are eliminated. Amounts originating from any deferral of intercompany profits are recorded within either the Company’s investment account or the account balance to which the transaction specifically relates (e.g., construction of fixed assets). Only upon settlement of the intercompany transaction with a

third

party is the deferral of the intercompany profit recognized by the Company. The Company consolidates the financial results of the AQ-JV based on its determination that, for accounting purposes, it holds a controlling financial interest in the joint venture and is the primary beneficiary of this variable interest entity. The Company has accounted for and reported QHL’s

50%

ownership interest in the joint venture as a noncontrolling interest. See Note

“

Joint Venture

” for additional information. Certain reclassifications have been made to the prior years’ financial statements to conform to the current year presentation.

Use of Estimates, Policy [Policy Text Block]

Use of Estimates

The preparation of financial statements in conformity with

Generally Accepted Accounting Principles in the United States (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Among the significant estimates affecting the financial statements are those related to the realizable value of accounts receivable and long-lived assets, the value of derivative instruments, deferred capacity revenue, legal contingencies, stock-based compensation and income taxes. These estimates and assumptions are based on management’s best estimates and judgment. Management evaluates its estimates and assumptions on an ongoing basis using historical experience and other factors, including the current economic environment, which management believes is reasonable under the circumstances. Assumptions are adjusted as facts and circumstances dictate. More volatile capital markets, uncertainty on interest rates, and the continuation of low crude oil pricing have combined to increase the uncertainty in such estimates and assumptions. As future events and their effects cannot be determined with precision, actual results

may

differ significantly from those estimates. Changes in those estimates will be reflected in the financial statements of future periods.

Cash and Cash Equivalents, Policy [Policy Text Block]

ash and Cash Equivalents

For purposes of the

Consolidated Balance Sheets and Consolidated Statements of Cash Flows, the Company generally considers all highly liquid investments with a maturity at acquisition of

three

months or less to be cash equivalents.

Cash and Cash Equivalents, Restricted Cash and Cash Equivalents, Policy [Policy Text Block]

Restricted Cash

Restricted cash

$11,814

December 31, 2017

consists of

$10,044

to fund the purchase or settlement at maturity of the Company’s

6.25%

Notes, certificates of deposits totaling

$1,734

required under the terms of certain contracts to which the Company is a party and other restricted cash of

$36.

When the restrictions are lifted, the Company will transfer these funds into its operating accounts.

Trade and Other Accounts Receivable, Policy [Policy Text Block]

Trade Accounts Receivable and

Bad Debt Reserves

Trade accounts receivable are recorded at the invoiced amount and do

not

bear interest. Amounts collected on trade accounts receivable are included in net cash provided by operating activities in the Consolidated Statements of Cash Flows. The Company does

not

have any off-balance sheet credit exposure related to its customers.

The Company evaluates its bad debt as a single portfolio since most of its subsidiaries primarily operate within Alaska and are subject to the same economic and risk conditions across industry segments and geographic locations. Bad debt reserves against uncollectible receivables are established and incurred during the period. These estimates are derived through an analysis of account aging profiles and a review of historical recovery experience. Receivables are charged off against the allowance when management confirms it is probable amounts will

not

be collected. Subsequent recoveries, if any, are credited to the allowance. The Company records bad debt expense as a component of “Selling, general and administrative expense” in the Consolidated Statements of Comprehensive (Loss) Income.

Inventory, Policy [Policy Text Block]

Materials

and

Supplies

Materials and supplies are carried in inventory at the lower of

moving average cost or net realizable value. Cash flows related to the sale of inventory are included in operating activities in the Company’s Consolidated Statements of Cash Flows.

Costs Associated with Exit or Disposal Activity or Restructuring [Policy Text Block]

Exit Obligations

In connection with the decision to sell its wireless operations, the Company incur

red certain costs associated with the wind-down of its retail wireless operations that met the criteria for reporting as exit obligations. These costs were incurred in the

fourth

quarter of

2014

through

2015,

and settlement of the liabilities was completed in

2016.

The accounting policies for these costs were as follows:

●

Employee termination costs associated with reductions in retail stores, contact center, and other support organizations

, and termination costs associated with synergies and future cost reductions resulting from the Company becoming a more focused broadband and managed IT services company were accrued equal to the payout amount, undiscounted due to the short duration, and amortized over the remaining required service period. These termination benefits included costs accounted for under both Accounting Standards Codification (“ASC”)

420,

“Exit or Disposal Costs Obligations” (“ASC

420”

) and ASC

712,

“Compensation – Nonretirement Postemployment Benefits” (“ASC

712”

●

Contract termination costs w

ere accrued for retail store leases and a software contract where we incurred a charge to terminate the contract prior to their stated maturity. These costs were measured equal to the actual cost to terminate the contract and were recognized at the date the contract was terminated.

●

For retail store leases that

were vacated, the costs were measured equal to the fair value of the remaining lease payments and recognized when the Company had ceased to use the property.

●

Other associated costs that met the criteria of an exit activity w

ere accrued when incurred.

Property, Plant and Equipment, Policy [Policy Text Block]

Propert

y, Plant and Equipment

Telephone property, plant and equipment are stated at historical cost of construction including certain capitalized overhead and interest charges. Renewals and betterments of telephone

plant are capitalized, while repairs and renewals of minor items are charged to cost of services and sales (excluding depreciation and amortization) as incurred. The Company uses a group composite depreciation method in accordance with industry practice. Under this method, telephone plant, with the exception of land and capital leases, retired in the ordinary course of business, less salvage, is charged to accumulated depreciation with

gain or loss recognized. Non-telephone plant is stated at historical cost including certain capitalized overhead and interest charges, and when sold or retired, a gain or loss is recognized. Depreciation of property is provided on the straight-line method over estimated service lives ranging from

years.

The Company is the lessee of equipment and buildings under capital leases expiring in various years through

2033.

The assets and liabilities under capital leases are initially recorded at the lower of the present value of the minimum lease payments or the fair value of the assets at the inception of the lease. The assets are amortized over the shorter of their related lease terms or the estimated productive lives. Amortization of assets under capital leases is included in depreciation and amortization expense.

The Company is also the lessee of various land, building and personal property under operating lease agreements for which expense is recognized on a monthly basis. Increases in rental rates are recorded as incurred which approximates

the straight-line method.

The Company capitalizes interest charges associated with construction in progress based on a weighted average interest cost calculated on the Company

’s outstanding debt.

Asset Retirement Obligation [Policy Text Block]

Asset Retirement O

bligations

The Company records liabilities for obligations related to the retirement and removal of long-lived assets

, consisting primarily of batteries and operating leases. The Company records, as liabilities, the estimated fair value of asset retirement obligations on a discounted cash flow basis when incurred, which is typically at the time the asset is installed or acquired. The obligations are conditional on the occurrence of future events. Uncertainty about the timing or settlement of the obligation is factored into the measurement of the liability. Amounts recorded for the related assets are increased by the amount of these obligations. Over time, the liabilities increase due to the change in their present value, the potential changes in assumptions or inputs, and the initial capitalized assets decline as they are depreciated over the useful life of the related assets. The liabilities are extinguished when the asset is taken out of service.

Revenue Recognition, Services, Licensing Fees [Policy Text Block]

Indefeasible

Rights of Use

Indefeasible rights of use (“IRU”) consist of agreements between the Company and a

third

party whereby

one

party grants access to a portion of its fiber network to the other party

, or receives access to a portion of the fiber network of the other party. The access

may

consist of individually specified fibers or a specified number of fibers on the network. Certain of the Company’s IRU agreements consist of like kind exchanges for which the value of the access given up is determined to be equal to the value of the access received. Cash

may

not

be exchanged depending on the terms of the agreement. For IRU agreements in which an equal amount of cash is received and paid and the transaction is determined to

not

have commercial substance, revenue and expense is

not

recognized in connection with the cash exchanged. For IRU agreements that are

not

like kind exchanges and for which the Company receives or pays cash, revenue and expense are recognized over the term of the agreement.

Investment, Policy [Policy Text Block]

Non-operating Assets

The Company periodically evaluates the fair value of its

non-current investments and other non-operating assets against their carrying value, or whenever market conditions indicate a potential change in that fair value. Any changes relating to declines in the fair value of non-operating assets are charged to non-operating expense in the Consolidated Statements of Comprehensive (Loss) Income.

Consolidation, Variable Interest Entity, Policy [Policy Text Block]

Variable Interest Entities

The Company

’s ownership interest in AQ-JV, LLC is a variable interest entity as defined in ASC

810,

“Consolidation.” The Company consolidates the financial results of this entity based on its determination that, for accounting purposes, it holds a controlling financial interest in, and is the primary beneficiary of, the entity. The Company has accounted for and reported the interest of this entity’s other owner as a noncontrolling interest. See Note

“

Joint Venture

” for additional information.

Equity Method Investments [Policy Text Block]

Equity Method of Accounting

Investments in entities where the Company is able to exercise significa

nt influence, but

not

control, are accounted for by the equity method. Under this method, equity investments are carried at acquisition cost, increased by the Company’s proportionate share of the investee’s comprehensive income, and decreased by the investee’s comprehensive losses up to our proportional ownership interest and cash distributions. The Company evaluates its investments in equity method investments for impairment whenever events or changes in circumstances indicate that the carrying amount

may

not

be recoverable. At

December 31, 2017

and

2016,

the Company had

equity method investments.

Revenue Recognition, Deferred Revenue [Policy Text Block]

Deferred

apacity Revenue

Deferred capacity liabilities are established for usage rights on the Company

’s network provided to

third

parties. They are established at fair value and amortized to revenue on a straight-line basis over the contractual life of the relevant contract. These liabilities include a deferred capacity revenue liability for future services to be provided to General Communications, Inc. (“GCI”) which is amortized over the contract life of up to

years.

Impairment or Disposal of Long-Lived Assets, Policy [Policy Text Block]

Long-lived Asset Impairment

Long

-lived assets, such as property, plant, and equipment, and purchased intangible assets subject to amortization, are reviewed for impairment annually, or whenever events or changes in circumstances indicate that the carrying amount of an asset

may

not

be recoverable. If circumstances require a long-lived asset or asset group be tested for possible impairment, the Company will compare the undiscounted cash flows expected to be generated by that asset to its carrying amount. If the carrying amount of the long-lived asset is

not

recoverable on an undiscounted cash flow basis, impairment is recognized to the extent that the carrying amount exceeds its fair value. Fair value is determined through various valuation techniques including discounted cash flow models, quoted market values and

third

-party independent appraisals. Impairment is displayed under the caption “Operating expenses” in the Company’s Consolidated Statements of Comprehensive (Loss) Income.

Debt, Policy [Policy Text Block]

Debt Issuance Costs

and Discounts

Debt issuance costs

are capitalized and amortized to interest expense using the effective interest method over the term of the related instruments. Debt discounts are accreted to interest expense using the effective interest method. Debt issuance costs and debt discounts are presented as a direct deduction from the carrying amount of debt on the Company’s Consolidated Balance Sheet.

Preferred Stock, Policy [Policy Text Block]

Preferred

tock

The Company has

,000

shares of

$0.01

par value preferred stock authorized,

none

of which were issued or outstanding at

December 31, 2017

and

2016.

January 8, 2018,

the Company

’s Board of Directors authorized

145,000

shares of Series A Junior Participating Preferred Stock,

none

of which were issued or outstanding as of the filing date of this Annual Report on Form

-K.

Revenue Recognition, Policy [Policy Text Block]

Revenue Recognition

Substantially all recurring

non-usage sensitive service revenues are billed

one

month in advance and are deferred until earned. Non-recurring and usage sensitive revenues are billed in arrears and are recognized when earned. Revenue is recognized on the sale of equipment upon acceptance by the customer. Certain of the Company’s bundled products and services have been determined to be revenue arrangements with multiple deliverables. Total consideration received in these arrangements is allocated and measured using units of accounting within the arrangement based on the relative selling price. Prior to

February 2, 2015,

wireless offerings included wireless devices and service contracts sold together in the Company’s stores and agent locations. The revenue for the device and accessories associated with these direct and indirect sales channels were recognized at the time the related wireless device was sold and was classified as equipment sales. Monthly service revenue from the majority of the Company’s customer base is recognized as services are rendered. Revenue earned from the Company’s wireless Lifeline customer base was less certain and was therefore recognized on the cash basis as payments were received.

The Company enters into contracts with its rural health care customers. Customers are billed, and revenue is recognized, for services as provided when it is determined that the selling price is fixed or determinable and collectability is reasonably assured. Payment for the services is made, in part, by the customer. The Company also receives funding support for these services through the Federal Communications Commission

’s (“FCC”) rural health care universal service support mechanism. As of

December 31, 2017,

the Universal Service Administrative Company (“USAC”), which administers this program, had

not

issued approval notices to the Company's rural health care customers (all of whom had timely applied for funding), or otherwise announced funding levels, for Funding Year

2017,

which began on

July 1, 2017

and ends on

June 30, 2018.

Revenues associated with services provided to the Company's rural health care customers in the

third

and

fourth

quarters of

2017

were recognized based on the amounts that were determinable and for which collectability is reasonably assured. Such amounts were estimated based on recent historical demand and funding approval levels. In the event approved funding varies from the estimated approval level, accounts receivable will be adjusted accordingly.

Concentration Risk, Credit Risk, Policy [Policy Text Block]

Concentrations of

isk

Cash is maintained with several financial institutions. Deposits

held with banks

may

exceed the amount of insurance provided on such deposits and the Company enters into arrangements to collateralize these amounts with securities of the underlying financial institutions. Generally, these deposits

may

be redeemed upon demand. The Company has

not

experienced any losses on such deposits.

The Company also depends on a limited number of suppliers and vendors for equipment and services for its network.

The Company’s subscriber base and operating results could be adversely affected if these suppliers experience financial or credit difficulties, service interruptions, or other problems.

As of

December 31,

201

approximately

54%

of the Company’s employees are represented by the International Brotherhood of Electrical Workers, Local

1547

(“IBEW”). The Master Collective Bargaining Agreement (“CBA”) between the Company and the IBEW, which was ratified on

December 8, 2017

and is effective through

December 31, 2023,

governs the terms and conditions of employment for all IBEW represented employees working for the Company in the state of Alaska and has significant economic impacts on the Company as it relates to wage and benefit costs and work rules that affect our ability to provide superior service to our customers. The Company considered relations with the IBEW to be stable in

2017;

however, any deterioration in the relationship with the IBEW would have a negative impact on the Company’s operations.

The Company provides voice, broadband and

managed IT services to its customers throughout Alaska. Accordingly, the Company’s financial performance is directly influenced by the competitive environment in Alaska, and by economic factors specifically in Alaska. The most significant economic factor is the level of Alaskan oil production and the per barrel price of relevant crude oil. A significant majority of the state’s unrestricted revenue comes from taxes assessed upon the production of this resource, and the price of crude oil impacts the level of investment by resource development companies. The drop in crude oil prices during the past

three

years has resulted in the State of Alaska reducing its spending, which is having a dampening impact on the overall state economy, including declining employment levels in

2016

and

2017.

Other important factors influencing the Alaskan economy include the level of tourism, government spending, and the movement of United States military personnel. Any further deterioration in these factors, particularly over a sustained period of time, would likely have a negative impact on the Company’s performance.

As an entity that relies on the

FCC and state regulatory agencies to provide stable funding sources to provide services in high cost areas, the Company is also impacted by any changes in regulations or future funding mechanisms that are being established by these regulatory agencies. In

2017,

of the Company’s total revenues were derived from high cost support and

were derived from the rural health care universal service support mechanism

Additionally, t

he Company considers the vulnerabilities of its network and IT systems to various cyber threats. While the Company has implemented several mitigating policies, technological safeguards and some insurance coverage, it is

not

possible to prevent every possible threat to its network and IT systems from deliberate cyber related attacks.

Advertising Costs, Policy [Policy Text Block]

Advertising Costs

The Company

expenses advertising costs as incurred. Advertising expense totaled

$3,656,

$3,460

and

$4,065

2017,

2016

and

2015,

respectively and is included in “Selling, general and administrative expense” in the Company’s Consolidated Statements of Comprehensive (Loss) Income.

Income Tax, Policy [Policy Text Block]

Income Taxes

The Company utilizes the asset-liability method of accounting for income taxes

. Under the asset-liability method, deferred taxes reflect the temporary differences between the financial and tax basis of assets and liabilities using the enacted tax rates in effect in the years in which the differences are expected to reverse. Deferred tax assets are reduced by a valuation allowance to the extent that management believes it is more-likely-than-

not

that such deferred tax assets will

not

be realized. The Company evaluates tax positions taken or expected to be taken in the course of preparing its financial statements to determine whether the tax positions are “more-likely-than-

not”

of being sustained by the applicable tax authority. The Company records interest and penalties for underpayment of income taxes as income tax expense.

Utility, Revenue and Expense Recognition, Policy [Policy Text Block]

Taxes Collected from Customers and Remitted to Government Authorities

The Company excludes taxes collected from customers and payable to government authorities from revenue. Taxes payable to government authorities are presented as a liability on the Consolidated Balance Sheets.

Regulatory Accounting and Regulation, Policy [Policy Text Block]

Regulatory Accounting and Regulation

Certain

activities of the Company are subject to rate regulation by the FCC for interstate telecommunication service and the Regulatory Commission of Alaska (“RCA”) for intrastate and local exchange telecommunication service. The Company, as required by the FCC, accounts for such activity separately. Long distance services of the Company are subject to regulation as a non-dominant interexchange carrier by the FCC for interstate telecommunication services and the RCA for intrastate telecommunication services. Wireless, Internet and other non-common carrier services are

not

subject to rate regulation.

Derivatives, Policy [Policy Text Block]

Derivative Financial Instrument

The Company does

not

enter into derivative contracts for speculative purposes.

The Company recognizes all asset or liability derivatives at fair value. The accounting for changes in fair value is contingent on the intended use of the derivative and its designation as a hedge. Derivatives that are

not

hedges are adjusted to fair value through earnings. If a derivative is a hedge, depending on the nature of the hedge, changes in fair value either offset the change in fair value of the hedged assets, liabilities or firm commitments through earnings, or are recognized in “Other comprehensive (loss) income” until the hedged transaction is recognized in earnings. On the date a derivative contract is entered into, the Company designates the derivative as either a fair value or cash flow hedge. The Company formally assesses, both at the hedge's inception and on an on-going basis, whether the derivatives that are used in hedging transactions are highly effective in offsetting changes in the fair values or cash flows of hedged items. If the Company determines that a derivative is

not

highly effective as a hedge or that it has ceased to be highly effective, the Company discontinues hedge accounting prospectively. The change in a derivative's fair value related to the ineffective portion of a hedge is immediately recognized in earnings. Amounts recorded to accumulated other comprehensive loss from the date of the derivative’s inception to the date of ineffectiveness are amortized to earnings over the remaining term of the hedged item. If the hedged item is settled prior to its originally scheduled date, any remaining accumulated comprehensive loss associated with the derivative instrument is reclassified to earnings. Termination of a derivative instrument prior to its scheduled settlement date

may

result in charges for termination fees.

Dividend, Policy [Policy Text Block]

Dividend Policy

The Company

’s dividend policy is set by the Company’s Board of Directors and is subject to the terms of its

2017

Senior Credit Facility and the continued current and future performance and liquidity needs of the Company. Dividends on the Company’s common stock are

not

cumulative to the extent they are declared. The Board has

not

authorized the payment of a dividend since

2012,

and has

not

updated its dividend policy.

Share-based Compensation, Option and Incentive Plans Policy [Policy Text Block]

Share-

ased

Payments

Effective in

2017,

the Company accounts for forfeitures associated with share-based payments as they occur.

Restricted S

tock

Units (“RSUs”)

The Company determines the fair value of

RSUs based on the number of shares granted and the quoted closing market price of the Company's common stock on the date of grant, discounted for estimated dividend payments that do

not

accrue to the employee during the vesting period. Compensation expense is recognized over the vesting period and adjustments are charged or credited to expense. RSUs are granted under the Company’s

2011

Incentive Award Plan.

erformance

hare

nits

(“PSUs”)

PSUs

may

include a combination of service, specified performance, and/or market based conditions which determine the number of awards and the associated vesting.

The Company measures the fair value of each new PSU at the grant date. Adjustments each reporting period are based on changes to the expected achievement of the performance goals or if the PSUs otherwise vest, expire, or are determined by the Compensation Committee of the Company’s Board of Directors to be unlikely to vest prior to expiration. Adjustments are charged or credited to expense. For PSUs that include a market condition, compensation expense associated with the market condition is recognized regardless of whether the market condition is satisfied provided that performance measure has been met and the requisite service has been provided. Compensation expense is recorded over the requisite service period. PSUs are granted under the Company’s

2011

Incentive Award Plan.

Employee Stock Purchase Plan (“ESPP

”)

The Company makes payroll deduction

s of from

15%

of compensation from employees who elect to participate in the ESPP. A liability accretes during the

-month offering period and at the end of the offering period (

June 30

and

December 31),

the Company issues the shares from the

2012

Employee Stock Purchase Plan (

“2012

ESPP”). Compensation expense is recorded based upon the estimated number of shares to be purchased multiplied by the discount rate per share.

Tax Treatment

Stock-based compensation is treated as a temporary difference for income tax purposes and increases deferred tax assets until the compensation is realized for income tax purposes.

To the extent that realized tax benefits exceed the book based compensation, the excess tax benefit is credited to additional paid in capital.

Pension and Other Postretirement Plans, Policy [Policy Text Block]

Pension

Benefits

Multi

-employer

efined

enefit

lan

Pension benefits for substantially all

of the Company’s Alaska-based employees are provided through the Alaska Electrical Pension Fund (“AEPF”). The Company pays a contractual hourly amount based on employee classification or base compensation. The accumulated benefits and plan assets are

not

determined for, or allocated separately to, the individual employer.

Defined Benefit Plan

The ACS Retirement Plan, which is the Company

’s sole single-employer defined benefit plan and covers a limited number of employees previously employed by a predecessor to

one

of our subsidiaries, is frozen. The Company recognizes the under-funded status of this plan as a liability on its balance sheet and recognizes changes in the funded status in the year in which the changes occur. The ACS Retirement Plan’s accumulated benefit obligation is the actuarial present value, as of the Company’s

December 31

measurement date, of all benefits attributed by the pension benefit formula. The amount of benefits to be paid depends on a number of future events incorporated into the pension benefit formula, including estimates of the average life of employees or survivors and average years of service rendered. It is measured based on assumptions concerning future interest rates and future employee compensation levels. Unrecognized prior service credits and costs and net actuarial gains and losses are recognized as a component of other comprehensive (loss) income, net of tax.

Defined Contribution P

lan

The Company provides a

401

(k) retirement savings plan covering substantially all of it employees. Discretionary company-matching contributions are determined by the Board of Directors.

Earnings Per Share, Policy [Policy Text Block]

Earnings per Share

The Company computes earnings per share based on the weighted number of shares of common stock and dilutive potential common share equivalents outstanding.

This includes all issued and outstanding share-based payments.

New Accounting Pronouncements, Policy [Policy Text Block]

Recently Adopted Accounting Pronouncements

In the

first

quarter of

2017,

the Company adopted ASU

No.

2016

09,

“

Compensation – Stock Compensation (Topic

718

), Improvements to Employee Share-Based Payment Accounting

” (“ASU

2016

09”

). The amendments in ASU

2016

simplify several aspects of the accounting for share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities, and classification on the statement of cash flows. The relevant provisions of ASU

2016

and the effect of adoption on the Company’s financial statements and related disclosures are summarized as follows: (i) The tax effects of exercised or vested awards should be treated as discrete items in the reporting period in which they occur. Excess tax benefits should be recognized regardless of whether the benefit reduces taxes payable in the current period. Excess tax benefits and tax deficiencies should be recognized as income tax expense or benefit in the income statement. The Company adopted these provisions on a modified retrospective basis. Excess tax benefits and tax deficiencies are included in the income tax provision beginning in the

first

quarter of

2017.

A cumulative-effect adjustment was recorded in the

first

quarter of

2017

to reclassify

$1,441

from additional paid in capital to retained earnings for excess tax benefits and deficiencies recorded to additional paid in capital prior to

2017;

(ii) Excess tax benefits and tax deficiencies should be classified as an operating activity in the statement of cash flows. The Company adopted this provision on a retrospective basis. Tax deficiencies from share-based payments of

$47

2016

and tax benefits of

$733

2015

classified as financing activities on the statement of cash flows in

2016

and

2015

were reclassified to operating activities. See the consolidated statement of cash flows; (iii) An entity

may

make an accounting policy election to either estimate the number of awards that are expected to vest or account for forfeitures when they occur. Prior to

2017,

the Company’s stock-based compensation expense reflected an estimate of the number of awards that were expected to vest, including an estimate of forfeitures. Effective in the

first

quarter

2017,

the Company elected to account for forfeitures when they occur. This provision was adopted on a modified retrospective basis, and a cumulative-effect adjustment was recorded in the

first

quarter of

2017

to reclassify

$163

from additional paid in capital to retained earnings for the effect of this accounting change on periods prior to

2017.

Retained earnings was charged

$96

net of the income tax effect of

$67;

(iv) The threshold to qualify for equity classification permits withholding up to the maximum statutory tax rates. The Company has historically withheld taxes at the minimum statutory rate. Adoption of this provision is

not

expected to have a material effect on the Company’s financial statements; and (v) Cash paid by an employer when directly withholding shares for tax withholding purposes should be classified as a financing activity. This classification is consistent with the Company’s historical practice. See the consolidated statement of stockholders’ equity, Note

15,

“

Income Taxes

” and Note

“

Stock Incentive Plans

” for additional information.

August 2016,

the Financial Accounting Standards Board (“FASB”) issued ASU

No.

2016

15,

“

Statement of Cash Flows (Topic

230

), Classification of Certain Cash Receipts and Cash Payments

” (“ASU

2016

15”

). The amendments in this update address

eight

specific cash flow classification issues for which current GAAP either is unclear or does

not

include specific guidance, and for which there exists diversity in practice: Debt prepayment or debt extinguishment costs; settlement of

zero

-coupon debt instruments or other debt instruments with coupon interest rates that are insignificant in relation to the effective interest rate of the borrowing; contingent consideration payments made after a business combination; proceeds from the settlement of insurance claims; proceeds from the settlement of corporate-owned life insurance policies, including bank-owned life insurance policies; distributions received from equity method investees; beneficial interests in securitization transactions; and separately identifiable cash flows and application of the predominance principle. ASU

2016

is effective for fiscal years beginning after

December 15, 2017,

and interim periods within those years, and early adoption is permitted. The Company adopted ASU

2016

effective in the

first

quarter of

2017

on a modified retrospective basis as required by the standard. The Company’s cash flow classifications for the

eight

issues addressed in ASU

2016

15,

where applicable, were generally consistent with the new guidance. Accordingly, adoption of ASU

2016

did

not

have a material effect on the Company’s financial statements.

November 2016,

the FASB issued ASU

No.

2016

18,

“

Statement of Cash Flows (Topic

230

), Restricted Cash

” (“ASU

2016

18”

). ASU

2016

requires that the statement of cash flows explain the change during the period in the total of cash, cash equivalents, and amounts generally described as restricted cash or restricted cash equivalents. ASU

2016

is effective for fiscal years beginning after

December 15, 2017,

and was adopted by the Company effective in the

first

quarter of

2017

on a retrospective basis as permitted. The net change in restricted cash of

$93

and

$1,357

previously reported as a cash outflows from investing activities in

2016

and

2015,

respectively, was eliminated from the statement of cash flows as a result of the adoption of ASU

2016

18.

February 2018,

the FASB issued ASU

No.

2018

02,

“

Income Statement – Reporting Comprehensive Income

(Topic

220

), Reclassification of Certain Tax Effect

from Accumulated Other Comprehensive Income

” (“ASU

2018

02”

). ASU

2018

allows for the reclassification of the stranded tax effects resulting from the Tax Cuts and Jobs Act of

2017

from accumulated other comprehensive income to retained earnings. ASU

2018

is effective for fiscal years beginning after

December 15, 2018,

and was adopted by the Company in the

fourth

quarter of

2017

as permitted. Upon adoption, the Company reclassified

$425

from accumulated other comprehensive loss to accumulated deficit associated with certain stranded tax effects related to defined benefit pension plans and interest rate swaps remaining in accumulated other comprehensive loss.

Accounting Pronouncements

Issued

Not

Yet Adopted

May 2014,

the FASB issued ASU

No.

2014

09,

“

Revenue from Contracts with Customers (Topic

606

)

” (“ASU

2014

09”

). The amendments in ASU

2014

and subsequent updates require that an entity should 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. Adoption of the new standard is to be applied on a full retrospective basis or modified retrospective basis. The Company has completed its assessment of ASU

2014

and subsequent updates. This assessment included determining the effect of the new standard on the Company’s financial statements, accounting systems, business processes, and internal controls. Based on this assessment, the Company does

not

expect adoption to have a material effect on its consolidated revenues. Adoption of the new standard will result in the deferral of certain costs incurred to obtain contracts, including sales commissions, which are currently expensed as incurred. Such deferred costs will be amortized over the period that the associated revenue is recognized. Adoption of ASU

2014

will also require enhanced financial statement disclosures about the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers. The Company is finalizing its implementation of the new standard, which requires changes to the Company’s accounting systems and business processes. The Company will adopt ASU

2014

effective

January 1, 2018

on a modified retrospective basis.

February 2016,

the FASB issued ASU

No.

2016

02,

“

Leases (Topic

842

)

” (“ASU

2016

02”

). The primary change in GAAP addressed by ASU

2016

is the requirement for a lessee to recognize on the balance sheet a liability to make lease payments (“lease liability”) and a right-of-use asset representing its right to use the underlying asset for the lease term. The accounting applied by a lessor is largely unchanged from that applied under previous GAAP. ASU

2016

also requires qualitative and quantitative disclosures to enable users of the financial statements to assess the amount, timing, and uncertainty of cash flows arising from leases. ASU

2016

is effective for fiscal years beginning after

December 15, 2018,

including interim periods within those years. Lessees must apply a modified retrospective transition approach for leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements. The Company is evaluating the effect that ASU

2016

will have on its consolidated financial statements and related disclosures.

March 2017,

the FASB issued ASU

No.

2017

07,

“

Compensation – Retirement Benefits (Topic

715

)

, Improving the Presentation of Net Periodic Postretirement Benefit Cost

” (“ASU

2017

07”

). The amendments in ASU

2017

require that an employer report the service cost component in the same line item or items as other compensation costs arising from services rendered by the pertinent employees. The other components of net benefit costs are required to be presented in the income statement separately from the service cost component and outside a subtotal of income from operations, if

one

is presented. If a separate line item or items are used to present the other components of net benefit costs, that line item or items must be appropriately described. If a separate line item or items are

not

used, the line item or items used in the income statement to present the other components of net benefit cost must be disclosed. ASU

2017

also requires that only the service cost component is eligible for capitalization when applicable. ASU

2017

is effective for fiscal years beginning after

December 15, 2017.

The Company does

not

currently expect that adoption of ASU

2017

will have a material effect on its consolidated financial statements and related disclosures.

May 2017,

the FASB issued ASU

No.

2017

09,

“

Compensation – Stock Compensation (Topic

718

)

, Scope of Modification Accounting

” (“ASU

2017

09”

). The amendments in ASU

2017

are intended to provide clarity, and reduce diversity in practice and the cost and complexity of applying the guidance in Topic

718.

The primary provision of ASU

2017

is to provide guidance about which changes to the terms or conditions of a share-based payment award require an entity to apply modification accounting. An entity should account for the effects of a change as a modification unless all the following conditions are met: (i) The fair value of the modified award is the same as the fair value of the original award immediately before the original award is modified. If the modification does

not

affect any of the inputs to the valuation technique that the entity uses to value the award, the entity is

not

required to estimate the value immediately before and after the modification. (ii) The vesting conditions of the modified award are the same as the vesting conditions of the original award immediately before the original award is modified. (iii) The classification of the modified award as an equity instrument or a liability instrument is the same as the classification of the original award immediately before the original award is modified. ASU

2017

is effective for fiscal years beginning after

December 15, 2017.

Early adoption is permitted, including adoption in any interim period. The amendments in this update should be applied prospectively to awards modified on or after the adoption date. The effect of the adoption of ASU

2017

on the Company’s financial statements and related disclosures will be dependent on the frequency and types of changes made to its share-based payment awards.

August 2017,

the FASB issued ASU

No.,

2017

12,

“

Derivatives and Hedging (Topic

815

), Targeted Improvements to Accounting for Hedging Activities

” (“ASU

2017

12”

). The amendments in ASU

2017

are intended to improve and simplify the accounting rules for hedge accounting, including providing a better portrayal of the economic results of an entity’s risk management activities in its financial statements and simplification of the application of hedge accounting guidance. The new guidance eliminates the requirement to separately measure and report hedge ineffectiveness and, for qualifying hedges, requires the entire change in the fair value of the hedging instrument to be presented in the same income statement line as the hedged item. ASU

2017

is effective for fiscal years beginning after

December 15, 2018.

Early adoption is permitted in any interim period or fiscal year prior to the effective date. The accounting and disclosure requirements are to be adopted on a prospective basis and a cumulative-effect adjustment is to be recorded for cash flow and net investment hedges existing at the date of adoption. The Company is evaluating the effect that ASU

2017

will have on its consolidated financial statements and related disclosures.